Market Roundup
- British government to activate full 'no-deal' Brexit preparations
- Bank of England needs "more cost-conscious culture" - watchdog
- UK economy to slip to 7th biggest in world in 2019 - PwC
- Italy strikes deal with EU commission over budget - ministry spokeswoman
- Judge excoriates Trump ex-adviser Flynn, delays Russia probe sentencing
- New Zealand current account deficit widens in Q3, largest gap in 9 years
- Japan Nov Exports Y/Y, 0.1%, 1.8% f'cast, 8.2% prev
- Japan Nov Imports Y/Y, 12.5%, 11.5% f'cast, 19.9% prev
- Japan Nov Trade Balance Total Yen, -737.3B, -600.3B f'cast, -449.3B prev
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov Producer Prices Y/Y, 3.2% f'cast, 3.3% prev
- (0430 ET/0930 GMT) Great Britain Nov Core CPI Y/Y, 1.8% f’cast, 1.9% prev
- (0430 ET/0930 GMT) Great Britain Nov CBI Trends – Orders, 6 f’cast, 10 prev
- (0430 ET/0930 GMT) Great Britain Nov CPI Y/Y, 2.3% f'cast, 2.4% prev
- (0430 ET/0930 GMT) Great Britain Nov RPI Y/Y, 3.2% f'cast, 3.3% prev
- (0430 ET/0930 GMT) Great Britain Nov PPI Input Prices Y/Y NSA, 4.6% f'cast, 10.0% prev
- (0430 ET/0930 GMT) Great Britain Nov PPI Ouput Prices Y/Y NSA, 2.9% f'cast, 3.3% prev
- (0500 ET/1000 GMT) EZ Oct Construction Output M/M, 2.04% prev
Key Events Ahead
- (1400 ET/1900 GMT) FOMC announces its decision on interest rates followed by a statement in Washington D.C.
FX Beat
DXY: The dollar index declined as investors curb their expectations for more Federal Reserve policy tightening in 2019 after an expected rate hike later in the day. The greenback against a basket of currencies trades 0.1 percent down at 96.90, having touched a low of 96.70 the day before, its lowest since December 10. FxWirePro's Hourly Dollar Strength Index stood at -62.53 (Bearish) by 0500 GMT.
EUR/USD: The euro rose, extending previous session gains after Italy stroked a deal with the European Commission over its contested 2019 budget. Rome has only received verbal assurances from Brussels, however, a deal is yet to be formalized until a meeting of EU commissioners on Wednesday, a source in Prime Minister Giuseppe Conte's office stated. The European currency traded 0.2 percent up at 1.1380, having touched a high of 1.1402 on Tuesday, its highest since Dec. 10. FxWirePro's Hourly Euro Strength Index stood at 18.76 (Neutral) by 0500 GMT. Investors’ attention will remain on German producer price index, and EZ construction output, ahead of the U.S. existing home sales and Fed interest rate decision. Immediate resistance is located at 1.1401 (November 29 High), a break above targets 1.1442 (December 10 High). On the downside, support is seen at 1.1318 (December 4 Low), a break below could drag it till 1.1267 (November 28 Low).
USD/JPY: The dollar slumped to a near 2-month low as investors speculated the Federal Reserve would slow the pace of U.S. monetary tightening in 2019. The major was trading 0.2 percent down at 112.32, having hit a low of 112.19 earlier, its lowest since October 29. FxWirePro's Hourly Yen Strength Index stood at 150.01 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. existing home sales and Fed interest rate decision. Immediate resistance is located at 113.01 (November 23 High), a break above targets 113.72 (November 30 High. On the downside, support is seen at 111.95 (October 23 Low), a break below could take it lower 111.62 (October 15 Low).
GBP/USD: Sterling rose, extending gains for the third straight session, amid growing expectations that Britain Prime Minister Theresa May can avoid a no-deal Brexit. However, concerns of a second referendum and a delay of parliamentary approval on PM May's Brexit deal limited upside. The major traded 0.2 percent up at 1.2656, having hit a high of 1.2705 on Tuesday; it’s highest since December 10. FxWirePro's Hourly Sterling Strength Index stood at -37.82 (Neutral) 0500 GMT. Investors’ attention will remain on the UK retail sales, producer price index and consumer price index, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2705 (Dec. 18 High), a break above could take it near 1.2754. On the downside, support is seen at 1.2560, a break below targets 1.2515. Against the euro, the pound was trading 0.1 percent down at 89.94 pence, having hit a low of 90.87 last week, it’s lowest since August 29.
AUD/USD: The Australian dollar steadied near the 0.7200 handle, as the greenback eased on speculation the Federal Reserve will hold off on raising rates any further after its policy meeting later in the day. The Aussie trades 0.2 percent up at 0.7194, having hit a low of 0.7151 on Friday; it’s lowest since November 1. FxWirePro's Hourly Aussie Strength Index stood at -10.09 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7141 (September 17 Low), a break below targets 0.7100. On the upside, resistance is located at 0.7212 (November 1 High), a break above could take it near 0.7268 (November 22 High).
NZD/USD: The New Zealand dollar rallied, despite data showing domestic current account deficit widened to its largest in nine years in the third quarter. The economy's annual deficit to September came in at NZ$10.539 billion, higher than the NZ$9.536 billion forecast, and equating to 3.6 percent of the gross domestic product. The Kiwi trades 0.3 percent up at 0.6865, having touched a low of 0.6777 on Friday, its lowest level Nov 27. FxWirePro's Hourly Kiwi Strength Index was at 65.43 (Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6900 (December 12 High), a break above could take it near 0.6944 (December 5 High). On the downside, support is seen at 0.6798 (November 16 Low), a break below could drag it below 0.6727 (November 9 Low).
Equities Recap
Asian shares nudged higher amid speculation the U.S. Federal Reserve might be done with tightening after its policy meeting later in the day.
MSCI's broadest index of Asia-Pacific shares outside Japan surged 0.4 percent.
Tokyo's Nikkei declined 0.6 percent to 20,987.92 points, Australia's S&P/ASX 200 index eased 0.2 percent to 5,580.60 points and South Korea's KOSPI rose 0.8 percent to 2,079.46 points.
Shanghai composite index fell 0.7 percent to 2,558.18 points, while CSI300 index traded 0.9 percent down at 3,099.77 points.
Hong Kong’s Hang Seng traded 0.05 percent higher at 25,822.27 points. Taiwan shares added 0.6 percent to 9,783.21 points.
Commodities Recap
Crude oil prices rebounded after falling to multi-month lows in the previous session on worries about oversupply and a slowing global economy. International benchmark Brent crude was trading 0.8 percent up at $56.43 per barrel by 0448 GMT, having hit a low of $55.88 on Tuesday, its lowest since October 2017. U.S. West Texas Intermediate was trading 0.2 percent up at $46.67 a barrel, after falling as low as $45.82 on Tuesday, its lowest since early August 2017.
Gold prices surged to a more than 5-month peak as investors’ cautiously awaited cues on the rate hike trajectory of the U.S. central bank from its two-day policy meeting. Spot gold was 0.2 percent up at $1,251.12 per ounce by 0456 GMT, having touched a high of $1,251.18 earlier, its highest level since July 11. U.S. gold futures were up 0.1 percent at $1,254.60 per ounce.
Treasuries Recap
The Japanese government bonds traded mixed after investors were disappointed by the worse-than-expected trade balance data for the month of November, released early today. The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose 3-1/2 basis points to 0.035 percent, the yield on the long-term 30-year note slipped 1 basis point to 0.750 percent and the yield on short-term 2-year plunged nearly 15 basis points to -0.147 percent.
The Australian government bonds were scarred by a fall in investors’ risk appetite as concerns over a slowdown in global economic growth groped market sentiments, pushing participants towards safe-haven buying. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 3-1/2 basis points to 2.384 percent, the yield on the long-term 30-year bond slumped 3-1/2 basis points to 2.880 percent and the yield on short-term 2-year down nearly 1-1/2 basis points to 1.944 percent.
The Canadian government bond prices were higher across the yield curve. The two-year rose 6.5 Canadian cents to yield 1.925 percent and the 10-year climbed 23 Canadian cents to yield 2.015 percent. The 10-year yield touched its lowest intraday since Dec. 28, 2017, at 2.007 percent.
