Market Roundup
- Japan Dec Services PMI falls to 51.1 vs 51.2 in Nov, new orders increase at slowest in 15 mths
- Japan Dec Comp PMI unchanged from previous month at 52.2 - Markit/Nikkei
- China to stick with "around 6.5 pct" growth goal in 2018 –sources
- N. Korea accepts Jan. 9 talks offer from S. Korea
- UK small business confidence wanes in late 2017 - trade association
- St. Louis Fed's Bullard links tax bill with equity surge, stronger growth outlook
- U.S. stock funds post $8.4 bln outflows during week -Lipper
- U.S. muni bond funds post $47.9 mln in outflows-Lipper
- Foreign CB US debt holdings -6.241 bln to $3.354 trln Jan 3 week
- Treasuries -6.097 bln to $3.01 trln, agencies -24 mln to $262.740 bln
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov Retail Sales MM Real, f'cast 1.0%, 1.2% last
- (0200 ET/0700 GMT) Germany Nov Retail Sales YY Real, f'cast 2.5%, -1.4% last
- (0245 ET/0745 GMT) France Dec Consumer Confidence, f'cast 103, 102 last
- (0245 ET/0745 GMT) France Dec CPI (EU Norm) Prelim YY, f'cast 1.2%, 1.2% last
- (0500 ET/1000 GMT) EZ Dec Inflation, Flash YY, f'cast 1.4%, 1.5% last
- (0500 ET/1000 GMT) EZ Dec Infl Ex Food & Enr Flash, f'cast 1.0%, 1.1% last
- (0500 ET/1000 GMT) EZ Nov Producer Prices MM, f'cast 0.3%, 0.4% last
- (0500 ET/1000 GMT) EZ Nov Producer Prices YY, f'cast 2.5%, 2.5% last
- (0500 ET/1000 GMT) Italy Dec CPI (EU Norm) Prelim YY, 1.0% last
- (0500 ET/1000 GMT) Italy Dec CPI (EU Norm) Prelim MM, -0.2% last
Key Events Ahead
- (1015 ET/1515 GMT) Philadelphia Fed President Patrick Harker speaks on the economic outlook at the 2018 ASSA/American Economic Association Annual Meeting in Philadelphia
- (1230 ET/1730 GMT) Cleveland Fed President Loretta Mester participates in panel "Coordinating Conventional and Unconventional Monetary Policies for Macroeconomic Stability" before the 2018 ASSA/American Economic Association Annual Meeting in Philadelphia
- (1430 ET/1930 GMT) BoE Chief Economist Andy Haldane: Chairing panel sessions at the Allied Social Sciences Association Annual Meeting in Philadelphia
FX Beat
DXY: The dollar index consolidated near multi-week lows as investors cautiously awaited the U.S. Nonfarm payroll report for further clues on the strength of the economy's labour market. The greenback against a basket of currencies traded flat at 91.86, having touched a low of 91.75 on Tuesday, its lowest since Sept. 20. FxWirePro's Hourly Dollar Strength Index stood at -68.78 (Bearish) by 0500 GMT.
EUR/USD: The euro steadied after rising to a near 4-month high in the previous session, amid subdued trading activity seen around the U.S. dollar and Treasury yields. The European currency traded flat at 1.2072, having touched a high of 1.2088 on Thursday, its highest since Sept. 8. FxWirePro's Hourly Euro Strength Index stood at 88.89 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone preliminary consumer price index and producer price index, ahead of U.S. unemployment rate, non-farm payroll, factory orders and trade balance. Immediate resistance is located at 1.2100, a break above targets 1.2130. On the downside, support is seen at 1.2001 (Jan 3 Low), a break below could drag it lower 1.1958 (10-DMA).
USD/JPY: The dollar rose to a 1-week high against the yen, after the ADP report and the Service PMI in the U.S. came in above expectations. The major was trading 0.2 percent up at 112.94, having hit a high of 112.95 earlier, its highest since Dec. 29. FxWirePro's Hourly Yen Strength Index stood at -81.85 (Slightly Bearish) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. unemployment rate, non-farm payroll, factory orders and trade balance for further momentum. Immediate resistance is located at 113.00, a break above targets 113.33 (Nov. 16). On the downside, support is seen at 112.55 (5-DMA), a break below could take it near 112.17.
GBP/USD: Sterling rose, extending previous session gains after surveys showed Britain's dominant services sector rebounded strongly last month. The major traded 0.2 percent up at 1.3569, having hit a high of 1.3612 on Wednesday; it’s highest since Sept. 20. FxWirePro's Hourly Sterling Strength Index stood at -4.12 (Neutral) by 0400 GMT. Investors’ focus will remain the BoE MPC member Haldane's speech, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3580, a break above could take it near 1.3620. On the downside, support is seen at 1.3505 (61.8% retracement of 1.3309 and 1.3612, a break below targets 1.3461 (10-DMA). Against the euro, the pound was trading 0.1 percent up at 88.96 pence, having hit a high of 88.48 pence on Wednesday, it’s highest since Dec. 22.
AUD/USD: The Australian dollar eased after rising to an 11-week peak earlier in the session after data showed the economy recorded a trade deficit of A$628 million ($492.73 million) in November, confounding expectations of a surplus. The Aussie trades 0.1 percent down at 0.7852, having hit a high of 0.7869 earlier; it’s highest since Oct. 20. FxWirePro's Hourly Aussie Strength Index stood at 99.64 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7814 (Previous Session Low), a break below targets 0.7765 (Dec. 28 Low). On the upside, resistance is located at 0.7870, a break above could take it near 0.7900.
NZD/USD: The New Zealand dollar rallied to an 11-week peak on a broadly softer U.S. currency. The Kiwi trades 0.1 percent up at 0.7158, having touched a high of 0.7164 earlier, its highest level since Oct. 19. FxWirePro's Hourly Kiwi Strength Index was at 138.19 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7196, a break above could take it near 0.7230. On the downside, support is seen at 0.7109 (5-DMA), a break below could drag it lower 0.7076 (10-DMA).
Equities Recap
Asian shares nudged closer to a record high as U.S. jobs data indicated firm economic growth, while the dollar touched a 1-week high against the yen ahead of the release of the first U.S. Nonfarm payroll in 2018.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei gained 0.8 percent to 23,690.68 points, Australia's S&P/ASX 200 index advanced 0.7 percent to 6,122.30 points and South Korea's KOSPI rallied 1.03 percent to 2,491.97 points.
Shanghai composite index rose 0.2 percent to 3,391.65 points, while CSI300 index was trading 0.2 percent up at 4,138.11 points.
Hong Kong’s Hang Seng was trading 0.1 percent higher at 30,755.57 points. Taiwan shares added 0.3 percent to 10,879.80 points.
Commodities Recap
Crude oil prices eased after falling away from highs last seen in 2015, as soaring production in the United States undermined prices. International benchmark Brent crude was trading 0.05 percent up at $67.97 per barrel by 0434 GMT, having hit a high of $68.25 the day before, its highest since May 2015. U.S. West Texas Intermediate was trading 0.1 percent higher at $61.94 a barrel, after rising as high as $62.18 on Thursday, its highest since May 2015.
Gold prices declined after rising to a 3-1/2 month high in the prior session but were on track for their fourth-straight weekly gain, with attention turning to U.S. payroll data due later in the day. Spot gold was down 0.1 percent at $1,321.38 an ounce at 0439 GMT, after touching its highest since Sept. 15 at $1,325.79 on Thursday. U.S. gold futures were up 0.1 percent at $1,323 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.459 percent higher by 0.007 bps, while 5-year yield was 0.006 bps up at 2.273 percent.
Japanese government bonds traded sideways on the last trading day of the week as investors refrained from any major trading activity amid a muted session that witnessed no data of major economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 0.05 percent, the yield on long-term 30-year also traded nearly flat at 0.81 percent and the yield on short-term 2-year steadied at -0.13 percent.
The Australian government bonds rallied following worse-than-expected trade balance data for December, which turned negative, lowering the investors risk sentiments. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 3-1/2 basis points to 2.625 percent, the yield on the long-term 30-year note dipped 2-1/2 basis points to 3.333 percent and the yield on short-term 2-year down 6 basis points to 1.907 percent.
The Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 3 Canadian cents to yield 1.70 percent and the 10-year declined 26 Canadian cents to yield 2.083 percent. On Tuesday, the 10-year yield touched its highest level in more than two months at 2.093 percent.
