Market Roundup
- China's producer price inflation slows to 13-mth low at 4.9 pct
- China Dec CPI rises 1.8 pct y/y
- UK economy set for "underwhelming" 2018: British Chambers of Commerce
- Australia job vacancies climb to record in Nov qtr
- S. Korea's Moon says Trump deserves 'big' credit for North Korea talks
- Toyota, Mazda to build $1.6 bln plant in Alabama
Economic Data Ahead
- (0245 ET/0745 GMT) France Nov Industrial Output MM, forecast -0.5%, 1.9% last
- (0430 ET/0930 GMT) Great Britain Nov Industrial Output MM, forecast 0.3%, 0.0% last
- (0430 ET/0930 GMT) Great Britain Nov Industrial Output YY, forecast 1.8%, 3.6% last
- (0430 ET/0930 GMT) Great Britain Nov Manufacturing Output MM, forecast 0.3%, 0.1% last
- (0430 ET/0930 GMT) Great Britain Nov Manufacturing Output YY, forecast 2.8%, 3.9% last
- (0430 ET/0930 GMT) Great Britain Nov Goods Trade Balance GBP, forecast -10.70 bln, -10.79 bln last
- (0430 ET/0930 GMT) Great Britain Nov Construction O/P Vol YY, forecast -1.1%, -0.2% last
Key Events Ahead
- (0900 ET/1400 GMT) Federal Reserve Bank of Chicago President Charles Evans participates in moderated discussion on current economic conditions and monetary policy before the Lake Forest-Lake Bluff Rotary Club 2018 Economic Breakfast in Lake Forest, Illinois
- (0910 ET/1410 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in moderated discussion on Weitzman Annual Retail Forecast in Dallas
- (1000 ET/1500 GMT) Bank of England Deputy Governor Ben Broadbent appears on BBC Radio 4's Money Box Live to answer questions on central bank policy in London
- (1015 ET/1515 GMT) Fed’s Kaplan participates in moderated discussion at the Urban Land Institute Emerging Trends Breakfast in Dallas
- (1330 ET/1830 GMT) Federal Reserve Bank of St. Louis President James Bullard gives presentation on the U.S. economy and monetary policy, in St. Louis
FX Beat
DXY: The dollar index slightly eased as 10-year U.S. Treasury yields stalled its rally. The greenback against a basket of currencies traded flat at 92.53, having touched a high of 92.64 in the previous session, its highest since Dec. 29. FxWirePro's Hourly Dollar Strength Index stood at 50.26 (Bullish) by 0500 GMT.
EUR/USD: The euro steadied after falling to a near 2-week low, however, could extend its 3-day losing streak if the yield spread rises in USD-positive manner. The European currency traded flat at 1.1939, having touched a low of 1.1916 the day before, its lowest since Dec. 28. FxWirePro's Hourly Euro Strength Index stood at -59.51 (Bearish) by 0400 GMT. Investors’ attention will remain on the U.S. import and export price index, Fed Evan and Bullard's speech, amid a lack of economic data from the Eurozone docket. Immediate resistance is located at 1.1992 (10-DMA), a break above targets 1.2052. On the downside, support is seen at 1.1916 (Previous Session Low), a break below could drag it lower 1.1898 (21-DMA).
USD/USD: The dollar slumped to a 1-week low as reports that North Korea refused to budge on nuclear stance in talks with South yesterday and news of a 7.8 M earthquake that hit Puerto Rico triggered a risk-off wave across the markets. The major was trading 0.3 percent down at 112.26, having hit a low of 112.17 earlier, its lowest since Jan. 3. FxWirePro's Hourly Yen Strength Index stood at 16.65 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. import and export price index, Fed Evan and Bullard's speech for further momentum. Immediate resistance is located at 112.89 (21-DMA), a break above targets 113.38 (Jan. 8 High). On the downside, support is seen at 112.03 (Jan 2 Low), a break below could take it near 111.73 (Nov. 30 Low).
GBP/USD: Sterling eased, extending previous session losses, as the sentiment around the pound remained dented amid latest UK political risks, combined with downbeat retail sales data and falling British house prices. The major traded 0.1 percent down at 1.3530, having hit a high of 1.3612 last week; it’s highest since Sept. 20. FxWirePro's Hourly Sterling Strength Index stood at -2.25 (Neutral) by 0500 GMT. Investors’ focus will remain the UK Industrial and manufacturing figures, alongside with November´s Trade Balance data, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3590, a break above could take it near 1.3640. On the downside, support is seen at 1.3507 (Previous Session Low), a break below targets 1.3450. Against the euro, the pound was trading 0.1 percent down at 88.22 pence, having hit a high of 88.08 pence the day before, it’s highest since Dec. 19.
AUD/USD: The Australian dollar held gains after falling for three consecutive sessions, following the release of China December producer price index, which came in at 4.9 percent y/y, beating the estimate of 4.8 percent. However, Chinese consumer price index printed at 1.8 percent, missed the estimated rise to 1.9 percent from the November figure of 1.7 percent. The Aussie trades flat at 0.7822, having hit a high of 0.7874 on Friday; it’s highest since Oct. 20. FxWirePro's Hourly Aussie Strength Index stood at -55.55 (Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7800, a break below targets 0.7765 (Dec. 28 Low). On the upside, resistance is located at 0.7880, a break above could take it near 0.7940.
NZD/USD: The New Zealand dollar rose, reversing some of its previous session losses, amid the ongoing rally in oil prices and on the back of mixed Chinese data. The Kiwi trades 0.1 percent up at 0.7164, having touched a high of 0.7196 the day before, its highest level since Oct. 17. FxWirePro's Hourly Kiwi Strength Index was at 143.22 (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 0.7200, a break above could take it near 0.7240. On the downside, support is seen at 0.7119 (10-DMA), a break below could drag it lower 0.7100.
Equities Recap
Asian shares declined, as investors booked profits in high-tech shares while the dollar steadied, supported by higher U.S. Treasury yields.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.3 percent.
Tokyo's Nikkei eased 0.2 percent to 23,797.41 points, Australia's S&P/ASX 200 index fell 0.6 percent to 6,096.70 points and South Korea's KOSPI lost 0.4 percent to 2,500.32 points.
Shanghai composite index declined 0.1 percent to 3,409.98 points, while CSI300 index was trading 0.1 percent up at 4,191.60 points.
Hong Kong’s Hang Seng was trading 0.3 percent higher at 31,110.27 points. Taiwan shares shed 0.7 percent to 10,831.09 points.
Commodities Recap
Crude oil prices hit their highest levels since 2014 amid ongoing production cuts led by OPEC as well as healthy demand. International benchmark Brent crude was trading flat at $69.15 per barrel by 0426 GMT, having hit a high of $69.24 earlier, its highest since May 2015. U.S. West Texas Intermediate was trading flat at $63.44 a barrel, after rising as high as $63.51 earlier, its highest since 2014.
Gold prices declined, extending previous session lows, as a surge in U.S. Treasury yields and an ongoing rally in equities dented the metal's safe-haven appeal. Spot gold was down 0.2 percent at $1,310.30 an ounce by 0431 GMT, having touched its highest since Sept. 15 at $1,325.79 on Thursday. U.S. gold futures were down 0.1 percent at $1,312.50 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.560 percent higher by 0.014 bps, while 5-year yield was 0.015 bps up at 2.339 percent.
The Japanese government bonds slumped following board weakness in the U.S. Treasuries. Yields on the benchmark 10-year US Treasury hit a nine-month high overnight, climbing to 2.5 percent after the Bank of Japan’s trimmed its purchases of super-long debt. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 2 basis points to 0.08 percent, the yield on the long-term 30-year note surged nearly 1-1/2 basis points to 0.84 percent and the yield on short-term 2-year climbed nearly 1 basis point to -0.12 percent.
The Australian government bonds slumped following board weakness in the U.S. Treasuries. Yields on the benchmark 10-year US Treasury hit a nine-month high overnight, climbing to 2.5 percent after the Bank of Japan’s trimmed its purchases of super-long debt. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 6 basis points to 2.703 percent, the yield on the long-term 30-year note jumped 5-1/2 basis points to 3.404 percent and the yield on short-term 2-year climbed 2-1/2 basis points to 2.035 percent.
The Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 2.5 Canadian cents to yield 1.799 percent and the 10-year declined 39 Canadian cents to yield 2.205 percent, its highest since September 2014.
