Market Roundup
- Japan up GDP forecast to +1.9% this FY, CPI far below BoJ target at +0.7%
- Japan DepPM/FinMin Aso – Bitcoin not yet proven as credible currency
- Japan EconMin Motegi – Overseas economies, financial markets pose risks
- World Bank raises China 2017 growth forecast, maintains 2018 outlook
- U.S. Republicans appear all but certain to pass tax legislation
- U.S. blames North Korea for 'WannaCry' cyber attack
- Trump strategy document says Russia meddles in domestic affairs worldwide
- U.S. vetoes U.N. call for withdrawal of Trump Jerusalem decision
- Eurosceptics baulk as May pitches status quo Brexit transition
- UK employers keep hiring but see Brexit risks ahead, survey shows
- Australia government 2017/18 bond sales put at A$74 bln
- Australian central bank grows in confidence, but consumer spending a major risk
- New Zealand Dec NBNZ Business Outlook, -37.8%, -39.3% last
Economic Data Ahead
- (0400 ET/0900 GMT) Germany Dec IFO Business Climate, f'cast 117.5, 117.5 last
- (0400 ET/0900 GMT) Germany Dec IFO Current Conditions, f'cast 124.7, 124.4 last
- (0400 ET/0900 GMT) Germany Dec IFO Expectations, f'cast 110.7, 111.0 last
- (0500 ET/1000 GMT) EZ Q3 Labour Costs yy, last 1.8%
Key Events Ahead
- N/A Bank of Slovenia board meeting - Ljubljana
- (0300 ET/0800 GMT) Riksbank holds monetary policy meeting 6 - Stockholm
- (0400 ET/0900 GMT) Estonia central bank Governor Ardo Hansson will speak on Estonia's economy - Tallinn
- (0435 ET/0935 GMT) Norges Bank Governor Oystein Olsen gives a speech at ANSA's career day - Oslo
- (0600 ET/1100 GMT) Norges Bank Governor Oystein Olsen gives a speech to bank’s regional network - Oslo
- (0700 ET/1200 GMT) Slovakia central bank (NBS) Governor Jozef Makuch holds a news conference - Bratislava
- (1310 ET/1810 GMT) Minneapolis Fed President Neel Kashkari attends a moderated Q&A session - Roseville
FX Beat
DXY: The dollar eased after Minneapolis Fed President Neel Kashkari stated on Monday that he voted against the Fed's decision to hike interest rates last week over worries on weak inflation and a flattening of the U.S. Treasury yield curve. The greenback against a basket of currencies traded 0.1 percent down at 93.65, having touched a low of 93.28 on Thursday, its lowest since Dec. 6. FxWirePro's Hourly Dollar Strength Index stood at -135.56 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains on expectations of an improvement in the German business morale and mixed sentiment prevalent across the markets. The European currency traded 0.1 percent up at 1.1789, having touched a high of 1.1862 on Thursday, its highest since Dec. 5. FxWirePro's Hourly Euro Strength Index stood at 92.06 (Slightly Bullish) by 0400 GMT. Investors’ attention will remain on German IFO business climate survey and political developments surrounding Germany and Spain, ahead of U.S. housing starts, building permits and current account figures. Immediate resistance is located at 1.1815 (21-DMA), a break above targets 1.1862 (Dec.14 High). On the downside, support is seen at 1.1737 (Previous Session Low), a break below could drag it lower 1.1717 (Dec 12. Low).
USD/JPY: The dollar gained, reversing some of its previous session losses as the Republican-controlled U.S. Congress appeared all but certain to pass tax legislation this week after two Senate Republican holdouts agreed on Monday to support a tax overhaul. The major was trading 0.1 percent up at 112.62, having hit a low of 112.03 on Friday, its lowest since Dec. 6. FxWirePro's Hourly Yen Strength Index stood at -19.69 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. housing starts, building permits and current account figures for further momentum. Immediate resistance is located at 112.85 (10-DMA), a break above targets 113.33 (Nov. 16). On the downside, support is seen at 112.21 (Dec.7 Low), a break below could take it near 111.73.
GBP/USD: Sterling steadied after rebounding from a 2-week low in the previous session, as the European Union agreed on Friday to move Brexit talks on to trade and a transition pact. The major traded flat at 1.3383, having hit a low of 1.3301 on Friday; it’s lowest since Nov. 28. FxWirePro's Hourly Sterling Strength Index stood at -12.16 (Neutral) by 0400 GMT. Investors’ focus will remain the U.S. fundamental drivers amid lack of economic data from the UK docket. Immediate resistance is located at 1.3428, a break above could take it near 1.3465. On the downside, support is seen at 1.3301 (Dec. 15 Low), a break below targets 1.3278 (Nov. 24 Low). Against the euro, the pound was trading 0.1 percent down at 88.13 pence, having hit a low of 88.59 pence on Friday, it’s lowest since Dec. 5.
AUD/USD: The Australian dollar extended previous session gains as the minutes from the Reserve Bank of Australia's December meeting showed policymakers expressed greater confidence about the economic outlook. The Aussie trades 0.1 percent up at 0.7669, having hit a high of 0.7694 on Friday; it’s highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 159.71 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7627 (Dec. 14 Low), a break below targets 0.7593 (Nov. 27 Low). On the upside, resistance is located at 0.7695, a break above could take it near 0.7730.
NZD/USD: The New Zealand dollar rose as expectations for a strong dairy auction later in the day outweighed surveys showing subdued confidence in the economy. The Kiwi trades 0.1 percent up at 0.7002, having touched a high of 0.7033 on Friday, its highest level since Oct. 20. FxWirePro's Hourly Kiwi Strength Index was at 39.34 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7040, a break above could take it near 0.7085. On the downside, support is seen at 0.6978, a break below could drag it lower 0.6931 (Dec. 13 Low).
Equities Recap
Asian shares rallied after a record-setting session on Wall Street, while the greenback eased on concerns about what U.S. tax reform bill's effect on growth would be.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
Tokyo's Nikkei eased 0.1 percent to 22,872.31 points, Australia's S&P/ASX 200 index gained 0.6 percent to 6,071.80 points and South Korea's KOSPI fell 0.2 percent to 2,476.92 points.
Shanghai composite index rose 0.6 percent to 3,288.09 points, while CSI300 index was trading 0.9 percent up at 4,022.54 points.
Hong Kong’s Hang Seng was trading 0.8 percent higher at 29,306.64 points. Taiwan shares shed 0.4 percent to 10,467.34 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, as the Forties pipeline outage in the North Sea and voluntary production restraint led by OPEC supported prices, however, rising output in the United States capped the upside. International benchmark Brent crude was trading 0.1 percent up at $63.48 per barrel by 0420 GMT, having hit a high of $65.80 last week, its highest since Jul. 2015. U.S. West Texas Intermediate was trading 0.1 percent higher at $57.33 a barrel, after rising as high as $58.53 last week, its highest since Dec. 1.
Gold prices were little changed amid a steady dollar with investors monitoring the progress of the U.S. tax reform bill. Spot gold was trading flat at $1,262.48 an ounce at 0427 GMT after touching its highest since Dec. 7 at $1,263.85 on Monday. U.S. gold futures were down 0.1 percent at $1,264.4 an ounce.
Treasuries Reap
The 10-year U.S Treasury yield stood at 2.396 percent higher by 0.004 bps, while 5-year yield was 0.005 bps up at 2.172 percent.
The Japanese government bonds traded nearly as investors remain remained sidelined in any major deal ahead of the last Bank of Japan’s monetary policy meeting of 2017. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.041 percent, the yield on new long-term 40-year remained steady 0.962 percent and the yield on short-term 2-year stood flat at -0.148 percent.
The Australian government bonds slumped following December Reserve Bank of Australia meeting minutes which displayed confidence in unemployment and inflation going forward. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 2 basis points to 2.563 percent, the yield on the long-term 30-year note surged 2 basis points to 3.284 percent and the yield on short-term 2-year climbed over 2 basis points to 1.939 percent.
The New Zealand government bonds closed mixed as investors wait to watch the country’s GlobalDairyTrade price auction, scheduled to be held later today and the third-quarter gross domestic product (GDP) data, due on December 20 at 21:45GMT for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.73 percent, the yield on the 20-year note rose 1-1/2 basis points to 3.28 percent and the yield on short-term 2-year ended 1-1/2 basis points lower at 1.93 percent.
The Canadian government bond prices were lower across the yield curve, with the two-year down 4 Canadian cents to yield 1.572 percent and the 10-year falling 20 Canadian cents to yield 1.86 percent.
