Market Roundup
- EUR/USD 0.28%, USD/JPY -0.31%, GBP/USD 0.44%, EUR/GBP -0.16%
- DXY -0.26%, DAX -0.31%, FTSE 0.28%, Brent 0.44%, Gold 0.12%
- EZ Money-M3 Annual Growth Nov, 4.9%, 4.9% forecast, 5.0% previous
- EZ Loans to Households Nov, 2.8%, 2.7% previous
- EZ Loans to Non-Fin Nov, 3.1%, 2.9% previous
- DE SN State CPI YY Dec, 1.7%, 2.0% previous
- DE BY State CPI YY Dec, 1.7%, 1.8% previous
- DE HE State CPI YY Dec, 1.7%, 2.0% previous
- DE NW State CPI YY Dec, 1.5%, 1.8% previous
- IT Producer Prices YY Nov, 2.5%, 2.0% previous
- China Dec factory growth seen slowing only slightly despite smog war
- China central bank promises to maintain 'prudent and neutral' policy
- US oil prices hit highest since mid-2015 on surprise output drop
- Gold heading for best year since 2010
Economic Data Ahead
- (0900 ET/1300 GMT) DE CPI Prelim YY (Dec) (1.5% forecast, 1.8% previous)
- (0900 ET/1300 GMT) DE HICP Prelim YY (Dec) (1.4% forecast, 1.8% previous)
- (1300 ET/1700 GMT) US Baker-Hughes Weekly Oil Rig Count (previous 747; unchanged w/w, +224 y/y)
Key Events Ahead
- (1400 ET/1800 GMT) SIFMA recommends early close
FX Beat
DXY: The dollar index on track to end the year down more than 9 percent, its worst showing since 2003. DXY is trading extremely weak after breaking major support 93. The index declined sharply till 92.31 and at the time of writing was trading around 92.38.
EUR/USD: The common currency showed little immediate reaction to Italy's announcement that it will hold an election on March 4. The euro was steady at $1.1947 and in close reach of a one-month high of $1.1959 hit the previous day. It has gained 0.3 percent in December. The pair is facing trend line resistance at 1.19615 (Nov 27th 2017 high) and any break above that level will take the pair to next level to 1.200/1.2090. On the lower side, any break below 1.1900 (20- 4H MA) will drag the pair to next level till 1.1850 (50 –4H MA)/1.1800/1.1730. Any minor weakness can be seen only below 1.1700.
USD/JPY: The dollar was 0.29 percent lower at 112.53 yen. The pair is on track to lose 3.5 percent in 2017. The major has breached 50-DMA support at 112.97 on Thursday's trade. Cautious sentiment around European equities should continue to underpin the Japanese Yen's safe-haven appeal, capping any recovery amid pre-holiday thin trading. Technical studies for the pair hint further downside. Stochs and RSI are biased lower. Next major support lies at 112.25 (trendline) ahead of 38.2% Fibo at 111.90. On the flipside retrace and close above 50-DMA could invalidate bearish bias.
GBP/USD: Cable spikes to 1.35 handle as USD selling continues unabated. GBP/USD has broken major resistance at 1.3500 and jumped till 1.35125 at the time of writing. It is currently trading around 1.34549. The near term resistance is around 1.3550 and any break above will take the pair to next level till 1.3600/1.3655. Bullish continuation only above 1.3550. On the lower side, near term support is around 1.3390 (100- 4H MA) and any break below will drag the pair to next level till 1.3350/1.330/1.3220. Short term bullish invalidation only below 1.30280.
USD/CHF: USD/ CHF extended slump for 3rd consecutive session, down 0.31 percent on the day at around 1115 GMT. The pair is showing a huge sell-off after making a minor top around 0.99154. The pair breaks minor support of 0.9800 and declined 0.97508. It is currently trading around 0.98548. On the higher side, near term resistance is around 0.9800 and any break above will take the pair to next level till 0.9865/0.9900/0.9970 (Dec 8th 2017 high)/1.000. It should break above 1.0040 for short term bullishness. The near term support is around 0.9705 and any violation below that level will drag the pair to next level till 0.9635/0.9600.
AUD/USD: The Aussie was headed for a 3 percent monthly gain, lifted by a rise in the prices of commodities like iron ore and copper. The pair trades with a strong bullish momentum which keeps scope for further upside. AUD/USD closed above 100-DMA at 0.7778 on Thursday's trade. We see weakness only on retrace below. Next major bull target lies at 0.7862 200W SMA. Violation there eyes 61.8% Fib retracement at 0.7886. On the downside, 100-DMA at 0.7778 is strong support and we see weakness till 200-DMA at 0.7694 on break below.
Equities Recap
European indices edged lower in early trade on Friday, but remain on track to close 2017 on a positive note. The pan-European STOXX 600 index was flat in percentage terms on the day.
At around 1045 GMT, Britain's FTSE was up 0.28 percent at 7,644.02 points; France's CAC 40 was trading at 5,332.70, down 0.13 percent; Germany's DAX was down 0.28 percent at 12,944.14 points.
Spain's IBEX 35 was down 0.27 percent at 10,065.50 points, while Italy's FTSE MIB was down 0.57 percent at 21,995.22 points.
Commodities Recap
WTI spikes above $60 per barrel on surprise output drop. U.S. oil prices hit their highest since mid-2015. U.S. West Texas Intermediate (WTI) crude futures were at $60.21 a barrel at 0806 GMT, up 37 cents or 0.6 percent from their last close. Brent crude futures were up 45 cents or 0.7 percent to $66.61 a barrel.
The dollar weakness has been a boon for commodities. Copper was a stand-out performer in part due to expectations of rising demand for the mass production of electric vehicle. Copper prices near a four-year peak on Friday at $7,284 a tonne. It is up more than 30 percent this year and on course for its largest annual rise since 2009.
Gold prices hit one-month highs on Friday. Spot gold was up 0.1 percent at $1,295.45 an ounce at 0735 GMT, having hit its highest since Nov. 29 at $1,296.26. U.S. gold futures were steady at $1,297.50 an ounce.
Spot silver fell 0.2 percent to $16.83, spot palladium rose 0.2 percent to $1,067.58 an ounce, while spot platinum rose 0.3 percent to $926.
Treasuries Recap
U.S.: The U.S. Treasuries traded flat Friday amid a silent trading session that witnessed data of least economic significance. The yield on the benchmark 10-year Treasuries slipped nearly 1 basis point to 2.42 percent, the super-long 30-year bond yields hovered around 2.75 percent while the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 1.89 percent.
UK: The UK gilts edged lower Friday as investors remained sidelined in any major trading activity ahead of the long weekend over New Year holidays. Also, the UK markets will witness early close today at 12:30GMT. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.20 percent, the super-long 30-year bond yields climbed nearly 1 basis point to 1.78 percent and the yield on the short-term 2-year too traded 1 basis point higher at 0.44 percent.
EUR: The German bunds sunk on the last trading day of the year as investors remain keen to watch the country’s consumer price-led inflation index (CPI) for the month of December, scheduled to be released today by 13:00GMT ahead of a long-standing New Year holiday. The German 10-year bond yields, which move inversely to its price, rose 1 basis point to 0.43 percent, the yield on 30-year note jumped nearly 1-1/2 basis points to 1.25 percent and the yield on short-term 2-year traded nearly 1 basis point higher at -0.60 percent.
JGBs: Japanese government bonds traded narrowly mixed on Friday as investors remain side-lined in any major trading activity amid a silent session that witnessed no data of major economic significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, remained flat at 0.053 percent, the yield on long-term 30-year also fell nearly 1/2 basis point to 0.812 percent and the yield on short-term 2-year hovered around -0.135 percent.
AUS: Australian government bonds gained on the last trading day of 2017 as investors cover previous short positions. Also, the stock market opened lower on Friday amid muted trading that marked the last week of the year following the highs of the past few months. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis point to 2.663 percent, the yield on the long-term 30-year note dipped 2 basis points to 3.373 percent and the yield on short-term 2-year slid 4 basis points to 1.987 percent.
