Market Roundup
- EUR/USD 0.51%, USD/JPY -0.45%, GBP/USD 0.39%, EUR/GBP 0.29%
- DXY -0.36%, DAX -0.79%, FTSE -0.44%, Brent -0.25%, Gold 0.70%
- Euro zone factory growth surges to record; more uneven in Asia
- Euro zone Markit Mfg Final PMI Dec, 60.6, 60.6 forecast, 60.6 previous
- Germany Markit/BME Mfg PMI Dec, 63.3, 63.3 forecast, 63.3 previous
- UK Markit/CIPS Mfg PMI Dec, 56.3, 58.0 forecast, 58.2 previous
- France Markit Mfg PMI Dec, 58.8, 59.3 forecast, 59.3 previous
- Italy Markit/ADACI Mfg PMI Dec, 57.4, 58.5 forecast, 58.3 previous
- Oil posts strongest year opening since 2014 as Iran unrest pushes up crude
- Gold hits 3-month peak after strong December rally
Economic Data Ahead
- (0945 ET/1345 GMT) US Markit Manufacturing PMI (final Dec) (flash 55.0)
- (1030 ET/1430 GMT) CA Markit Mfg PMI SA (Dec) (54.4 previous)
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade operation 30-year Ginnie Mae (max $1.295 bn)
FX Beat
DXY: The USD index accelerates its decline to hit fresh four-month lows of 91.75. Focus now turns towards the US final manufacturing PMI report due on the cards in the NA session.
EUR/USD: EUR/USD extends winning streak into a fourth day amid unabated broad-based US dollar selling. The major prints fresh 4-month tops near 1.2081. German and Eurozone final manufacturing PMI readings were as expected, suggesting the 19-nation bloc’s growth prospects remain solid heading into 2018. EURUSD formed rising wedge pattern and finds major resistance around 1.2090 - 2017 high. Any convincing break above confirms further bullishness and a jump till 1.2170 (50% fib)/1.2410 (161.8% fib). On the lower side, any break below 1.1950 (20- 4H MA) will drag the pair to next level till 1.1898 (55 – 4H EMA)/1.1830/1.1800. Any minor weakness can be seen only below 1.1700.
USD/JPY: USD/JPY recovery attempts capped at 5-DMA, the pair slips lower to hit fresh 3-week lows at 112.11. Price action has broken support by 200W SMA at 112.38, bears now target 100-DMA at 112.00. Technicals studies for the pair hint further downside. Violation at 100-DMA could see further weakness. Scope then 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 sticks to gains despite today's weaker UK manufacturing PMI print. GBP/USD breaks major resistance at 1.3550 level to hit fresh 4-month tops at 1.3566. On the lower side, 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 offered for fourth straight session amid weaker USD. Huge sell-off seen after the major broke support at 0.9780 (200-day MA). The pair declined till 0.96997 at the time of writing and is currently trading around 0.97128. Immediate resistance lies at 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 violation below that level will drag the pair to next level till 0.9635/0.9600.
AUD/USD: Aussie buoyed by upbeat Caxin China Manufacturing PMI data. AUD/USD is extending its bullish momentum from the last year, breaks above daily cloud. The pair has hit fresh 10-week highs at 0.7844, bias remains higher. We see a strong bullish momentum which keeps 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 0.7696 on break below. Violation at 200-DMA invalidates bullish bias.
Equities Recap
European stocks faltered at the start of the trading year on Tuesday. Autos stocks and miners weighed. The pan-European STOXX 600 index dipped 0.3 percent in early deals.
At around 1045 GMT, Britain's FTSE was down 0.43 percent at 7,654.53 points; France's CAC 40 was trading at 5,268.60 points, down 0.83 percent; Germany's DAX was down 0.91 percent at 12,800.27 points.
Spain's IBEX 35 was down 0.18 percent at 10,025.40 points, while Italy's FTSE MIB was down 1.0 percent at 21,635.58 points.
Commodities Recap
Gold breaks above the psychological $1,300 an ounce, hits highest in more than three months. Spot gold rose 0.76 percent to $1,312.10 an ounce at 1030 GMT. U.S. gold futures rose 0.1 percent to $1,310.50 an ounce
Spot silver was up 0.5 percent at $17.04. Spot platinum rose 0.2 percent to $927.49. Palladium rose 1 percent to $1,072.50, after hitting its highest since Feb. 2001 at $1,074.30
Iran unrest and ongoing supply cuts led by OPEC and Russia push crude higher. U.S. West Texas Intermediate (WTI) crude futures were at $60.33 a barrel at 1030 GMT, up 0.4 percent, after hitting $60.7 earlier in the day. Brent crude future were at $67.18 a barrel, up 0.5 percent.
Treasuries Recap
U.S.: The U.S. Treasuries traded in low volumes Tuesday, returning from a long New Year holiday as investors wait to watch the Federal Open Market Committee’s (FOMC) December monetary policy meeting minutes, scheduled to be released on January 3 by 19:00GMT. Also, a host of other economic data through the latter half of this week will add further direction to the debt market. The yield on the benchmark 10-year Treasuries rose 2 basis points to 2.43 percent, the super-long 30-year bond yields jumped nearly 4 basis points to 2.77 percent and the yield on the short-term 2-year traded nearly 1 basis point higher at 1.89 percent.
UK: The UK gilts slumped Tuesday as fears of a Hard Brexit eased among investors, thus wooing them away from safe-haven instruments. The negotiations have reached the second stage -- the Trade Relations, after an almost done deal regarding the borders with Ireland. Also, participants have widely shrugged off the decline in the country’s manufacturing PMI for the month of December, which came in at 56.3, vs estimates of 58.0, from prior 58.2. The yield on the benchmark 10-year gilts, jumped 6 basis points to 1.24 percent, the super-long 30-year bond yields climbed nearly 5-1/2 basis points to 1.80 percent and the yield on the short-term 2-year too traded nearly 4 basis points higher at 0.48 percent.
EUR: The German bunds plunged Tuesday after the country’s manufacturing PMI for the month of December matched market expectations, coming in at 63.3, albeit unchanged from that in November but remaining well above the 50-point neutral mark that demarcates expansion from contraction. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.44 percent, the yield on 30-year note jumped nearly 3-1/2 basis points to 1.29 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points higher at -0.62 percent.
NZD: New Zealand markets remain closed today, following New Year’s Day.
JGBs: Japanese markets remain closed today on account of Exchange Holiday.
AUS: Australian government bonds traded fairly mixed on the first trading day of 2018 as investors remain sidelined 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, fell 1 basis point to 2.662 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.367 percent and the yield on short-term 2-year rose 1 basis point to 2.000 percent.
