Market Roundup
- BoJ trims long/super-long JGB buys by Y10 bln to Y190 bln.
- November real wages +0.1% y/y, up for first time in 11 months.
- Total cash earnings +0.9% y/y, overtime +2.6%, special payments +7.5%.
- North, South Korea begin talks as Winter Olympics help break ice
- UK retailers report the biggest fall in non-food spending since 2009
- UK firms hire permanent staff at fastest rate in 4 months - recruiters
- Fed's Bostic says three rate hikes in 2018 may be too much
- Australia's home building boom gets new burst of energy
- Australia job advertisements fall 2.3 pct in Dec-ANZ
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov Industrial Output MM, forecast 1.8%, -1.4% last
- (0200 ET/0700 GMT) Germany Nov Exports MM SA, forecast 1.2%, -0.4% last
- (0200 ET/0700 GMT) Germany Nov Imports MM SA, forecast 0.8%, 1.8% last
- (0200 ET/0700 GMT) Germany Nov Trade Balance, EUR, SA, forecast 20.9 bln, 19.9 bln last
- (0245 ET/0745 GMT) France Nov Trade Balance, EUR, SA, forecast -4.70 bln, -4.96 bln last
- (0400 ET/0900 GMT) Italy Nov Unemployment Rate, forecast 11.0%, 11.1% last
- (0500 ET/1000 GMT) EZ Nov Unemployment Rate, forecast 8.7%, 8.8% last
Key Events Ahead
- N/A The European Commission holds a conference, with speakers including EU Commission head Jean-Claude Juncker, German Foreign Affairs Minister Sigmar Gabriel, Italian Finance Minister Pier-Carlo Padoan, German Secretary for Finances Jens Spahn and the chairman of eurozone finance ministers Mario Centeno in Brussels (Final Day).
- (1000 ET/1500 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a moderated question-and-answer session hosted by Cargill in Wayzata, Minnesota
FX Beat
DXY: The dollar index eased after rising to a 1-week peak in the previous session, as U.S. inflation remained subdued despite very tight labour market conditions. The greenback against a basket of currencies traded 0.1 percent down at 92.28, having touched a low of 91.75 last week its lowest since Sept. 20. FxWirePro's Hourly Dollar Strength Index stood at 5.15 (Neutral) by 0500 GMT.
EUR/USD: The euro steadied after falling to an over 1-week low in the previous session, as the dollar weakened across the board amid subdued Treasury yields and mixed comments from Fed officials. The European currency traded flat at 1.1968, having touched a high of 1.2088 on Thursday, its highest since Sept. 8. FxWirePro's Hourly Euro Strength Index stood at -82.04 (Slightly Bearish) by 0400 GMT. Investors’ attention will remain on Eurozone non-monetary policy's ECB meeting and the unemployment rate, ahead of U.S. housing starts, JOLTS job openings, and FOMC member Kashkari's speech. Immediate resistance is located at 1.2027 (5-DMA), a break above targets 1.2130. On the downside, support is seen at 1.1936 (Dec 29 Low), a break below could drag it lower 1.1900.
USD/JPY: The dollar slumped against the Japanese yen following the report that the Bank of Japan reduced its daily JGBs purchases to JPY 190 bln of 10 - 25 Year JGBs compared to 200bn yen last. The major was trading 0.4 percent down at 112.18, having hit a high of 113.38 the day before, its highest since Dec. 22. FxWirePro's Hourly Yen Strength Index stood at -36.67 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. housing starts, JOLTS job openings, and FOMC member Kashkari's speech for further momentum. Immediate resistance is located at 113.38 (Jan. 8 High), a break above targets 113.75 (Dec. 12). On the downside, support is seen at 112.50, a break below could take it near 112.03 (Dec. 15 LOw).
GBP/USD: Sterling rose, extending gains for the fourth consecutive session, after Prime Minister Theresa May named Immigration Minister Brandon Lewis the new chairman of her Conservative Party while pro-Brexit MP James Cleverly was confirmed as the new deputy chairman. The major traded 0.1 percent up at 1.3571, having hit a high of 1.3612 last week; it’s highest since Sept. 20. FxWirePro's Hourly Sterling Strength Index stood at 1.36 (Neutral) by 0400 GMT. Investors’ focus will remain U.S. fundamental drivers, amid lack of economic data from the UK docket. Immediate resistance is located at 1.3590, a break above could take it near 1.3640. On the downside, support is seen at 1.3500 (10-DMA), a break below targets 1.3450. Against the euro, the pound was trading flat at 88.19 pence, having hit a high of 88.14 pence earlier, it’s highest since Dec. 19.
AUD/USD: The Australian dollar steadied after easing for continuous two sessions after data showed approvals to build new homes surged 11.7 percent in November to a 15-month peak. The Aussie trades 0.2 percent up at 0.7855, having hit a high of 0.7874 on Friday; it’s highest since Oct. 20. FxWirePro's Hourly Aussie Strength Index stood at 101.36 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7814 (Jan 4 Low), a break below targets 0.7765 (Dec. 28 Low). On the upside, resistance is located at 0.7880, a break above could take it near 0.7940.
NZD/USD: The New Zealand dollar rallied to a fresh three-month top as the U.S. dollar ran into a sudden bout of selling. The Kiwi trades 0.1 percent up at 0.7181, having touched a high of 0.7196, its highest level since Oct. 17. FxWirePro's Hourly Kiwi Strength Index was at 3.48 (Neutral) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7200, a break above could take it near 0.7240. On the downside, support is seen at 0.7138 (5-DMA), a break below could drag it lower 0.7107 (10-DMA).
Equities Recap
Asian shares hovered towards record highs after the S&P 500 extended its winning streak, while the greenback eased after Atlanta Fed President Raphael Bostic stated that the Fed may only need to raise interest rates two times in 2018 given weak price pressures.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.
Tokyo's Nikkei gained 0.5 percent to 23,839.10 points, Australia's S&P/ASX 200 index advanced 0.1 percent to 6,135.80 points and South Korea's KOSPI eased 0.2 percent to 2,509.11 points.
Shanghai composite index rose 0.1 percent to 3,412.07 points, while CSI300 index was trading 0.5 percent up at 4,179.16 points.
Hong Kong’s Hang Seng was trading 0.3 percent higher at 30,972.78 points. Taiwan shares shed 0.2 percent to 10,895.67 points.
Commodities Recap
Crude oil prices rose to their highest since 2015 again as speculators bet on further price rises amid OPEC-led production cuts and a drop in American drilling activity. International benchmark Brent crude was trading 0.4 percent up at $68.17 per barrel by 0411 GMT, having hit a high of $68.25 on Thursday, its highest since May 2015. U.S. West Texas Intermediate was trading 0.5 percent higher at $62.19 a barrel, after rising as high as $62.53 earlier, its highest since May 2015.
Gold prices edged down amid expectations for more U.S. interest rate hikes this year. Spot gold was 0.1 down percent at $1,319.01 an ounce by 0413 GMT, having touched its highest since Sept. 15 at $1,325.79 on Thursday. U.S. gold futures were mostly unchanged at $1,320 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.487 percent higher by 0.005 bps, while 5-year yield was 0.005 bps up at 2.292 percent.
The Japanese bonds edged lower after Bank of Japan cuts its purchases of long-term bonds in its today open market operation. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 0.069 percent, the yield on new long-term 40-year also climbed 2 basis points to 0.997 percent and the yield on short-term 2-year up 1/2 basis point at -0.133 percent.
The Australian government bonds slumped following upbeat building approvals data. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.650 percent, the yield on the long-term 30-year note jumped 2 basis points to 3.346 percent and the yield on short-term 2-year climbed 3 basis points to 2.019 percent.
The Canadian government bond prices were mostly lower across the yield curve, with the two-year down 1.5 Canadian cents to yield 1.784 percent and the 10-year off 4 Canadian cents to yield 2.159 percent. The 30-year issue was up 5 Canadian cents to yield 2.356 percent.
