Market Roundup
- China Central bank pledges cash support for banks before Lunar New Year.
- China funds cut equity exposure to over 1-year low, boost bonds.
- China targets trust industry next year in fight against shadow banking.
- Brexit spurs near doubling of UK domestic deal-making.
- Trump says China's stance on N. Korea influences his trade policy.
- Trump says Russia probe will be fair, but timeline unclear.
- New York governor says new U.S. tax code may be unconstitutional.
- Italy to vote on March 4, with hung parliament feared.
- U.S. stock funds attract most cash since 2014 –Lipper.
- Foreign CB US debt holdings -10,658 bln to $3.361 trln Dec 27 week .
- Treasuries -9,690 bln to $3.02 trln, agencies -840 mln to +$262.76 bln.
Economic Data Ahead
- (0400 ET/0900 GMT) Euro zone Nov Money-M3 Annual Growth, forecast 4.9%, 5.0% last.
- (0800 ET/1300 GMT) Germany December CPI Prelim mm, forecast 0.5%, 0.3% last.
- (0800 ET/1300 GMT) Germany December CPI Prelim yy, forecast 1.5%, 1.8% last.
- (0800 ET/1300 GMT) Germany December HICP Prelim mm, forecast 0.6%, 0.3% last.
- (0800 ET/1300 GMT) Germany December HICP Prelim yy, forecast 1.4%, 1.8% last
Key Events Ahead
- N/A ECB Board Member Sabine Lautenschlager, European Banking Authority Chief Andrea Enria and Basel Committee Chair Stefan Ingves speak about new banking rules – Frankfurt.
- N/A ECB to release monthly data on lending and money supply – Frankfurt.
FX Recap
USD: The dollar index against a basket of six major currencies was unchanged at 92.602 after slipping 0.4 percent overnight to 92.573; it’s lowest since November 27. The index was on track to lose 0.5 percent this month. The dollar index will likely end the year down more than 9 percent, its worst showing since 2003 and poll showed it is expected to lose a bit more ground against other major currencies next year.
EUR/USD: The euro was steady at $1.1947 and in close reach of a one-month high of $1.1959 scaled the previous day. It has gained 0.3 percent in December. The euro has risen 13.5 percent this year, its strongest annual gain since 2003. It was lifted by factors including relief over the French elections and expectations for the ECB to normalize monetary policy while taking in stride political developments in Germany and Spain.
USD/JPY: The yen rises gradually against U.S. dollar and currently trading around 112.70 mark. It made intraday high at 112.96 and low at 112.68 levels. A sustained close above 113.34 is required to take the parity higher towards key resistances around 113.75, 114.17, 115.37 and 117.42 marks. Alternatively, a daily close below 113.34 will drag the parity down towards key supports around 112.51, 111.45, 109.23, 108.12 and 107.50 marks respectively. It had slipped to a nine-day low of 112.660 overnight, having gone as high as 113.750 on Dec. 12. It was headed to lose 3.5 percent against its Japanese peer in 2017.
GBP/USD: The pound trades higher and was currently trading around $1.3463 mark against the U.S. dollar. Against the euro the pound trades almost flat at 0.8876 mark. Intraday bias remains bullish till the time pair holds key support at $1.3395 mark. Immediate resistance was seen at $1.3465 and $1.3520 mark respectively.
AUD/USD: The Australian dollar was on track for a third straight week of gains on Friday, and its best annual performance in seven years, as optimism for global growth and strong commodity prices helped offset its shrinking yield advantage. The Australian dollar was taking in the view at $0.7802, having touched a 10-week top of $0.7810 overnight. That left the commodity currency with gains of more than 8 percent for the year, its best showing since 2010.
NZD/USD: New Zealand dollar edged up to $0.7098 having also reached a 10-week peak overnight. The kiwi was 2.3 percent firmer for the year, a relatively solid performance given it had to weather a bout of political uncertainty when the country's long-serving conservative government lost power.
Equities Recap
Shanghai composite index to open flat at 3,295.25 points and China's CSI300 index to open up 0.1 pct at 4,022.88 points.
Japan’s Nikkei was trading 0.05 pct higher at 22,784.55 points.
Australia’s S&P/ASX200 was trading 0.31 pct lower at 6,069.55 points.
Hong Kong’s hang seng was trading 0.28 pct higher at 29,946.44 points.
Taiwan stock was trading around 0.58 pct higher at 10,628.87 points.
India’s NSE Nifty was trading around 0.40 percent higher at 10,520.95 points and BSE Sensex was trading at 0.43 percent higher 33,991.28 points.
Commodities Recap
U.S. crude oil futures rise to $60.08/barrel, highest level since June 2015, on fall in output. U.S. West Texas Intermediate (WTI) crude futures rose 20 cents to $59.84 a barrel. Brent crude futures settled up 28 cents at $66.72 a barrel. This week, WTI broke above $60 a barrel for the first time since June 2015, while Brent breached $67 for the first time since May 2015.
Gold prices inched up on Friday to one-month highs and were on track for their best year since 2010, driven higher over the past 12 months mainly by a weaker dollar and safe-haven buying prompted by global political uncertainties. Spot gold was up 0.1 percent at $1,295.36 an ounce at 0310 GMT, having hit its highest since Nov. 29 at $1,296.26. U.S. gold futures were steady at $1,297.80 an ounce.
Treasuries Recap
Australian government bond futures inched ahead for a third session. The three-year bond contract added 3 ticks to 97.835, while the 10-year contract rose 1 tick to 97.3150.
10-year U.S. treasury yield at 2.432 percent, unchanged from U.S. close on Thursday.
