Market Roundup
- Russian foreign minister Lavrov says allegations that Russia interfered in U.S. elections are baseless – TASS
- Lavrov says Russia will not leave U.S. sanctions unanswered - TASS
- Russian foreign ministry proposes to Putin to expel 35 U.S. diplomats – TASS
- Russian PM Medvedev says regrettable that Obama administration, which started out by restoring our ties, is ending its term in an anti-Russia agony - PM's facebook page
- Greek November producer price inflation at -1.2 pct y/y from -0.5 pct in October
- Greek October retail sales unchanged at +2.4 pct y/y after revised +2.4 pct in September
- Russia Dec CPI yy decrease to 5.4 % (fcast 5.6 %) vs prev 5.8 %
- Russia Dec CPI mm stays flat at 0.4 % (fcast 0.5 %) vs prev 0.4 %
- India Nov Fed fiscal deficit, INR increase to 4579.96 bln INR vs prev 4235.07 bln INR
- India's April-November net tax receipts at 6211.72 bln rupees – Govt
- Italy Nov producer prices yy increase to -0.3 % vs prev -0.6 %
- Italy Nov producer prices mm stays flat at -0.1 % vs prev -0.1 %
- Spain October current account 2 bln euros vs 1.5 bln euros in September - bank of Spain
- Indonesia Nov m2 money supply yy increase to 9.3 % vs prev 7.5 %
- Hong Kong dollar m-3 +8.7 pct in Nov year-on-year – HKMA
- China final Jan-Sept current account surplus $172.7 bln - Fx regulator
- China final Jan-Sept capital and financial account deficit $9.4 bln - Fx regulator
- Spain December flash EU-harmonised CPI 1.4 pct y/y (0.5 pct in November) – INE
- Spain December flash national cpi 1.5 pct y/y vs 0.7 pct in November
- Thai Nov private consumption index -0.5 pct on month - central bank
- Thai Nov private investment index +0.4 pct on month - central bank
- Thai Nov trade account +2.79 bln dlrs - central bank
- Thai Nov current account +3.2 bln dlrs - central bank
- Turkey Nov trade balance increase to -4.11 bln $ vs prev -4.16 bln $
- Turkey Nov trade balance increase to 4.11 bln $ vs prev -4.16 bln $
- Malaysia's November broad money +2.9 pct on yr - central bank
- Russia services PMI rises to 56.5 in December from 54.7 in November
- Russia services PMI reaches 49-month high in December
- South Africa Nov m3 money supply yy decrease to 4.76 % (fcast 6.50 %) vs prev 6.62 %
- S.Africa's October credit growth unrevised at 6.31 pct y/y, m3 unrevised at 6.62 pct y/y
- South Africa Nov pvt sector credit ext. decrease to 4.6 % (fcast 5.87 %) vs prev 6.31 %
- Dutch Dec manufacturing confidence +4.7 pts after +3.4 pts in nov - CBS
- ECB's Nowotny says overall inflation is expected to remain below the ECB's stability target in 2017
- ECB's Nowotny says public budgets should make use of low interest rates to reduce deficits and to accelerate reduction of government debt
- ECB's Nowotny says therefore a continuation of the ECB's expansive monetary policy can be expected
- ECB's Nowotny says expects significant increase in inflation rates in 2017 due to stabilization or even increase in energy prices
- China central bank: will keep liquidity basically stable
- China central bank: will continue with interest rate, exchange rate reform
- China central bank: will keep monetary policy neutral, neither too tight nor too loose
- China central bank: will keep yuan basically stable
- China Fx regulator: cross-border net capital outflows expected to narrow in Q4
- Poland's 2016 fiscal deficit seen at 2.4 pct/GDP - Deputy finance minister
- Polish deputy finance minister says q4 GDP growth may slightly exceed 2 pct year-on-year
Economic Data Ahead
- (0945 ET/1445 GMT) The Chicago Purchasing Managers' Index for December is expected have fallen slightly to 57.0 from 57.60 in November.
- (1300 GMT/1800 GMT) Baker Hughes US Oil Rig Count.
- (1430 ET/1930 GMT) CFTC releases commitments of traders report for the net positions on gold, USD, oil, GBP, JPY, EUR, AUD.
Key Events Ahead
- No major key events scheduled.
FX Beat
DXY: The US dollar index declined to 102.60, the weakest in a week. Overall, price action remains limited in the market, moving in a holiday mode. DXY, down from a 14-year high of 103.65 hit on Dec. 20 and up 3.8 percent on the year.
EUR/GBP: Short-lived surge in the single currency saw EUR/GBP spike higher in early Tokyo session. The rally was quickly faded, EUR/GBP slips below 0.86 handle and is currently trading at 0.8573. Technically, the pair was unable to hold gains above 100-DMA at 0.8633, which is strong resistance level. Momentum studies are biased higher. Break above 100-DMA could see further gains. We then see scope for test of 0.8764 (50% Fib of 0.9225 to 0.8304 slide).
USD/JPY: USD/JPY has recovered from session lows just shy of 116 handle and has retraced above 117 levels. The pair was trading at 117.08 at the time of writing. Strong support seen by 20-DMA at 116.30, close below will confirm further downside. RSI and Stochs have rolled over from overbought zone. MACD has shown a bearish crossover on signal line, confirming weakness. Major support and resistance are seen at 116.30 (20-DMA) and 118.20 (trendline).
AUD/USD: AUD/USD has reversed majority of its strong gains and has turned flat for the day. The major was extending bullish momentum after break of 5-DMA at 0.7186 on Thursday. Major trendline support seen at 0.7160, weakness only on break below. RSI has shown a rollover from oversold levels. Stochs are at oversold and on verge of rollover. Price action moving away from lower bollinger band. Rising commodities’ prices, particularly oil, copper and gold support the resource-linked Aussie. Australian private sector credit data which was inline with expectations offers fresh impetus.
NZD/USD: NZD/USD edges lower from fresh weekly highs at 0.6978, but bias remains higher. Upside in the pair intact as long as it holds 5-DMA support at 0.6925. Bullish RSI divergence on daily charts supports upside. The pair has retraced above 50% Fibo of 0.6347 to 0.7485 rally. Stochs are on verge of rollover from oversold which if done would provide further upside confirmation. Major support lies at 0.6925 (5-DMA) and then 0.6875 ( trendline). On the flipside, major resistance aligns at 0.7012 (23.6% Fib of 0.7485 to 0.6865 fall) ahead of 0.7019 (20-DMA).
USD/CHF: USD/CHF sees massive slump on the back of a decline in the US dollar across the board. The pair has largely reverses knee-jerk downward spike, but still remains in the red amid ongoing broad based US dollar weakness. The major was trading at 1.0160 at the time of writing. Major resistance levels could be located at 1.0240/45 (Dec 23 low), 1.0265 (Dec 28 low) and 1.0300 (psychological level). Support is seen at 1.0018 (Dec 8 low) and further below at 0.9909 (100-DMA). Technical studies have turned bearish, we see scope for downside. Test of 100-DMA likely in the week ahead.
Equities Recap
On Friday, the STOXX 600, the FTSE 100, Germany's DAX and France's CA were all trading around 0.2 percent lower in early trading.
For the year, FTSE 100 has gained nearly 14 percent, making it the best performer among major European stock indexes. The STOXX Europe 600 index is down around 1.6 percent this year. Italy's benchmark FTSE MIB is down around 10 percent, among the worst performers in Europe, following a 38 percent slump in Italian banks this year.
Asian stocks looked set to end 2016 on an upbeat note. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.5 percent on Friday and poised to record a 3.8 percent gain for the year.
China's CSI 300 index added about 0.1 percent in its first session of gains this week. Hong Kong's Hang Seng rose 1 percent, its biggest one-day rally in 5 1/2 weeks, helping the index eke out a 0.6 percent gain for the year. Japan's Nikkei closed down 0.2 percent on Friday, erasing most of this year's meager gains and ending 2016 up only 0.4 percent.
Commodities Recap
Gold touched a two-week high on Friday, basking in its safe haven status amid the broad pull-back in risk. Spot gold edged up 0.3 percent to $1,161.50 an ounce, building on Thursday's 1.4 percent surge. It is headed for a 9.5 percent jump this year, snapping a three-year losing streak.
Oil prices inched up as optimism over a deal to curb outputs that is set to take effect at the start of the new year offset an unexpected increase in U.S. inventories. Brent crude added 1.8 percent to $57.16, despite a paltry 0.1 percent loss on Thursday. It is headed for a 53 percent gain this year, almost at the same level it was at the start of 2015.
U.S. crude added 0.4 percent to $53.99 a barrel on Friday, after losing 0.5 percent on the U.S. stock rise. It is on track for a 47 percent surge this year, its best annual performance since 2009, recovering all of its 2015 losses.
Treasuries Recap
U.S. Treasuries traded nearly flat during a relatively quiet Friday session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note stood flat at 2.47 percent, the super-long 30-year bond yield hovered around 3.08 percent and the yield on short-term 2-year note remained steady at 1.22 percent.
U.K. gilts traded modestly lower on the last working day of the year as investors remain sidelined in any big deal ahead of long New Year holidays. The yield on the benchmark 10-year gilts rose 1 basis point to 1.24 percent, the super-long 40-year bond yield also climbed 1 basis point to 1.69 percent and the yield on short-term 2-year bounced 1 basis point to 0.07 percent
German bunds traded narrowly mixed Friday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, some profit taking has been observed along the long-range of the curve. The yield on the benchmark 10-year bond hovered around 0.18 percent mark, the long-term 30-year bond yield climbed 2 basis points to 0.89 percent and the yield on short-term 2-year bond slid 1 basis point to -0.79 percent.
Japanese government bonds snapped previous gains as investors booked profits ahead of long New Year holidays. We foresee that bond prices will keep drifting between small gains and losses in quiet next week’s trading session. The benchmark 10-year bond yield, which moves inversely to its price, fell 1 basis point to 0.052 percent, the long-term 30-year bond yields climbed 1-1/2 basis points to 0.72 percent and the yield on short-term 3-year note bounced nearly 1 basis point to -0.13 percent.
Chinese 10-year sovereign bond yields hit lowest in December as investors poured into safe-haven instruments amid rising concerns that the country may witness subdued GDP growth with the country unwilling to raise more debt to boost its economy. The yield on the benchmark 10-year bonds fell 6 basis points to 3.06 percent, the long-term 30-year bond yield also dipped nearly 6 basis points to 3.67 percent and the yield on the short-term 2-year bonds slid 11 basis points to 2.79 percent.
New Zealand government bonds closed higher following recovery in global debt market. Also, weak United States equities and higher U.S. Treasury prices boosted demand for safe-haven assets. The yield on the benchmark 10-year bond closed 3-1/2 basis points lower at 3.36 percent, the yield on 7-year note ended down 3 basis points to 2.98 percent and the yield on short-term 2-year note slid 3-1/2 basis points at 2.28 percent.
Australian government bonds rebounded following firmness in the United States Treasuries amid stronger demand in 7-year note auction and weak equities. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.77 percent, the yield on 15-year note dipped 2 basis points to 3.23 percent, while the yield on short-term 2-year slid 3-1/2 basis points to 1.91 percent.
