Market Roundup
EUR/USD 0.34%, USD/JPY -0.42%, GBP/USD 0.33%, EUR/GBP 0.05%
DXY -0.29%, DAX -0.17%, FTSE -0.03%, Brent 0.14%, Gold 0.38%
GB UK Finance Mortgage Approvals Nov, 39.507k, 40.488k prev
Japan's factories, retailers rev up as some c.bankers call for debate on rates
China temporarily exempts foreign firms from taxes for reinvested profits
Oil near mid-2015 highs on strong China data, tighter 2018 outlook
Gold hits 1-month high as dollar weakens further
Economic Data Ahead
(0830 ET/1230 GMT) US Initial Jobless Claims (w/e Dec 23) (mkt 240k, prev 245k)
(0830 ET/1230 GMT) US Continued Claims (w/e Dec 16) (mkt 1.900 mn, prev 1.932 mn)
(0830 ET/1230 GMT) Advance International Goods Trade Balance (Nov) (prev -$68.3 bn, prev advance -$68.1 bn)
(0830 ET/1230 GMT) Advance Wholesale Inventories (Nov) (prev -0.5% m/m, prev advance -0.4% m/m)
(0830 ET/1230 GMT) Advance Retail Inventories (Nov) (prev 0.0% m/m, prev advance -0.1% m/m)
(1100 ET/1500 GMT) EIA Weekly Petroleum Status Report
Key Events Ahead
No events scheduled for the day
FX Beat
DXY: The Dollar Index extended overnight slide after breaking below major trend line support 93 levels. The index declined till 92.64 and was at the time of writing trading around 92.75. Technically any daily close below trend line support of 93 confirm minor weakness and a decline till 92/91.02 is possible.
EUR/USD: EUR/USD was up 0.33% on the day, holding on to gains near 1-month tops. Euro supported after the release of ECB's economic bulletin for December. The pair is facing trend line resistance at 1.19615 (Nov 27 th 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 1.1838 (50- 4H MA) will drag the pair to next level till 1.1800 (200 – 4H EMA)/1.1755/1.1700. Any minor weakness can be seen only below 1.1700.
USD/JPY: USD/JPY slumps on broad-based US dollar weakness. The major has broken down from its narrow trading range. The pair broke below 113 handle to hit weekly lows at 112.66. Price action has broken below 50-DMA support at 112.97. Technical studies support further downside in the pair. Next major support lies at 111.90 (nearly converged 100-DMA and 38.2% Fib retrace of 107.318 to 114.737 rally). We see major trendline resistance at 113.50, bearish invalidation only on break above. Focus now on U.S. initial weekly jobless claims, along with goods trade balance data and Chicago PMI, for further impetus during the early NA session.
GBP/USD: Cable extends the break above 1.3400. GBP/USD advances further towards the midpoint of the 1.34 handle as persistent broad-based US dollar weakness continues to lend support. The major has broken minor trend line resistance at 1.3400 and jumped till 1.34567. On the lower side, near term support is around 1.3340 (200- 4H MA) and any break below will drag the pair to next level till 1.330/1.3220/1.3175. Short term bullish invalidation only below 1.30280. The near term resistance is around 1.34654 (Dec 14 th 2017 high) and any break above will take the pair to next level till 1.3520/1.3550. Bullish continuation only above 1.3550.
USD/CHF: Huge sell-off seen in USD/CHF sell-off after making a minor top around 0.99154. The pair breaks minor support of 0.9838 and declined 0.97977. It is currently trading around 0.98025. US dollar was trading slightly lower against all majors after weak set of economic data released yesterday. Near term resistance is around 0.9877 and any break above will take the pair to next level till 0.99345/0.9977 (Dec 8 th 2017 high)/1.000. It should break above 1.0040 for short term bullishness. The near term support is around 0.9800 and any violation below that level will drag the pair to next level till 0.9735/0.9704.
AUD/USD: Commodity currencies buoyed by strong gains in the commodity space. AUD/USD has broken above 100-DMA resistance at 0.7778 and hit 0.78 handle. Strong bullish momentum keeps scope for further upside in the pair. Immediate resistance now lies at 0.7813 (nearly converged cloud top and 50% Fib retracement of 0.81250 to 0.75012 fall). Break above 0.7813 resistance then eyes 61.8% Fib retracement at 0.7886. On the downside, 200-DMA at 0.7693 is strong support and we see bullish invalidation on retrace below.
NZD/USD: NZD/USD has shown a decisive breakout above major resistance at 0.7059 (converged 100 and 20 W SMA). Technical studies on weekly charts are bullish, Stochs have rolled over from oversold levels and RSI is biased higher. MACD is on verge of a bullish crossover on signal line which if completed adds to bullish bias. Next bull target lies at 200-DMA (0.7104), violation there could see further upside. The pair has hit fresh 2-month highs at 0.7094, breach at 200-DMA targets 0.72 levels. On the flipside, immediate support lies at 5-DMA at 0.7045, weakness likely on break below.
Equities Recap
European stocks set to close 2017 on a positive note, buoyed by buoyant company earnings and a brighter economic backdrop. Germany's DAX up 13.8%, Italy's benchmark up 15.4% while Britain's FTSE has managed to gain 6.7 percent for the year.
On the day, European indices stood as follows at around 1030 GMT: Britain's FTSE 100 index was largely unchanged at 7,619.54 points; France's CAC 40 was trading at 5,367.99, down 0.02 percent; Germany's DAX was down 0.08 percent at 13,059.26 points.
Spain's IBEX 35 was down 0.30 percent at 10,135.20 points, while Italy's FTSE MIB was down 0.03 percent at 22,193.97 points.
Commodities Recap
Gold prices hit 1-month high as U.S. dollar weakens across the board. Spot gold was up 0.4 percent at $1,292.20 an ounce at 0742 GMT, edging slightly lower from highs of $1,292.67. U.S. gold futures were up 0.3 percent at $1,295.30 an ounce.
Silver was 0.4 percent higher at $16.75, Palladium was up 0.5 percent at $1,065.50 an ounce and Platinum was up 0.5 percent at $921.10.
Oil prices buoyed by strong China data and tighter outlook for 2018. U.S. West Texas Intermediate (WTI) crude futures were at $59.82 a barrel at 0744 GMT, up 18 cents or 0.3 percent from their last settlement. Brent crude futures were at $66.68 a barrel, up 24 cents or 0.4 percent.
Treasuries Recap
U.S.: The U.S. Treasuries plummeted Thursday as investors wait to watch the 7-year auction, scheduled to be held today by 18:00GMT. Also, the country’s initial jobless claims, due today at 13:30GMT, will provide further direction to the debt market. The yield on the benchmark 10-year Treasuries jumped 2-1/2 basis points to 2.43 percent, the super-long 30-year bond yields surged nearly 3 basis points to 2.77 percent while the yield on the short-term 2-year traded nearly 1 basis point higher at 1.90 percent.
UK: The UK gilts plunged Thursday even as geopolitical concerns centred on North Korea amid receding expectations that U.S. interest rates would be raised quickly. The United States announced sanctions on two North Korean officials behind their country's ballistic missile program on Tuesday after the U.N. Security Council unanimously imposed new sanctions on North Korea last week. The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.20 percent, the super-long 30-year bond yields climbed 3 basis points to 1.78 percent and the yield on the short-term 2-year traded nearly 4 basis points higher at 0.45 percent.
EUR: The German bunds slumped Thursday after traders shifted their attention on Wednesday to major central banks whether they would trim bond purchases or start raising interest rates next year. Trading volumes were thin, as many traders and investors stayed away from the market after Monday's Christmas holiday and before next Monday's New Year's Day holiday. Also, investors look forward to the country’s consumer price-led inflation index (CPI) for the month of December, scheduled to be released on December 29 by 13:00GMT. The German 10-year bond yields, which move inversely to its price, jumped nearly 4 basis points to 0.41 percent, the yield on 30-year note surged close to 4-1/2 1 basis points to 1.24 percent and the yield on short-term 2-year traded nearly 5 basis points higher at -0.61 percent.
NZD: New Zealand government bonds jumped at close Thursday tracking overnight movement in U.S. Treasuries amid investors remaining side-lined in any major trading activity amid a silent session that witnessed hardly any data of major economic significance, following the year-end holiday season. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.75 percent, the yield on 20-year plunged 2 basis points to 3.30 percent and the yield on short-term 2-year too ended 2 basis points lower at 1.90 percent.
JGBs: Japanese government bonds slumped on Thursday following upbeat economic data, suggesting that the world’s third-largest economy is in good health. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.054 percent, the yield on new long-term 40-year traded flat at 0.981 percent and the yield on short-term 2-year climbed nearly 1/2 basis point to -0.135 percent.
AUS: Australian government bonds gained on Thursday in line with U.S. Treasuries, sending the benchmark 10-year yield over 4 basis points lower. The U.S. Treasuries pushed higher across the curve overnight during a relatively quiet session light on data of great significance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.678 percent, the yield on the long-term 30-year note dipped 4 basis points to 3.400 percent and the yield on short-term 2-year slid 1/2 basis point to 2.028 percent.
