Market Roundup
- Japan Dec consumer confidence index 43.1, November 40.9.
- Toyota looks to invest $10 bln in the US over next five years – Nikkei.
- Japan Takeda ready for fresh acquisitions after $5.2 bln US Ariad buy
- Japan Mitsubishi Chemical to buy US carbon fiber plant - Nikkei.
- Honda Canada to invest $492 mln to modernize Ontario plant – Reuters.
- Japan Asahi Mutual goes on road for USD perpetual issue – IFR.
- China NDRC Xu – Consumption accounted for 71% of GDP growth Jan-Sept, ‘16 growth likely @6.7%, increased uncertainties in ’17, ’16 financial ODI $170 bln, policies to support outbound investment unchanged, won’t change.
- China Dec CPI +0.2% m/m, +2.1% y/y, +0.3% and +2.3% forecast, food CPI +2.4% y/y, non-food +2.0%.
- China Dec PPI +1.6% m/m, +5.5% y/y, +4.5% y/y forecast, rise fastest since Sept’11, commodity price jumps cited.
- JPMorgan CEO Dimon – Strong economy will speed interest rate hikes – Reuters.
- UK Dec BRC like-for-like retail sales +1.0% y/y, total spending +1.7%, Nov +0.6%, +1.3%, pick-up but bigger ticket item sales still sluggish.
- Australia Nov retail sales +0.2% m/m, +0.4% forecast, last +0.5%
Economic Data Ahead
- (0145 ET/0645 GMT) Switzerland Dec unemployment, 3.3% sa forecast; last 3.3% sa, 3.3% nsa.
- (0200 ET/0700 GMT) Norway Dec CPI, -0.1% m/m, +3.8% y/y forecast; last +0.2%, +3.5%, index 146.7.
- (0200 ET/0700 GMT) Norway Dec – core, unch m/m, +2.8% y/y forecast; last -0.1%, +2.6%.
- (0200 ET/0700 GMT) Norway Dec producer prices; last -2.6% y/y.
- (0245 ET/0745 GMT) France Nov industrial output, +0.6% m/m forecast; last -0.2%.
- (0330 ET/0830 GMT) Sweden Nov industrial output, unch y/y forecast; last -1.3% m/m, -0.5% y/y.
- (0330 ET/0830 GMT) Sweden Nov mfg new orders; last +6.0% y/y.
- (0600 ET/1100 GMT) United States Dec NFIB business optimism index; last 98.4.
- (1000 ET/1500 GMT) United States Nov wholesale sales, +0.5% m/m forecast; last +1.4%.
- (1000 ET/1500 GMT) United States Nov wholesale inventories, +0.9% forecast; prelim +0.9%.
- (1000 ET/1500 GMT) United States Nov JOLTS job openings, 5.56 mln forecast; last 5.53 mln.
Key Events Ahead
- N/A OMFIF London city lecture.
- (0400 ET/0900 GMT) Netherlands E0.75-1.25 bln 2.75% 2047 DSL auction.
- (0500 ET/1000 GMT) Austria E1.1 bln total 0.75% and 1.5% 2026 and 2047 RAGB auctions.
- (0530 ET/1030 GMT) Germany E1 bln 0.1% 2026 index-linked Bund auction.
- (0530 ET/1030 GMT) UK DMO GBP750 mln 0.125% 2046 index-linked Gilt auction.
- (0530 ET/1030 GMT) Belgium E1.6-2.0 bln 3 and 12-month treasury certificate auctions.
- (0630 ET/1130 GMT) ESM E1.5 bln 3-month bill auction.
- N/A United States Senate begins confirmation hearings on Trump Cabinet nominations.
FX Beat
DXY: The dollar eased versus its major peers, as hard Brexit concerns and downbeat Chinese CPI data triggered a fresh bout of risk-off sentiment. The greenback against a basket of currencies traded 0.13 percent lower at 101.71, having hit a low of 101.51 earlier in the session. FxWirePro's Hourly Dollar Strength Index stood at 2.53 (Neutral) by 0500 GMT.
EUR/USD: The euro rose, hitting a fresh 11-day high above the 1.0600 handle, as the offered tone around the U.S. dollar intensified. On Monday, the major initially declined to a low of 1.0510, however, it rebounded to close higher at 1.0571. The European currency trades 0.4 percent higher at 1.0616, having touched a peak of 1.0627 earlier in the session, its highest since Dec 30. FxWirePro's Hourly Euro Strength Index stood at 32.97 (Neutral) by 0400 GMT. Investors’ await the U.S. JOLTS Job Openings and wholesale inventories, amid a lack of relevant data from the Eurozone docket. Immediate resistance is located at 1.0650, a break above targets 1.0700. On the downside, support is seen at 1.0544 (7-EMA), a break below could drag it till 1.0481 (21-DMA).
USD/JPY: The dollar declined, extending previous session losses, as downbeat Chinese consumer price index figures triggered a fresh bout of risk aversion in the market. Moreover, comments from Fed official Rosengren continued to weigh on the major. The major trades 0.5 percent lower at 115.41, hovering towards a low of 115.07 hit on Monday, its lowest since Dec. 14. Investors are likely to track overall market sentiment, ahead of the U.S. Job Openings and Labor Turnover Survey (JOLTS) report for further momentum on the pair. FxWirePro's Hourly Yen Strength Index stood at 153.77 (Highly Bullish) by 0400 GMT. Immediate resistance is located at 116.43 (7-EMA), a break above targets 117.00. On the downside, support is seen at 115.00, a break below could take it near 114.77 (Dec 14 Low).
GBP/USD: Sterling slumped, extending losses for the third consecutive session, as investors worried over hard Brexit after Prime Minister Theresa May stated that she was not interested in keeping bits of EU membership. However, the major is seen making a minor recovery as the selling pressure behind the greenback accelerated amid weaker U.S. Treasury yields. Sterling trades 0.1 percent down at 1.2143, drifting towards a low of 1.2124 hit in the previous session, it’s lowest since Oct. 28. FxWirePro's Hourly Sterling Strength Index stood at -114.47 (Highly Bearish) by 0400 GMT. In absence of relevant macro- fundamental drivers from the UK docket, markets attention will remain on the U.S JOLTS job openings data. Immediate resistance is located at 1.2200, a break above could take it near 1.2241 (7-EMA). On the downside, support is seen at 1.2100, a break below targets 1.2000. Against the euro, the pound trades 0.5 percent down at 87.33 pence, having hit a low of 87.35 earlier in the day, its lowest since Nov. 10.
AUD/USD: The Australian dollar rallied, hitting a fresh 3-week high, as the U.S. dollar resumed yesterday’s sell-off against its major peers. However, the upside remains capped as downbeat Australian retail sales and Chinese Consumer Price Index figures weighed on the Aussie bulls sentiment. China December CPI rose at an annualized rate of 2.1 percent, but missing estimates of 2.2 percent rise, while Australia's retail sales came at 0.2 percent in November against the consensus of 0.4 percent, and previous 0.5 percent. The Aussie trades 0.25 percent up at 0.7372, having hit an early high of 0.7384, it’s highest since Dec. 15. FxWirePro's Hourly Aussie Strength Index stood at 56.94 (Bullish) by 0500 GMT. Investors will continue to digest Australian and Chinese economic data, ahead of the upcoming U.S. jobs figures. Immediate support is seen at 0.7268 (9-EMA), a break below could drag it till 0.7238 (10-DMA). On the upside, resistance is located at 0.7350, a break above targets 0.7400.
NZD/USD: The New Zealand dollar rose to a 4-week high, as its U.S. counterpart ran into more profit-taking. Moreover, the selling pressure in the greenback is likely to keep the bid tone around the Kiwi intact. The major trades 0.2 percent up at 0.7029, having hit a high of 0.7047, it’s strongest since Dec. 16. FxWirePro's Hourly Kiwi Strength Index was at 38.08 (Neutral) by 0500 GMT. Investors will continue to track the action in the treasury yields, ahead of the U.S. economic data due later in the day. Immediate resistance is located at 0.7050 (Dec 16 High), a break above could take it till 0.7100. On the downside, support is seen at 0.6998 (5-DMA), a break below could drag it near 0.6963 (10-DMA).
Equities Recap
Asian shares edged down, as a retreat in oil prices, downbeat Chinese CPI figures and renewed concerns about a "hard" Brexit triggered a fresh bout of risk aversion in the market.
MSCI's broadest index of Asia-Pacific shares outside Japan was flat in early trade.
Tokyo's Nikkei dropped 0.7 percent to 19,303.63 points, Australia's S&P/ASX 200 index lost 0.78 percent at 5,762.30 points and South Korea's KOSPI was trading 0.3 percent down at 2,043.18 points.
Shanghai composite index declined 0.1 percent to 3,168.05 points, while CSI300 index was trading 0.04 percent higher at 3,365.96 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 22,683.23 points. Taiwan shares added 0.1 percent to 9,349.64 points.
Commodities Recap
Crude oil prices steadied after declining around 4 percent the previous session on reports that supplies from other regions including North America, Iraq, and Iran could offset production cuts by major exporters Saudi Arabia and Russia, undermining efforts to curb a global fuel supply glut. International benchmark Brent crude was trading 0.7 percent higher at $55.13 per barrel by 0407 GMT, having touched a low of $54.72 in the previous session, its weakest since Dec. 23. U.S. West Texas Intermediate crude rose 0.6 percent at $52.10 a barrel, after falling as low as $51.74 on Monday.
Gold prices rose, hovering near a fresh 5-week peak hit earlier in the session, as a weaker U.S. dollar and worries of Hard Brexit boosted safe-haven buying. Spot gold was up 0.4 percent at $1,185.42 an ounce by 0413 GMT, having hit its highest since Dec. 5 at $1,187.20. U.S. gold futures were steady at $1,184.60 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3648 percent lower by 0.011 bps, while 5-year yield was down by 0.01 bps at 1.8710 percent.
The Australian government bonds gained following weaker-than-expected retail sales amid sharp losses in equities. The yield on the benchmark 10-year Treasury note fell more than 4-1/2 basis points to 2.72 percent, the yield on 15-year note plunged 5-1/2 basis points to 3.16 percent and the yield on short-term 2-year moved down 5 basis points to 1.86 percent.
The New Zealand government bonds rebounded at the closing session, following firmness in U.S. Treasuries. Also, China, a major trading partner posted softer consumer inflation for the month of December, which further extended support to New Zealand’s debt market. The yield on the benchmark 10-year bond plunged 6 basis points to 3.20 percent, the yield on 7-year note fell nearly 5 basis points to 2.85 percent and the yield on the short-term 2-year note slid 3-1/2 basis points to 2.22 percent.
Canadian government bond prices were higher across the maturity curve, with the 2-year price up 2.5 Canadian cents to yield 0.752 percent and the benchmark 10-year rising 33 Canadian cents to yield 1.69 percent.
