Market Roundup
- PBOC sets Yuan mid-point at 6.9307 / dollar vs last close 6.9306 vs 6.9526 set Wed- Reuters
- China Caixin Dec composite index (manufacturing and services) rises to 53.5, near four-year high- Reuters
- China Caixin Dec services PMI rises to 53.4 (vs Nov 53.1), highest since July 2015 -Reuters
- China to invest $360 bln in renewable power in 2016-2020- Reuters
Economic Data Ahead
- (0315 ET/0815 GMT) Switzerland CPI YY % Dec -0.3 previous
- (0315 ET/0815 GMT) Switzerland CPI MM % Dec -0.2
- (0400 ET/0900 GMT) Italy ISTAT Public Deficit/GDP % Q3 0.2
- (0430 ET/0930 GMT) Great Britain Markit/CIPS Service PMI Dec 55.2
- (0500 ET/1000 GMT) Eurozone Producer Prices YY % Nov -0.4
- (0500 ET/1000 GMT) Eurozone Producer Prices MM % Nov 0.8
Key Events Ahead
- (0430 ET/0930 GMT) Spain 13Y EI E0.750B 1.000% 30/11/30 0.25-0.75B Syndicated
- (0430 ET/0930 GMT) Spain 5Y E1.500B 0.750% 30/07/21 EUR3.0BN
- (0430 ET/0930 GMT) Spain 10Y E1.500B 1.300% 31/10/26 EUR4.0BN
- (0430 ET/0930 GMT) Spain 30Y E1.000B 2.900% 31/10/46 TOTAL
- (0450 ET/0950 GMT) France 10Y E4.000B 0.250% 25/11/26 EUR8.5BN
- (0450 ET/0950 GMT) France 20Y E3.000B 1.250% 25/05/36 EUR9.5BN
- (0450 ET/0950 GMT) France 28Y E1.500B 3.250% 25/05/45 TOTAL
- (0450 ET/0950 GMT) France 49Y E1.000B 1.750% 25/05/66
- (0530 ET/1030 GMT) UK 20Y 2.250B 1.750% 09/07/37 TAP
FX Beat
DXY: The dollar declined versus its major peers as investors locked in profits. The greenback against a basket of currencies traded 0.5 percent lower at 102.02, having touched a low of 101.86 earlier in the session, its lowest since Dec. 14. FxWirePro's Hourly Dollar Strength Index stood at -134.94 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose to a near 1-week high as the greenback drifted further away from a 14-year peak against a basket of currencies. The major climbed above the 1.0500 handle as the dollar eased on profit taking after rallying for nearly 2-months since Donald Trump won the U.S. presidential election. The European currency traded 0.3 percent up at 1.0520, having hit a high of 1.0540, its highest since Dec. 30. Investors’ attention now remains on Eurozone's producer price index, ahead of the U.S. ADP employment change data and unemployment benefit claim figures. FxWirePro's Hourly Euro Strength Index stood at 1.28 (Neutral) by 0400 GMT. Immediate resistance is located at 1.0550, a break above targets 1.0600. On the downside, support is seen at 1.0464 (10-DMA), a break below could drag it till 1.0400.
USD/JPY: The dollar declined as the fall in the Treasury yields and less hawkish FOMC minutes released late-Wednesday weighed on the greenback. The major slumped to a near 1-week low of 116.45, however, it trimmed some losses despite continued selling in the U.S. Treasury yields. The pair trades 0.6 percent lower at 116.46, hovering away from a high of 118.60 hit earlier in the week, its highest since Dec. 15. Markets focus now shifts towards the U.S. ADP employment change data, ISM non-manufacturing index and unemployment benefit claim releases for further momentum. FxWirePro's Hourly Yen Strength Index stood at 70.88 (Slightly Bullish) by 0400 GMT. Immediate resistance is located at 117.42 (Session High), a break above targets 118.00. On the downside, support is seen at 116.00, a break below could take it near 115.57.
GBP/USD: Sterling rose, extending gains above the 1.2300 handle, amid broad-based U.S. dollar selling and upbeat UK economic data releases. However, the upside remains capped as the uncertainty surrounding article 50 overshadowed better-than-expected the UK manufacturing PMI and construction PMI figures released earlier this week. Sterling trades 0.1 percent up at 1.2338, attempting to sustain gains above the 1.2300 level. FxWirePro's Hourly Sterling Strength Index stood at -89.74 (Slightly Bullish) by 0400 GMT. Markets attention will remain on the UK services PMI and Brexit related news flow, ahead of series of U.S. economic data. Immediate resistance is located at 1.2350, a break above could take it near 1.2400. On the downside, support is seen at 1.2281 (10-DMA), a break below targets 1.2200. Against the euro, the pound trades 0.3 percent down at 85.31 pence, having hit a near 1-week low of 85.43 earlier in the day.
AUD/USD: The Australian dollar rallied above the 0.7300 handle to hit a more than 2-week high as a fresh bout of profit-taking curbed the U.S. dollar. The bid tone around the major intensified following the release of upbeat Chinese services PMI, which rose to 53.4 in December versus previous 53.1 and it’s highest in 17-months. Moreover, dovish Fed minutes and better-than-expected AiG Performance of Services Index for the November provided a further boost to the pair. The Aussie trades 0.45 percent up at 0.7315, having hit an early high of 0.7320, its highest since Dec. 16. FxWirePro's Hourly Aussie Strength Index stood at 132.94 (Highly Bullish) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of series of U.S. macro fundamental drivers due later in the day. Immediate support is seen at 0.7249 (7-EMA), a break below could drag it till 0.7213 (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 near 3-week high above the 0.7000 handle, following the release of better-than-expected Chinese services PMI data. China’s services PMI came in at 53.4 against 53.3 estimates and higher from November’s 53.1 print. Moreover, weakness in the US dollar across the board kept the bid tone intact. The Kiwi trades 0.6 percent higher at 0.7007, having hit a high of 0.7010, its highest since Dec. 16. FxWirePro's Hourly Kiwi Strength Index was at 58.33 (Bullish) by 0500 GMT. The major will continue to be driven by overall market sentiment, ahead of the U.S. jobs data and service PMI figures. 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 0.6928 (10-DMA), a break below could drag it near 0.6900.
Equities Recap
Asian shares rose, extending gains for an eighth straight day, while the dollar declined from a 14-year peak against a basket of currencies as investors booked profits.
MSCI's broadest index of Asia-Pacific stocks outside Japan rose 0.6 percent in early trade.
Tokyo's Nikkei fell 0.37 percent to 19,520.69 points, Australia's S&P/ASX 200 index rose 0.32 percent to 5,755.00 points and South Korea's KOSPI was trading 0.11 percent down at 2,043.89 points.
Shanghai composite index rose 0.12 percent to 3,162.72 points, while CSI300 index was trading 0.04 percent lower at 3,367.57 points.
Hong Kong’s Hang Seng was trading 1.44 percent higher at 22,454.54 points. Taiwan shares added 0.8 percent to 9,358.14 points.
Commodities Recap
Crude oil prices declined, as markets doubted the producers would fully deliver planned output cut. International benchmark Brent crude was trading 0.4 percent lower at $56.24 per barrel by 0412 GMT, having touched a high of $58.35 on Tuesday, its strongest since July 2015. U.S. West Texas Intermediate crude fell 0.4 percent at $53.12 a barrel, after rising as high as $55.21 earlier in the week, its highest since July 2015.
Gold prices rose, hitting their highest in four weeks as the U.S. dollar eased from a 14-year peak with investors paring gains from its 2-month rally. Spot gold was up 1.12 percent at $1,175.83 an ounce by 0611 GMT, having touched its highest since Dec. 8 at $1,177.48. U.S. gold futures climbed 0.6 percent to $1,172.50 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4154 percent lower by 0.037 bps, while 5-year yield was down by 0.036 bps at 1.9108 percent.
The Australian government bonds rebounded as investors poured into safe-haven instruments amid firmness in the U.S. Treasuries. The yield on the benchmark 10-year Treasury note fell 4-1/2 basis points to 2.75 percent, the yield on 15-year note dipped nearly 5 basis points to 3.22 percent and the yield on short-term 2-year slid 3-1/2 basis points to 1.90 percent.
The New Zealand government bonds rallied following a revival in the global debt market post-FOMC December meeting minutes. In intraday trading, the yield on the benchmark 10-year bond fell 8 basis points to 3.25 percent, the yield on 7-year note dipped nearly 7 basis points to 2.87 percent and the yield on short-term 2-year note slid 4-1/2 basis points to 2.21 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 2 Canadian cents to yield 0.755 percent and the 10-year rising 26 Canadian cents to yield 1.711 percent.
