Market Roundup
- China Caixin/Markit Dec Services PMI rises to 53.9 (vs Nov 51.9), highest since Aug 2014
- Japan Dec Final Manufacturing PMI 54.0, highest since Feb 2014 (vs flash 54.2, Nov final 53.6)
- Fed policymakers see future rate rises guided by inflation, fiscal stimulus
- U.S. factory, construction data brighten economic outlook
- Americans should worry about Kim's mental fitness, not Trump's - White House
- Iran deploys Revolutionary Guards to quell "sedition" in protest hotbeds
- Parties optimistic as matchmaker Merkel plans SPD coalition re-run
- S .Korea cenbank chief says will respond if "herd behavior" seen in fx market
Economic Data Ahead
- (0200 ET/0700 GMT) Great Britain Dec Nationwide House Price MM, forecast 0.2%, 0.1% last
- (0200 ET/0700 GMT) Great Britain Dec Nationwide House Price YY, forecast 2.0%, 2.5% last
- (0315 ET/0815 GMT) Spain Dec Services PMI, forecast 54.8, 54.4 last
- (0345 ET/0845 GMT) Italy Dec Markit/ADACI Svcs PMI, forecast 54.7, 54.7 last
- (0350 ET/0850 GMT) France Dec Markit Svcs PMI, forecast 59.4, 59.4 last
- (0350 ET/0850 GMT) France Dec Markit Comp PMI, forecast 60.0, 60.0 last
- (0355 ET/0855 GMT) Germany Dec Markit Svcs PMI, forecast 55.8, 55.8 last
- (0355 ET/0855 GMT) Germany Dec Markit Comp PMI, forecast 58.7, 58.7 last
- (0400 ET/0900 GMT) EZ Dec Markit Svcs PMI, forecast 56.5, 56.5 last
- (0400 ET/0900 GMT) EZ Dec Markit Comp PMI, forecast 58.0, 58.0 last
- (0430 ET/0930 GMT) Great Britain Dec Markit/CIPS Svcs PMI, forecast 53.8, 53.8 last
- (0430 ET/0930 GMT) Great Britain Nov BOE Consumer Credit, forecast 1.500 bln, 1.451 bln last
Key Events Ahead
- (1330 ET/1830 GMT) U.S. Fed's James Bullard gives presentation on the U.S. economy and monetary policy in Philadelphia
FX Beat
DXY: The dollar index extended the previous day's bounce, underpinned by stronger US factories data and hawkish FOMC minutes. The greenback against a basket of currencies traded 0.1 percent up at 92.20, having touched a low of 91.75 on Tuesday, its lowest since Sept. 20. FxWirePro's Hourly Dollar Strength Index stood at -37.23 (Neutral) by 0500 GMT.
EUR/USD: The euro consolidated within a narrow range above the 1.2000 handle as markets awaited the European Central Bank's policy minutes due next week for fresh insights on the policy outlook this year. The European currency traded flat at 1.2016, having touched a high of 1.2081 on Tuesday, its highest since Sept. 8. FxWirePro's Hourly Euro Strength Index stood at 62.88 (Bullish) by 0500 GMT. Investors’ attention will remain on Eurozone Markit services and composite PMI, ahead of U.S. ADP employment change, unemployment benefits claims and non-manufacturing PMI. Immediate resistance is located at 1.2034, a break above targets 1.2092. On the downside, support is seen at 1.1992, a break below could drag it lower 1.1938 (10-DMA).
USD/JPY: The dollar rose, extending previous session gains, boosted by stronger than expected U.S. manufacturing PMI data and supportive minutes from the Federal's Reserve's latest policy meeting. The major was trading 0.1 percent up at 112.66, having hit a low of 112.05 on Tuesday, its lowest since Dec. 15. FxWirePro's Hourly Yen Strength Index stood at -72.90 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S.ADP employment change, unemployment benefits claims and non-manufacturing PMI for further momentum. Immediate resistance is located at 112.94 (10-DMA), a break above targets 113.33 (Nov. 16). On the downside, support is seen at 112.17 (Previous Session Low), a break below could take it near 111.73.
GBP/USD: Sterling steadied after declining from a three-month high above 1.3600 touched in the previous session, as a survey showed growth in Britain's construction sector slowed last month. The major traded flat at 1.3518, having hit a high of 1.3612 in the previous session; it’s highest since Sept. 20. FxWirePro's Hourly Sterling Strength Index stood at -53.34 (Bearish) by 0500 GMT. Investors’ focus will remain the UK service PMI and consumer credit data, ahead of U.S. fundamental drivers. Immediate resistance is located at 1.3544, a break above could take it near 1.3600. On the downside, support is seen at 1.3471 (50% retracement of 1.3309 and 1.3612, a break below targets 1.3415 (21-DMA). Against the euro, the pound was trading down at 88.91 pence, having hit a high of 88.48 pence on Wednesday, it’s highest since Dec. 22.
AUD/USD: The Australian dollar rallied, extending gains for the thirteenth consecutive session after data showed the Caixin China Services PMI rose to 53.9 in December from a previous reading of 51.9 and surpassing expectations of 51.8. The Aussie trades 0.1 percent up at 0.7839, having hit a high of 0.7884 on Wednesday; it’s highest since Oct. 20. FxWirePro's Hourly Aussie Strength Index stood at 121.64 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7805 (Previous Session Low), a break below targets 0.7765 (Dec. 28 Low). On the upside, resistance is located at 0.7850, a break above could take it near 0.7900.
NZD/USD: The New Zealand dollar rose above the 0.7100 handle after declining for two straight sessions, supported by China’s Caixin December services PMI release and with oil prices hitting a more-than-two-year peak. The Kiwi trades 0.2 percent up at 0.7104, having touched a high of 0.7130 on Tuesday, its highest level since Oct. 19. FxWirePro's Hourly Kiwi Strength Index was at 75.78 (Slightly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7130, a break above could take it near 0.7171. On the downside, support is seen at 0.7062 (10-DMA), a break below could drag it lower 0.7028.
Equities Recap
Asian shares steadied near 10-year highs as robust economic data from the United States and Germany reinforced investors' optimism, while the dollar gained following upbeat U.S. manufacturing PMI and hawkish minutes from the Federal's Reserve's latest policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan was almost flat.
Tokyo's Nikkei gained 3.03 percent to 23,455.51 points, Australia's S&P/ASX 200 index advanced 0.1 percent to 6,077.10 points and South Korea's KOSPI eased 0.5 percent to 2,474.10 points.
Shanghai composite index rose 0.4 percent to 3,382.78 points, while CSI300 index was trading 0.3 percent up at 4,122.84 points.
Hong Kong’s Hang Seng was trading 0.5 percent higher at 30,699.74 points. Taiwan shares added 0.2 percent to 10,823.79 points.
Commodities Recap
Crude oil prices rose, hitting its highest levels last seen in mid-2015, with markets tightening amid tensions in Iran and due to ongoing OPEC-led production cuts. International benchmark Brent crude was trading 0.2 percent up at $68.10 per barrel by 0446 GMT, having hit a high of $68.13 earlier, its highest since May 2015. U.S. West Texas Intermediate was trading 0.3 percent higher at $62.08 a barrel, after rising as high as $62.11 on Tuesday, its highest since May 2015.
Gold prices declined after rising to a 3-1/2-month high the session before, weighed down as investors took profits and as the U.S. dollar firmed. Spot gold was down 0.4 percent at $1,308.09 an ounce at 0453 GMT, after touching its highest since Sept. 15 at $1,321.39 on Wednesday. U.S. gold futures dropped 0.8 percent to $1,307.80 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.367 percent higher by 0.012 bps, while 5-year yield was 0.014 bps up at 2.170 percent.
The Australian government bonds gained as FOMC December meeting minutes showed that stubbornly weak inflation could slow the pace of interest rate hikes in 2018. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 3 basis points to 2.664 percent, the yield on the long-term 30-year note dipped 4 basis points to 3.362 percent and the yield on short-term 2-year down 2 basis point to 1.973 percent.
The New Zealand government bonds rallied at the time of closing on continuing signal from a subdued dairy supply outlook despite an improvement in the global dairy prices at the country’s latest GlobalDairyTrade Price auction held lately. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.80 percent, the yield on 20-year slumped 2-1/2 basis points to 3.28 percent and the yield on short-term 2-year ended 2 basis points lower at 1.94 percent.
