Financial markets moved sideways in Asian session on Monday. The outlook this week is likely gloomy amid global economic prospect remains unclear. Moody’s announced to downgrade the UK’s triple A rating while the second tranche of LTRO repayments by Eurozone banks were less than forecast. The focus this week was Abe’s nomination of the BOJ governor. A report from the Nikkei newspaper suggested that the government is likely to nominate Asian Development Bank President Haruhiko Kuroda and Kikuo Iwata as BOJ governor and deputy governor respectively. Both of them are advocates of aggressive monetary expansion. Moreover, the US sequester is expected to begin on March 1.
Moody’s downgraded the UK sovereign rating by 1 notch from Aaa to Aa1. The rating agency stated that the country’s weak economic growth “poses an increasing challenge to the government’s fiscal consolidation efforts”. Moreover, Moody’s indicated that while the country’s "debt-servicing capacity remains very strong and very capable of withstanding further adverse economic and financial shocks, it does not at present possess the extraordinary resilience common to other AAA-rated issuers"p>
In the Eurozone, the ECB announced that 356 banks will make a repayment of 61.09B euro on February 27. This was compare with market expectations of 130B euro. The central bank began out the first LTRO in December 2011 and a second one in February 2012. It has given out over 1 trillion euro in total. A total 523 banks took 489B euro in the first round of LTROs while 529.53B euro was given out to 800 banks.
Commitments of Traders:
With the exception of heating oil, speculators were bearish towards the energy complex in the week ended February 19. Net length for crude oil futures slipped -14 957 contracts to 257 918. Net length for heating oil rose +3 853 contracts to 42 247 while that for gasoline slid -36 contracts to 94 377. Net short for natural gas soared +7447 contracts to 146 102.
With the exception of palladium, speculators were bearish towards precious metals during the week. Net length for gold future was down -23 184 contracts to 103 651 while that for silver futures fell -5 616 contracts to 26 456. For PGMs, net length for platinum dropped -1 390 contracts to 48 748 while that for palladium climbed +316 contracts to 26 200.
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