Market Roundup
- UK in deadlock over Brexit 'Plan B' as May and Corbyn tussle
- U.S. Treasury Secretary Mnuchin weighs lifting tariffs on China -WSJ
- U.S. Treasury says China trade talks 'nowhere near completion'
- China trims 2017 GDP growth rate just before 2018 pace unveiled
- Trump cancels U.S. delegation to Davos forum - press secretary
- Trump blocks Pelosi trip as tensions mount over U.S. govt shutdown
- N.Korea envoy in U.S. for talks with Pompeo, possibly Trump
- Former Trump lawyer reconsidering plan to testify to Congress -adviser
- Japan Dec CPI, Core Nationwide YY, 0.7%, 0.8% f'cast, 0.9% prev
- Japan Dec CPI, Overall Nationwide 0.3%, 0.8% prev
- U.S. fund investors put most cash in 'junk' since late 2016 -Lipper
- U.S. muni bond funds post $945.9 mln in inflows-Lipper
- Foreign CB US debt holdings +$7.635 bln to $3.403 tln Jan 16 week
- Treasuries +$5.490 bln to $3.027 tln, agencies +$758 mln to $307.909 bln
Economic Data Ahead
- (0430 ET/0930 GMT) Great Britain Dec Retail Sales, -0.8% m/m, 3.6% y/y f'cast, 1.4%, 3.6% prev
- (0430 ET/0930 GMT) Great Britain Dec Retail sales Ex Fuel, -0.6% m/m, 3.9% y/y f'cast; 1.2%, 3.8% prev
Key Events Ahead
- (0600 ET/1100 GMT) ECB's Sabine Lautenschlager at Risk Management & Supervisory Conference organized by Banking & Payments Federation Ireland in Dublin.
- (0905 ET/1405 GMT) Fed's John Williams speaks on the U.S. economic outlook and monetary policy before the New Jersey Bankers Association Economic Leadership Forum in Somerset, New Jersey
- (0915 ET/1415 GMT) Federal Reserve issues industrial production for December in Washington D.C.
- (1100 ET/1600 GMT) Fed's Patrick Harker speaks on "Business, Equity and the Future of Philadelphia" before event, "The Prosperity Symposium: Economic Mobility Research in Action" in Philadelphia, Pennsylvania
FX Beat
DXY: The dollar index surged, extending gains for the fourth straight session after U.S. Treasury yields rose amid improvement in risk appetite in the broader markets. The greenback against a basket of currencies trades 0.05 at 96.10, having touched a high of 96.26 on Thursday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 8.70 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied near a 2-week low touched in the previous session, as the European Central Bank is expected to wait until the fourth quarter to raise its deposit rate. The European currency traded flat at 1.1388, having touched a low of 1.1370 on Thursday, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at -35.48 (Neutral) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies and EZ current account, ahead of the U.S. industrial production, capacity utilization and FOMC Member William's speech. Immediate resistance is located at 1.1442 (December 10 High), a break above targets 1.1500 (November 7 High). On the downside, support is seen at 1.1356 (December 21 Low), a break below could drag it till 1.1325 (Jan. 2 Low).
USD/JPY: The dollar rallied to an over 2-week peak, as growing optimism of progress in U.S.-China trade talks supported broader appetite for risk. Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the next round of trade talks aimed at resolving the trade dispute. The major was trading 0.1 percent up at 109.38, having hit a high of 109.43, its highest since Jan 2. FxWirePro's Hourly Yen Strength Index stood at -118.43 (Highly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S.industrial production, capacity utilization and FOMC Member William's speech. Immediate resistance is located at 109.68 (Jan. 2 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 108.44 (Jan. 8 Low), a break below could take it lower at 108.02 (Jan. 7 Low).
GBP/USD: Sterling slightly edged lower after rising to a 2-month peak in the previous session, as Britain's Prime Minister Theresa May repeatedly rejected a second referendum. Markets believe the risks of a hard no-deal Brexit have receded considerably despite the headlines. The major traded 0.1 percent down at 1.2977, having hit a high of 1.3000 on Thursday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 164.90 (Highly Bullish) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3030 (November 15 High), a break above could take it near 1.3107 (November 6 High). On the downside, support is seen at 1.2936 (October 23 Low), a break below targets 1.2879 (November 14 Low). Against the euro, the pound was trading flat at 87.73 pence, having hit a high of 87.63 on Thursday, it’s highest since November 15.
AUD/USD: The Australian dollar consolidated within narrow ranges, as a report of progress in the U.S.-China trade dispute buoyed risk sentiment. The Aussie trades flat at 0.7189, having hit a low of 0.7146 on Thursday; it’s lowest since January 9. FxWirePro's Hourly Aussie Strength Index stood at 94.15 (Slightly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7116 (January 8 Low), a break below targets 0.7085 (December 20 Low). On the upside, resistance is located at 0.7246 (December 13 High), a break above could take it near 0.7273 (December 6 High).
NZD/USD: The New Zealand dollar held firm near a 1-week low, on expectations that key inflation data due next week will prove soft enough to fuel speculation of a cut in interest rates. The Kiwi trades flat at 0.6763, having touched a low of 0.6728 on Thursday, its lowest level January 9. FxWirePro's Hourly Kiwi Strength Index was at -31.07 (Neutral) by 0500 GMT. Immediate resistance is located at 0.6809 (Jan.9 High), a break above could take it near 0.6862 (Nov.14 High. On the downside, support is seen at 0.6726 (Jan. 7 Low), a break below could drag it below 0.6707 (Jan. 8 Low).
Equities Recap
Asian shares surged, as a report of progress in U.S.-China trade talks stirred hopes of a deal in their tariff dispute.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.7 percent.
Tokyo's Nikkei rose 1.3 percent to 20,665.95 points, Australia's S&P/ASX 200 index climbed 0.5 percent to 5,879.60 points and South Korea's KOSPI surged 0.7 percent to 2,121.94 points.
Shanghai composite index gained 1.4 percent to 2,595.72 points, while CSI300 index traded 1.8 percent up at 3,166.63 points.
Hong Kong’s Hang Seng traded 1.3 percent higher at 27,078.27 points. Taiwan shares added 0.5 percent to 9,836.06 points.
Commodities Recap
Crude oil prices rose by 1 percent after a report from the Organization of the Petroleum Exporting Countries (OPEC) showed its production fell sharply in December, easing fears about prolonged oversupply. International benchmark Brent crude was trading 1.0 percent up at $61.80 per barrel by 0525 GMT, having hit a high of $61.81, its highest since January 11. U.S. West Texas Intermediate was trading 0.9 percent higher at $52.66 a barrel, after rising as high as $52.75, its highest since the January 11.
Gold prices steadied amid uncertainty around the partial U.S. government shutdown. Spot gold was firm at $1,293.34 per ounce, having touched a high of $1,298.42 earlier in the month, its highest level since June 15. U.S. gold futures were firm at $1,291.60 per ounce.
Treasuries Recap
The Japanese government bonds remained narrowly mixed after the country’s national consumer price inflation (CPI) data for the month of December disappointed market sentiments and industrial production for November improved from that in the previous month. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 1 basis point to 0.010 percent, the yield on the long-term 30-year note hovered around 0.700 percent while the yield on short-term 2-year slumped 17 basis points to -0.169 percent.
The Australian government bonds slumped across the curve during Asian trading session as better-than-expected U.S. economic data and progress in U.S.-China trade talks helped investors to move from safe-haven buying. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 3 basis points to 2.315 percent, the yield on the long-term 30-year bond climbed 2 basis points to 2.849 percent and the yield on short-term 2-year up 2-1/2 basis points to 1.891 percent.
The Canadian government bond prices were mixed across a steeper yield curve, with the two-year up 1 Canadian cent to yield 1.914 percent, and the 10-year falling 3 Canadian cents to yield 1.999 percent. The gap between Canada's 2-year yield and its U.S. equivalent widened by 3.5 basis points to a spread of 66.2 basis points in favor of the U.S. bond.
