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Asia Roundup: Dollar gains against yen as Treasury yields resume rise, Kiwi eases on weaker dairy prices, Asian shares edge higher- Wednesday, January 4th, 2017

Market Roundup

  • Japan Dec manufacturing activity expands at fastest pace in a year- PMI - Reuters News
     
  • Japan final Dec manufacturing PMI 52.4 vs flash 51.9, Nov final 51.3
     
  • PBOC sets Yuan mid-point at 6.9526 / dollar highest since mid-May 08 vs 6.9498 Tues
     
  • Indonesia penalizes JPMorgan for negative report in latest emerging markets skirmish – Reuters
     
  • U.S. CFTC Chairman Massad tenders his resignation -statement - Reuters
     
  • Indonesia penalizes JPMorgan for negative report in latest emerging markets skirmish – Reuters
     
  • Trump says he will get intelligence briefing on Russia hacking on Friday - Reuters
     
  • Wall Street lawyer Jay Clayton emerges as Trump’s top SEC choice – Reuters
     
  • DXY holding 103.30 area in Asia after posting fresh Dec 2002 top of 103.82 o/n

Economic Data Ahead

  • (0345 ET/0845 GMT) Italy Markit/ADACI Services PMI Dec 53.30 previous
     
  • (0350 ET/0850 GMT) France Markit Comp PMI Dec 52.80
     
  • (0350 ET/0850 GMT) France Markit Services PMI Dec 52.60
     
  • (0355 ET/0855 GMT) Germany Markit Services PMI Dec 53.80
     
  • (0355 ET/0855 GMT) Germany Markit Comp Final PMI Dec 54.80
     
  • (0400 ET/0900 GMT) Eurozone Markit Services Final PMI Dec 53.10
     
  • (0400 ET/0900 GMT) Eurozone Markit Comp Final PMI Dec 53.90
     
  • (0430 ET/0930 GMT) Great Britain M4 Money Supply % Nov   1.10
     
  • (0430 ET/0930 GMT) Great Britain BOE Consumer Cr blnNov   1.62
     
  • (0430 ET/0930 GMT) Great Britain Markit/CIPS Cons PMI Dec 52.80
     
  • (0430 ET/0930 GMT) Great Britain Mortgage Approvals k Nov 67.52
     
  • (0430 ET/0930 GMT) Great Britain Mortgage Lending bln Nov   3.28
     
  • (0500 ET/1000 GMT) Eurozone Inflation, Flash YY% Dec   0.60
     
  • (0500 ET/1000 GMT) Norway Housing Prices YY% Dec 11.60
     
  • (0500 ET/1000 GMT) Eurozone Inflation Ex Food & Energy Dec   0.80
     

Key Events Ahead

  • No Significant Event Scheduled

FX Beat

DXY: The dollar stood firm versus its major peers after rising to multi-week highs in the previous session. The greenback against a basket of currencies traded 0.1 percent up at 103.32, having touched a 14-year high of 103.82 in the previous session. FxWirePro's Hourly Dollar Strength Index stood at 53.26 (Bullish) by 0500 GMT.

EUR/USD: The euro attempted a minor recovery after declining to a 14-year trough of 1.0340 in the previous session. The major weakened following the release of upbeat Institute for Supply Management (ISM) numbers, which showed U.S. factory activity rose to a 2-year high in December. The European currency traded flat at 1.0404, having hit an intra-day high of 1.0423. Investors’ attention now remain on series of Service PMI figures from the Eurozone economies and Euro areas’ preliminary consumer price index, ahead of the U.S. ADP employment change data and FOMC latest meeting minutes. FxWirePro's Hourly Euro Strength Index stood at -112.04 (Highly Bearish) by 0400 GMT. Immediate resistance is located at 1.0445 (9-EMA), a break above targets 1.0500. On the downside, support is seen at 1.0372 (Dec-28 Low), a break below could drag it till 1.0340 (14-year Low).

USD/JPY: The dollar rose, extending gains for the fourth consecutive session, as the 10-year treasury yield rose by nearly 2.4 basis points. On Tuesday, the major advanced to a 3-week high after data showed the U.S. ISM manufacturing PMI rose to 54.7 in December from 53.2 in November, beating expectations of 53.5 and recording the strongest level since December 2014. The pair trades 0.2 percent up at 117.98, having hit a high of 118.60 on the prior day, its highest since Dec. 15. Markets focus now shifts towards the U.S. ADP employment change data and FOMC latest policy meeting minutes for further cues on the major. FxWirePro's Hourly Yen Strength Index stood at -37.84 (Neutral) by 0400 GMT. Immediate resistance is located at 118.50, a break above targets 119.00. On the downside, support is seen at 117.50, a break below could take it near 116.99.

GBP/USD: Sterling slightly edged up, after slumping to a 2-month low in the previous session, amid stalled dollar buying and a better risk environment. On Tuesday, the major rose above the 1.2300 handle after a stronger UK manufacturing PMI, however, it slumped to a low of 1.2199 following the release of better-than-expected U.S. ISM manufacturing PMI data. Sterling trades up at 1.2240, attempting a minor recovery from 2-month lows. FxWirePro's Hourly Sterling Strength Index stood at 40.80 (Neutral) by 0400 GMT. Markets attention will remain on the UK construction PMI and consumer credit figures, ahead of Federal Reserve meeting minutes. Immediate resistance is located at 1.2270 (7-EMA), a break above could take it over 1.2300. On the downside, support is seen at 1.2199 (Oct 31 Low), a break below targets 1.2100. Against the euro, the pound trades up at 84.97 pence, having hit a 2-week high of 84.50 the prior day.

AUD/USD: The Australian dollar edged up, extending previous session gains, strengthened by tighter capital controls from China. Moreover, strong Chinese manufacturing PMI report released on Tuesday kept the bid tone around the major intact. The Aussie trades 0.3 percent up at 0.7237, hovering towards a high of 0.7246 hit last week and away from a 7-month trough of 0.7159 hit in the previous month. FxWirePro's Hourly Aussie Strength Index stood at 102.28 (Highly Bullish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. ADP employment report and FOMC meeting minutes due later in the day. Immediate support is seen at 0.7198 (10-DMA), a break below could drag it till 0.7160. On the upside, resistance is located at 0.7250, a break above targets 0.7294 (21-DMA).

NZD/USD: The New Zealand dollar extended its losing streak for a second straight session, as a fall in the New Zealand's Global Dairy Trade price index and board based U.S. dollar strength weighed on the major. The Global Dairy Price index fell 3.9 percent with an average selling price of $3,463 per tonne, after recording a drop of 0.5 percent at the previous sale. However, the index is still up about 44 percent year-on-year. The Kiwi trades 0.1 percent lower at 0.6910, attempting to sustain gains above the 0.6900 handle. FxWirePro's Hourly Kiwi Strength Index was at 14.38 (Neutral) by 0500 GMT. The pair will continue to digest GDT figures, ahead of Fed December meeting minutes. Immediate resistance is located at 0.6950, a break above could take it till 0.6992 (21-DMA). On the downside, support is seen at 0.6860, a break below could drag it near 0.6800.

Equities Recap

Asian shares gained, after series of upbeat global economic data boosted Wall Street, while the U.S. dollar hovered near 14-year peaks.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent.

Tokyo's Nikkei rallied 2.51 percent to 19,594.16 points, Australia's S&P/ASX 200 index fell 0.02 percent to 5,731.90 points and South Korea's KOSPI was trading 0.07 percent up at 2,045.33 points.

Shanghai composite index rose 0.55 percent to 3,153.68 points, while CSI300 index was trading 0.6 percent higher at 3,362.11 points.

Hong Kong’s Hang Seng was trading 0.09 percent down at 22,129.21 points. Taiwan shares rose 0.2 percent to 9,286.96 points.

Commodities Recap

Crude oil prices edged higher, after rising to more than 1 year high in the previous session, as major exporter Saudi Arabia is expected to raise prices for its crude as part of planned supply cuts, however, a strong dollar limited gains. International benchmark Brent crude was trading 0.4 percent higher at $55.84 per barrel by 0415 GMT, having hit a high of $58.35 on Tuesday, its highest since July 2015. U.S. West Texas Intermediate crude rose 0.4 percent at $52.69 a barrel, after rising as high as $55.21, its highest since July 2015.

Gold prices rose, after hitting a 3-week high in the previous session, as the U.S. dollar hovered near a 14-year peak against a basket of major currencies. Spot gold was trading 0.2 percent at $1,160.82 an ounce by 0419 GMT, after rising as high as $1,164.11 on Tuesday, the highest since Dec. 14. U.S. gold futures fell 0.2 percent to $1,160.10 per ounce.

Treasuries Recap

The 10-year U.S treasury yield stood at 2.4739 percent higher by 0.02 bps, while 5-year yield was up by 0.026 bps at 1.9735 percent.

The Australian government bonds slumped as investors moved away from safe-haven buying amid weakness in the U.S. Treasuries. The yield on the benchmark 10-year Treasury note rose 5 basis points to 2.80 percent, the yield on the 15-year note climbed 4-1/2 basis points to 3.26 percent and the yield on short-term 2-year bounced 3 basis points to 1.93 percent.

The New Zealand government bonds traded higher as dairy prices posted their largest fall over ten months at the first dairy auction of 2017. In intraday trading, the yield on the benchmark 10-year bond fell 3 basis points to 3.31 percent, the yield on 7-year note also dipped 3 basis points to 2.92 percent and the yield on short-term 2-year note slid 3 basis points to 2.23 percent.

Canadian government bond prices were lower across the yield curve, with the 2-year price down 3 Canadian cents to yield 0.763 percent and the benchmark 10-year falling 24 Canadian cents to yield 1.742 percent. In mid-December, the 10-year yield touched its highest in 17 months at 1.859 percent.

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