Market Roundup
- U.S. Fed raises interest rates, signals more hikes ahead
- U.S. Senate OKs government funding through Feb. 8 to avert shutdown
- U.S. Congress to push stop-gap funding bill with no border wall money
- Japan's central bank sticks to economic recovery view despite rising global risks
- World Bank expects China's economic growth to slow to 6.2 pct in 2019
- China keeps short-term borrowing rates steady after Fed hike
- Australian jobs surpass forecasts in Nov, unemployment ticks up
- New Zealand's economic growth slides to 5-year low, stokes c.bank rate cut talk
- New Zealand Nov Trade Balance, -861.0M, -1,295.0M prev, -1317M r’vsd
Economic Data Ahead
- (0400 ET/0900 GMT) EZ Oct Current Account SA, EUR, 16.9B prev
- (0400 ET/0900 GMT) Italy Nov Producer Prices Y/Y, 5.8% prev
- (0430 ET/0930 GMT) Great Britain Nov Retail Sales Y/Y, 1.9% f'cast, 2.2% prev
- (0600 ET/1100 GMT) Great Britain Dec CBI Distributive Trades, 16 f'cast, 19 prev
- (0700 ET/1200 GMT) Great Britain Dec BOE Bank Rate, 0.75% prev
Key Events Ahead
- (0700 ET/1200 GMT) BoE publishes summary and minutes of the Monetary Policy Committee meeting in London
FX Beat
DXY: The dollar index edged lower after Federal Reserve Chairman Jerome Powell in a press conference suggested that the expected two hikes for 2019 weren't set in tone. The greenback against a basket of currencies trades 0.1 percent down at 96.90, having touched a low of 96.55 the day before, its lowest since December 10. FxWirePro's Hourly Dollar Strength Index stood at -0.75 (Neutral) by 0500 GMT.
EUR/USD: The euro rose, extending gains for the fourth straight session, supported by news Italy had struck a deal with the European Commission over its contested 2019 budget. The European currency traded 0.1 percent up at 1.1386, having touched a high of 1.1439 on Wednesday, its highest since Dec. 10. FxWirePro's Hourly Euro Strength Index stood at 73.81 (Slightly Bullish) 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. unemployment benefit claims. Immediate resistance is located at 1.1412 (December 6 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 plunged, hovering towards a near 2-month low touched in the previous session, after the Federal Reserve hiked interest rates by 25 basis points, as expected, but forecast fewer rate increases next year than it had at its September policy meeting. The major was trading 0.2 percent down at 112.23, having hit a low of 112.09 on Wednesday, its lowest since October 29. FxWirePro's Hourly Yen Strength Index stood at 106.70 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims. 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 consolidated above the 1.2600 handle, amid prevalent concerns Britain is headed for a disorderly exit from the European Union. The major traded 0.2 percent up at 1.2636, having hit a high of 1.2705 on Tuesday; it’s highest since December 10. FxWirePro's Hourly Sterling Strength Index stood at 87.37 (Slightly Bullish) 0500 GMT. Investors’ attention will remain on the UK retail sales and Bank of England interest rate decision, 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 up at 90.09 pence, having hit a low of 90.87 last week, it’s lowest since August 29.
AUD/USD: The Australian dollar slumped to a 1-1/2 month low after domestic data showed the unemployment rate ticked higher as more people went looking for work. However, the downside was limited as a net 37,000 new jobs were created in November, up from a downwardly revised 28,600 the month before and surpassing forecasts of a 20,000 increase. The Aussie trades 0.2 percent down at 0.7090, having hit a low of 0.7086 earlier; it’s lowest since November 1. FxWirePro's Hourly Aussie Strength Index stood at -158.24 (Highly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7050 (October 29 Low), a break below targets 0.7021 (October 26 Low). On the upside, resistance is located at 0.7122 (October 30 High), a break above could take it near 0.7203 (December 18 High).
NZD/USD: The New Zealand dollar tumbled to an over 1-month low on data that showed the country's economic growth slumped to its lowest in almost five years in the third quarter, stoking concerns the RBNZ might take a more dovish monetary policy stance in 2019. The Kiwi trades 0.5 percent down at 0.6729, having touched a low of 0.6724 earlier, its lowest level Nov 13. FxWirePro's Hourly Kiwi Strength Index was at -140.25 (Highly Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6810 (November 27 High), a break above could take it near 0.6883 (November 16 High). On the downside, support is seen at 0.6705 (November 12 Low), a break below could drag it below 0.6645 (November 6 Low).
Equities Recap
Asian shares plunged after the U.S. Federal Reserve raised key overnight lending rate rates by 0.25 percent point, as expected, and sounded less dovish on future rate hikes than investors had initially anticipated.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 1.3 percent.
Tokyo's Nikkei declined 3.0 percent to 20,358.02 points, Australia's S&P/ASX 200 index eased 1.3 percent to 5,505.80 points and South Korea's KOSPI declined 1.1 percent to 2,055.91 points.
Shanghai composite index fell 0.7 percent to 2,531.84 points, while CSI300 index traded 0.9 percent down at 3,063.59 points.
Hong Kong’s Hang Seng traded 1.3 percent lower at 25,529.17 points. Taiwan shares shed 1.1 percent to 9,674.52 points.
Commodities Recap
Crude oil prices declined, reversing some of its previous session losses, amid worries about oversupply and the outlook for the global economy. International benchmark Brent crude was trading 0.6 percent up at $56.16 per barrel by 0503 GMT, having hit a low of $55.88 on Tuesday, its lowest since October 2017. U.S. West Texas Intermediate was trading 0.6 percent down at $47.05 a barrel, after falling as low as $45.77 on Tuesday, its lowest since early August 2017.
Gold prices surged after retreating from an over 5-month peak in the previous session, as the U.S. Federal Reserve did not deliver as dovish a statement as some investors had expected. Spot gold was 0.2 percent up at $1,244.77 per ounce by 0507 GMT, having touched a high of $1,257.52 on Wednesday, its highest level since July 11. U.S. gold futures declined 0.7 percent to $1,247.4 per ounce.
Treasuries Recap
The Japanese government bonds continued to trade mixed after the Bank of Japan (BoJ) kept its asset purchase programme unchanged at its monetary policy meeting concluded early today, while the Federal Reserve sounded more dovish than before at its last policy meeting of the year, also unveiled early today. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 3 basis points to 0.032 percent, the yield on the long-term 30-year note also plunged nearly 3 basis points to 0.728 percent and the yield on short-term 2-year traded 14-1/2 basis points lower at -0.144 percent.
The Australia 10-year bond yield hits an 18-month low as investors moved to safe-haven buying following surprise rise in November jobless rate. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 4 basis points to 2.350 percent, the yield on the long-term 30-year bond also dipped 5 basis points to 2.834 percent and the yield on short-term 2-year down 1 basis point to 1.949 percent.
The New Zealand's 10-year yield eased to 2.405 percent, the lowest since late 2016 and down 47 basis points in little more than a month.
The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 5 Canadian cents to yield 1.895 percent and the 10-year climbed 38 Canadian cents to yield 1.971 percent. The 10-year yield touched its lowest level since Dec. 20, 2017, at 1.949 percent.
