Market Roundup
- EUR/USD -0.29%, USD/JPY -0.04%, GBP/USD -0.08%, EUR/GBP -0.24%
- DXY 0.19%, DAX 0.36%, FTSE -0.04%, Brent 0.24%, Gold -0.27%
- Britain's open to foreign investment, trade minister Fox tells China
- UK trade minister: Too soon to seek membership of Trans-Pacific trade deal
- Germany Unemployment Change SA Dec, -29k, -12k forecast, -18k previous
- Germany Unemployment Total NSA Dec, 2.385M, 2.411M forecast, 2.368M previous
- Germany Unemployment Rate SA Dec, 5.5%, 5.6% forecast, 5.6% previous
- Germany Unemployment Total SA Dec, 2.442M, 2.476M previous
- Germany BB State CPI YY Dec, 1.5%, 1.6% previous
- UK Markit/CIPS Cons PMI Dec, 52.2, 52.5 forecast, 53.1 previous
- Oil dips away from mid-2015 highs as higher output looms
- Gold hits 3-1/2-month highs before dipping on dollar recovery
Economic Data Ahead
- (0955 ET/1355 GMT) Redbook Same-Store Sales Index (weekly) (prev +5.7% y/y)
- (1045 ET/1445 GMT) ISM-New York Business Conditions Index (Dec) (prev 58.1)
- (1100 ET/1500 GMT) ISM Manufacturing PMI (Dec) (mkt 58.1, prev 58.2)
- (1100 ET/1500 GMT) Construction Spending (Nov) (mkt +0.5% m/m, prev +1.4% m/m)
- N/A Light Vehicle Sales (Dec) (mkt 17.50 mn SAAR, prev 17.48 mn SAAR)
- N/A Domestic Car Sales (Dec) (mkt 4.65 mn SAAR, prev 4.70 mn SAAR)
- N/A Domestic Light Truck Sales (Dec) (mkt 9.07 mn SAAR, prev 9.05 mn SAAR)
Key Events Ahead
- (1245 ET/1645 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.38 bn)
- (1500 ET/1900 GMT) FOMC Minutes (of the December 12-13 meeting)
- N/A Atlanta Fed GDPNow model forecast for real GDP (Q4) (prev +2.8% q/q AR)
FX Beat
DXY: DXY shown a minor recovery from the low of 91.75 made yesterday. The index jumped till 92.11 at the time of writing and is currently trading around 92.07. Technically any break below 91.75 confirm bearish continuation and a decline till 91.02 likely.
EUR/USD: EUR/USD has shown a minor sell-off till 1.20265 from highs of 1.20813 hit yesterday. The market awaits major releases US ISM and Fed minutes meeting today for further direction. Technically, near term is around 1.1999 (20- 4H MA) and any break below will drag the pair down till 1.1970 (4H Kijun-Sen)/1.1930 (55- 4H EMA).Minor weakness can be seen only below 1.1800. On the higher side, near term resistance is around 1.20920 and any break below will take the pair till 1.2112 (161.8% fib)/1.21850/1.2297 (138.2% fib).
USD/JPY: USD/JPY downside held above 112 handle overnight, is currently trading at 112.27 levels. The pair has formed a Doji pattern on daily charts, recovery lacks traction, upside capped below 5-DMA. Immediate support seen at 100-DMA at 112.02, break below will accentuate weakness. Violation at 100-DMA raises scope for test of 200-DMA at 111.65. Focus now on FOMC meeting minutes and the keenly watched NFP data due this week for further impetus.
GBP/USD: Cable trades slightly weaker, retraces from 1.36 handle after weaker UK data. Weak UK construction PMI print added to disappointment from Tuesday's softer manufacturing sector activity data. The pair hit low of 1.3858 and is currently trading around 1.35906. Near term support is around 1.3490 (10- 4H MA) and any break below will drag the pair to next level till 1.3445 (4H Kijun-Sen)/1.3360 (200- 4H EMA)/1.3300. Short term bullish invalidation only below 1.30280. 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.
USD/CHF: USD/CHF has recovered slightly form the low of 0.96997. The pair breaks minor trend line resistance at 0.9730 and jumped till 0.97549 at the time of writing. It is currently trading around 0.97565. Markets await US Fed minutes meeting and ISM manufacturing for further trend continuation. 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 8 th 2017 high)/1.000. It should break above 1.0040 for short term bullishness. The near term support is around 0.9705 and any close below that level will drag the pair to next level till 0.9635/0.9600.
AUD/USD: AUD/USD stalled corrective slide near 0.78 handle, edges higher to currently trade at 0.7833 level. The pair retraced brief dip below daily cloud and 5-DMA, bias higher as long as cloud support holds. Strong bullish momentum likely to keep scope for further upside. Momentum studies on weekly charts are also bullish. Next major bull target lies at 0.7856 200W SMA. Violation there eyes 61.8% Fib retracement at 0.7886. On the downside, 100-DMA at 0.7777 is strong support and we see weakness till 200-DMA at 0.7697 on break below. Violation at 200-DMA invalidates bullish bias.
Equities Recap
The pan-European stock index opened 0.3 percent higher as manufacturing surveys pointed to a strong start for the European economy. The Euro Stoxx 50 was 0.16 percent higher at 3,495.66 points at 1115 GMT.
Britain's FTSE was up 0.04 percent at 7,651.41 points; France's CAC 40 was trading at 5,306.99 points, up 0.35 percent; Germany's DAX was up 0.33 percent at 12,914.45 points.
Spain's IBEX 35 was up 0.51 percent at 10,130.00 points, while Italy's FTSE MIB was down 0.12 percent at 21,818.95 points.
Commodities Recap
Gold edges lower from 3-1/2 month highs at 1321.39, as the dollar recovered from its lows. Spot gold fell 0.4 percent to $1,312.35 an ounce at 0257 GMT. U.S. gold futures were mostly unchanged at $1,315.60 an ounce.
Spot silver fell 0.8 percent to $17.05 an ounce, after hitting a six-week high at $17.21 earlier in the day. Spot platinum fell 0.8 percent to $936.10 an ounce.
U.S. WTI crude futures were at $60.34 a barrel at 0739 GMT, down 3 cents from their last close. Brent crude futures were at $66.49 a barrel, down 8 cents but still not far off the price of Tuesday's high of $67.29 that was the most since May 2015.
Treasuries Recap
U.S.: The U.S. Treasuries traded flat Wednesday as investors wait to watch the Federal Open Market Committee’s (FOMC) December monetary policy meeting minutes, scheduled to be released today by 19:00GMT. Also, the country’s ISM manufacturing PMI for the month of December due later today will add further direction to the debt market. The yield on the benchmark 10-year Treasuries hovered around 2.46 percent, the super-long 30-year bond yields remained nearly flat 2.81 percent and the yield on the short-term 2-year steadied at 1.92 percent.
UK: The UK gilts jumped Wednesday as investors poured into safe-haven assets following the lower-than-expected construction PMI for the month of December. Also, investors are closely eyeing the country’s services PMI for the month of December, due for release on January 4 for further direction in the debt market. The yield on the benchmark 10-year gilts, slumped 3-1/2 basis points to 1.25 percent, the super-long 30-year yields plunged 3 basis points to 1.81 percent and the yield on the short-term 2-year too traded 3-1/2 basis points lower at 0.47 percent.
EUR: The German bunds jumped Wednesday as investors largely shrugged off the country’s better-than-expected employment report for the month of December. Participants will now be eyeing the eurozone’s consumer price-led inflation index for the month of December, scheduled for release on January 5 for further direction in the debt market. The yield on the benchmark 10-year gilts, fell 1 basis point to 0.45 percent, the super-long 30-year yields slipped nearly 1-1/2 basis points to 1.29 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 0.62 percent.
NZD: New Zealand government bonds closed higher Wednesday, despite an improvement in the global dairy prices at the country’s latest GlobalDairyTrade Price auction held overnight. Elsewise, trading remained sideways as the country returned from a long New Year holiday today. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.80 percent, the yield on 20-year also slipped by a basis point to 3.29 percent and the yield on short-term 2-year too ended 1 basis point lower at 1.95 percent.
JGBs: Japanese markets remain closed today on account of Exchange Holiday.
AUS: Australian government bonds slumped on Wednesday as a spate of rousing manufacturing PMI from around the world seemed to bode well for the country’s goods exports. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 2 basis points to 2.694 percent, the yield on the long-term 30-year note climbed nearly 2 basis points to 3.403 percent and the yield on short-term 2-year down 1 basis point to 1.994 percent.
