Market Roundup
- BOJ's Kuroda sounds more positive on prices, yen hits 4-month high
- BOJ Gov Kuroda – Will maintain QQE with YCC for as long as needed
- Imperative 2% CPI target achieved, won’t hesitate to ease more if needed
- Dec money supply M2 +3.6% y/y, M3 +3.1%, broadest liquidity +3.5%
- Softbank plans US$18 bln IPO of mobile phone unit – Nikkei
- China sets yuan midpoint at strongest in over 1-1/2 years
- China c. bank injects 398 bln yuan via MLF, citing tight liquidity
- S. Korea and N. Korea to hold working-level talks on Jan. 15
- Berlin and Paris step up push for eurozone reform deal
- Singapore c.bank head hopes cryptocurrency tech will survive "crash"
Economic Data Ahead
No major economic events scheduled
Key Events Ahead
- (1315 ET/1815 GMT) BoE’s Silvana Tenreyro speaks on "The Fall in Productivity Growth: Causes and Implications" at the 2018 Peston Lecture at Queen Mary University
FX Beat
DXY: The dollar index tumbled to a 3-year low, dragged down by monetary policy convergence and unimpressive U.S. fundamentals amid holiday-thinned light trading. The greenback against a basket of currencies traded 0.1 percent down at 90.77, having touched a low of 90.62 earlier, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -147.75 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose above the 1.2200 handle, hitting its highest since December 2014 on expectations that European Central Bank policymakers were gearing up to further trim their monetary stimulus. The European currency traded 0.2 percent up at 1.2230, having touched a high of 1.2239 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 140.21 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on the Eurozone trade balance, amid lack of economic data from the U.S. docket. Immediate resistance is located at 1.2250, a break above targets 1.2280. On the downside, support is seen at 1.2173 (78.6% retracement of 1.1916 and 1.2242), a break below could drag it lower 1.2119 (61.8% retracement).
USD/JPY: The dollar slumped to 4-month lows as the Bank of Japan trimmed long-term bond purchases ahead of January 23rd's meeting. The major was trading 0.3 percent down at 110.64, having hit a low of 110.57 earlier, its lowest since Dec. 28. FxWirePro's Hourly Yen Strength Index stood at -15.02 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 111.24 (23.6% retracement of 110.57 and 113.38), a break above targets 111.65 (38.2% retracement). On the downside, support is seen at 110.57 (Session Low), a break below could take it near 110.00.
GBP/USD: Sterling rallied to its highest levels above the 1.3700 handle since the Brexit vote, on a report that the Netherlands and Spain were open to a deal for Britain to remain as close as possible to the European Union. Sterling traded 0.1 percent up at 1.3744, having hit a high of 1.3754 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 59.27 (Bullish) by 0500 GMT. Investors’ focus will remain on the U.S. fundamental drivers, amid lack of economic data from the UK docket. Immediate resistance is located at 1.3760, a break above could take it near 1.3800. On the downside, support is seen at 1.3690 (78.6% retracement of 1.3458 and 1.3757), a break below targets 1.3641 (61.8% retracement). Against the euro, the pound was trading 0.1 percent up at 88.92 pence, having hit a low of 89.29 pence the session before, it’s lowest since Nov. 28.
AUD/USD: The Australian dollar advanced to a near 4 -month high as its U.S. counterpart suffered broad-based selling while optimism over global growth underpinned commodity prices. The Aussie trades 0.5 percent up at 0.7954, having hit a high of 0.7960 earlier; it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at 96.70 (Slightly Bullish) by 0500 GMT. Immediate support is seen at 0.7930, a break below targets 0.7903. On the upside, resistance is located at 0.7960 (Session High), a break above could take it near 0.8000.
NZD/USD: The New Zealand dollar rose to a near 4-month top, as the U.S. dollar remained weighed down by monetary policy convergence. The Kiwi trades 0.3 percent up at 0.7271, having touched a high of 0.7282, its highest level since Sept. 25. FxWirePro's Hourly Kiwi Strength Index was at 2.54 (Neutral) by 0500 GMT. Immediate resistance is located at 0.7300, a break above could take it near 0.7340. On the downside, support is seen at 0.7209 (5-DMA), a break below could drag it lower 0.71567 (10-DMA).
Equities Recap
Asian shares hit record highs after Wall Street extended its record-breaking run, while the greenback continued to slump as investors priced in the risk of tighter policies elsewhere in the developed world.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent.
Tokyo's Nikkei rose 0.3 percent to 23,720.25 points, Australia's S&P/ASX 200 index rallied 0.1 percent to 6,077.10 points and South Korea's KOSPI surged 0.3 percent to 2,502.04 points.
Shanghai composite index declined 0.2 percent to 3,423.74 points, while CSI300 index was trading 0.5 percent up at 4,244.04 points.
Hong Kong’s Hang Seng was trading 0.8 percent higher at 31,656.07 points. Taiwan shares added 0.7 percent to 10,956.31 points.
Commodities Recap
Crude oil prices steadied just below December 2014 highs, supported by ongoing output cuts led by OPEC and Russia despite a rise in U.S. and Canadian drilling activity. International benchmark Brent crude was trading 0.1 percent up at $69.90 per barrel by 0504 GMT, having hit a high of $70.01 on Thursday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.1 percent up at $64.50 a barrel, after rising as high as $64.75 on Thursday, its highest since Dec. 2014.
Gold prices rallied to its highest in 4-months, boosted by a weaker U.S. dollar, which slumped to three-year lows against a basket of currencies. Spot gold was up 0.3 percent at $1,342.20 an ounce by 0507 GMT, after touching its strongest since Sept. 11 at $1,342.78. U.S. gold futures were up 0.4 percent at $1,340.80 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.549 percent, while 5-year yield was at 2.346 percent.
The Japanese government bonds traded narrowly mixed after Bank of Japan Governor Haruhiko Kuroda reiterated the central bank will continue to keep its yield curve control (YCC) unchanged near zero until 2 percent inflation is achieved. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.078 percent, the yield on the long-term new 40-year note dipped nearly 1 basis point to 0.995 percent and the yield on short-term 2-year remained flat at -0.132 percent.
The Australian government bonds traded mixed as investors remain sidelined in any major trading activity amid a silent session that witnessed no data of major economic importance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.748 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.432 percent and the yield on short-term 2-year up 2 basis points to 2.062 percent.
