Market Roundup
- Japan Dec wholesale prices rise 3.1% yr/yr (vs Nov 3.6%, forecast 3.2%).
- Japan finmin: Don't see problem with dollar around 110.80 yen.
- Japan's Motegi: want to monitor impact of moves in FX, other markets.
- China lifts 63-day reverse repo rate in line with other maturities.
- China lifts yuan midpoint to highest in over 2 years.
- "Ample time" before next Bank of England rate move needed –Tenreyro.
- ECB could end bond buys in one go after Sept – Hansson.
- North Korea meeting to stress importance of sanctions – Canada.
- German establishment woos SPD activists to back coalition talks.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec CPI Final YY forecast 1.7%, 1.7% last
- (0200 ET/0700 GMT) Germany Dec HICP Final YY forecast 1.6%, 1.6% last
- (0430 ET/0930 GMT) UK Dec Core CPI YY forecast 2.6%, 2.7% last
- (0430 ET/0930 GMT) UK Dec CPI YY forecast 3.0%, 3.1% last
- (0430 ET/0930 GMT) UK Dec RPI YY forecast 3.9%, 3.9% last
- (0430 ET/0930 GMT) UK Dec PPI Input Prices YY NSA forecast 5.4%, 7.3% last
- (0430 ET/0930 GMT) UK Dec PPI Output Prices YY NSA forecast 2.9%, 3.0% last
- (0430 ET/0930 GMT) UK Dec PPI Core Output YY NSA forecast 2.3%, 2.2% last
- (0500 ET/1000 GMT) Italy Dec Consumer Prices Final YY forecast 0.9%, 0.9% last
- (0500 ET/1000 GMT) Italy Dec CPI (EU Norm) Final YY forecast 1.0%, 1.0% last
Key Events Ahead
- (0415 ET/0915 GMT) BoE's Sam Woods speaks at parliament treasury committee, London
- (1200 ET/1700 GMT) Swiss National Bank's Thomas Jordan speaks at Zurich Univ of Education, Zurich
FX Beat
DXY: The dollar index slightly edged up after tumbling to a 3-year low in the session before on increased expectations of higher global interests rates, indicating that the Fed is not the only central bank to move towards policy normalization this year. The greenback against a basket of currencies traded 0.05 percent up at 90.51, having touched a low of 90.28 on Monday, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -158.77 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro steadied after rising to a 3-year high in the previous session on the back of optimism about the euro zone's economic outlook and expectations for the European Central Bank to wind down its massive monetary stimulus. The European currency traded 0.1 percent up at 1.2266, having touched a high of 1.2296 on Monday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 74.72 (Bullish) by 0400 GMT. Investors’ attention will remain on series if data from the Eurozone economies, amid a lack of significant economic data from the U.S. docket. Immediate resistance is located at 1.2300, a break above targets 1.2340. On the downside, support is seen at 1.2216 (78.6% retracement of 1.1916 and 1.2269), a break below could drag it lower 1.2153 (61.8% retracement).
USD/JPY: The dollar rebounded after falling to a 4-month low in the prior session on the back of speculation that the Bank of Japan could edge away from its massive stimulus programme. The major was trading 0.05 percent up at 110.84, having hit a low of 110.32 on Monday, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at -21.34 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of New York Empire State Manufacturing Index. Immediate resistance is located at 111.05 (23.6% retracement of 110.32 and 113.38), a break above targets 111.49 (38.2% retracement). On the downside, support is seen at 110.32 (Previous Session Low), a break below could take it near 110.00.
GBP/USD: Sterling hovered just below a 1-1/2 year high hit in the previous session on expectations that other EU members would seek a relatively "soft" Brexit. The major traded 0.05 percent up at 1.3792, having hit a high of 1.3819 on Monday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 11.98 (Neutral) by 0500 GMT. Investors’ focus will remain on UK retail sales, producer price index and consumer price index figures, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3830, a break above could take it near 1.3870. On the downside, support is seen at 1.3744 (78.6% retracement of 1.3458 and 1.3819), a break below targets 1.3683 (61.8% retracement). Against the euro, the pound was trading 0.05 percent down at 88.93 pence, having hit a low of 89.29 pence on Friday, it’s lowest since Nov. 28.
AUD/USD: The Australia dollar held gains near 4-months highs after data showed new motor vehicle sales rose 4.5 percent in December, surpassing expectations of 0.1 percent, while on an annualized basis it grew to 6.7 percent, up from previous 2.1 percent. The Aussie trades 0.05 percent up at 0.7965, having hit a high of 0.7978 on Monday; it’s highest since Sept. 22. FxWirePro's Hourly Aussie Strength Index stood at 66.82 (Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7944 (78.6% retracement of 0.7807 and 0.7978), a break below targets 0.7915 (61.8% retracement). On the upside, resistance is located at 0.7990, a break above could take it near 0.8040.
NZD/USD: The New Zealand dollar eased below the 0.7300 handle after rising to a 3-1/2 month high in the prior session as speculators took profits on short U.S. dollar positions after several sessions of selling. The Kiwi trades 0.2 percent down at 0.7282, having touched a high of 0.7314 on Monday, its highest level since Sept. 25. FxWirePro's Hourly Kiwi Strength Index was at -18.92 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7320, a break above could take it near 0.7360. On the downside, support is seen at 0.7234 (5-DMA), a break below could drag it lower 0.7186 (10-DMA).
Equities Recap
Asian shares rose, reversing early session losses, while the euro stood near a 3-year peak on rising expectations that the European Central Bank could trim its monetary stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent.
Tokyo's Nikkei rose 1.04 percent to 23,960.50 points, Australia's S&P/ASX 200 index fell 0.5 percent to 6,048.60 points and South Korea's KOSPI surged 0.6 percent to 2,519.82 points.
Shanghai composite index rose 0.1 percent to 3,416.41 points, while CSI300 index was trading 0.3 percent up at 4,236.91 points.
Hong Kong’s Hang Seng was trading 1.05 percent higher at 31,669.39 points. Taiwan shares added 0.3 percent to 10,986.11 points.
Commodities Recap
Crude oil prices declined after rising to its highest levels since late December 2014 in the previous session on the back of production curbs in OPEC nations and Russia. International benchmark Brent crude was trading 0.3 percent up at $70.01 per barrel by 0438 GMT, having hit a high of $70.33 on Monday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.4 percent down at $64.52 a barrel, after rising as high as $64.86 on Monday, its highest since Dec. 2014.
Gold prices edged higher, hovering just below a four-month high touched in the previous session, supported by a weaker U.S. dollar languishing near three-year trough. Spot gold was up 0.1 percent at $1,341.30 an ounce by 0442 GMT, after touching its strongest since Sept. 11 at $1,344.47 on Monday. U.S. gold futures rose 0.5 percent to $1,341 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.542 percent lower by 0.009 bps, while 5-year yield was 0.001 bps down at 2.348 percent.
The Japanese government bonds traded nearly flat as investors remained 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, traded flat at 0.073 percent, the yield on the long-term new 40-year note dipped 1/2 basis point to 0.992 percent and the yield on short-term 2-year remained steady at -0.133 percent.
The Australian government bonds continued to hover near 4-month high as investors awaited the December employment report, which would allow the Reserve Bank of Australia (RBA) to decide on future interest rate path. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.7662 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.455 percent and the yield on short-term 2-year up 1 basis point to 2.074 percent.
The New Zealand government bonds closed narrowly mixed, following a disparate set of economic data released overnight. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.89 percent, the yield on 20-year climbed 2-1/2 basis points to 3.37 percent and the yield on short-term 2-year also ended 2-1/2 basis points higher at 2.00 percent.
The Canadian government bond prices were lower across much of the yield curve, with the two-year down 3 Canadian cents to yield 1.775 percent and the 10-year falling 10 Canadian cents to yield 2.188 percent.
