Market Roundup
- USD loses its footing and stages broad market pullback
- US 10yr yield sub-2.5% first since Dec 14 hike, 2.4660% low so far
- USD/JPY -0.72%, EUR/USD + 0.6%, GBP/USD +0.34%
- DXY -0.5%, DAX -0.22%, Brent +0.3%, Iron +0.9%, Gold +0.45%
- UK Dec N/Wide house prices +4.5% y/y vs 4.4% prev, 3.8% expected
- EZ Nov M3 y/y growth 4.8% vs 4.4% prev, 4.4% expected
- EZ Nov Loans to households 1.9% vs 1.8%
- EZ Nov Loans to non-financials 2.2% vs 2.1% previous
- Turkish Dec Economic Sentiment sinks to 70.52 vs 86.50
- Turkish Foreign Arrivals -21.35% y/y vs -25.80% previous
- SE Nov Trade Bal. -SEK1.1 bln vs -2.70bln previous
- Shares in Toshiba fell 17% on Thursday, clocking a third day of heavy losses
- Nikkei off 1.32% at 19145
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Department of Labor is set to release initial jobless claims for the week ending Dec 23. The number of people filing first-time claims likely slipped to 264,000 from previous week's 275,000. While the continuing claims for the week ending Dec 16 are expected to have fallen slightly to 2.030M from previous 2.036M.
- (0830 ET/1330 GMT) The U.S. Census Bureau's wholesale inventories report for the month of November is expected to show a rise of 0.1 pct in sales and inventories from a drop of 0.4 pct in the previous month. Separately, analysts expect the U.S. goods trade balance for November to stay at $-61.5B.
- (1030 ET/1530 GMT) EIA reports Natural Gas Storage change for the week ending Dec 23.
- (1130 ET/1630 GMT) EIA reports Crude Oil Stocks change for the week ending Dec 23.
Key Events Ahead
- (1300 ET/1800 GMT) The U.S. Department of Treasury auctions 7-year notes.
FX Beat
DXY: The dollar fell 0.6 percent against a basket of six main currencies, mostly due to the yen's strength, while the benchmark 10-year U.S. Treasury yield slipped to two-week lows. The U.S dollar index formed double top around 103.65 and slightly declined from that level. The index is facing resistance around 103.60 and any break above targets 105.
EUR/USD: EUR/USD recovered sharply from the low of 1.03720 till 1.04797 at the time of writing. It is currently trading around 1.04559. Any indicative break above 1.04640 will take the pair till 1.05425/1.05600 level. It should break above 1.06700 level for further jump. On the lower side, any break below 1.03500 confirms further weakness a decline till 1.03100/1.0261 (161.8% retracement of 1.03522 and 1.04992).
USD/JPY: USD/JPY breaks minor support 116.54 and declined till 116.23 at the time of writing. It is currently trading around 116.60. The pair’s major resistance is around 119 and break above targets 120. On the lower side minor support is around 115.94 (21-day MA) and any break below targets 116.54 (Dec 19th 2016 low)/114.75 (daily Kijun-Sen).
GBP/USD: Cable recovered slightly from the low of 1.22005 till 1.2270 level at the time of writing. It is currently trading around 1.22667. Short term trend is bearish as long as resistance 1.2300 holds. On the higher side, any break above 1.23000 will take the pair to next level till 1.2385/1.24350. The major support stands at 1.2200 and any violation below that level will drag the pair down till 1.2150/1.2080 level.
USD/CHF: USD/CHF has once again retreated after jumping till 1.03212. The pair should break above temporary top of 1.03435 for further bullishness. The jump from 0.95493 and 1.03435 will come to end if the pair breaks below 1.02179 level. Any break below 1.02179 will drag the pair down till 1.01820/1.0150/1.00835 (Dec 14th low). On the higher side, break above 1.03435 will take the USD/CHF to next level till 1.04180 (161.8% retracement of 1.03435 and 1.02179) in the short term.
Equities Recap
European shares opened slightly lower on Thursday with all sectors in negative territory in early deals as banking shares and miners fell. The pan-European STOXX 600 index was down 0.3 percent.
Banking stocks were among the top fallers, led lower by Credit Suisse which was down 1.2 percent. Shares in Italian lender Monte dei Paschi were closed once again.
Germany's DAX Index was at 11,447.26, down -27.73 points or -0.24 percent, France's CAC 40 Index was at 4,840.89, down -7.12 points or -0.15 percent and UK's FTSE 100 Index was at 7,101.04, down -5.04 points or -0.07 percent at the time of writing.
Commodities Recap
Gold prices rose to their highest in two weeks on Thursday as the dollar and U.S. bond yields declined following weaker than expected economic data.
Spot gold hit $1,150.26 an ounce, its highest since December 14, and was up 0.4 percent at $1,146.16 by 1122 GMT. U.S. gold futures rose $6.30 to $1,147.10 an ounce.
Among other precious metals, silver rose for a third straight session, up 0.8 percent at $16.10 an ounce. Platinum was 0.1 percent higher at $903.20, while palladium climbed 0.9 percent to $671.20 an ounce.
Oil prices steadied on Thursday after a surprise increase in U.S. inventories helped stall an upward trend. U.S. light crude was down 20 cents at $53.86 by 1130 GMT, while North Sea Brent crude was up 5 cents at $56.27 a barrel.
Treasuries Recap
Benchmark United States 10-year bonds witnessed strong demand in the 5-year auction, dragging yields by 10 basis points to 2.47 percent. Markets now look ahead to a lighter flow of data, highlighted by initial jobless claims, crude oil inventories followed by 7-year note auction.
UK 10-year gilt yields hit 1-month low following gains in U.S. Treasuries. The yield on the benchmark 10-year gilts fell 6-1/2 basis points to 1.23 percent, the super-long 40-year bond yield dipped 6 basis points to 1.68 percent and the yield on short-term 3-year slid 2 basis points to 0.09 percent.
German 10-year bund yields hit lowest in 3-weeks as investors poured into safe-haven instruments following firmness in the U.S. Treasuries coupled with weak equities. The yield on the benchmark 10-year bond fell more than 2 basis points to 0.17 percent (lowest in 3-weeks), the long-term 30-year bond yield dipped 3-1/2 basis points to 0.87 percent and the yield on short-term 3-year bond slid 1/2 basis point to -0.76 percent.
Chinese sovereign bonds rallied 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 5 basis points to 3.13 percent, the long-term 30-year bond yield dipped 4 basis points to 3.71 percent and the yield on the short-term 2-year bonds slid 1 basis point to 2.90 percent.
Japanese government bonds gained as the Bank of Japan in its 'Summary of Opinions' from the December monetary policy meeting showed a strong dedication to keep 10-year yields near zero despite the opposition from one of its board members. The benchmark 10-year bond yield fell 1-1/2 basis points to 0.045 percent, the long-term 30-year bond yields dipped 1 basis point to 0.70 percent and the yield on short-term 2-year note slid 1 basis point to -0.16 percent.
New Zealand government bonds closed higher following a recovery in the global debt market. Also, weak United States equities and higher Treasury prices boosted demand for safe-haven assets. The yield on the benchmark 10-year bond closed 9-1/2 basis points lower at 3.40 percent, the yield on 7-year note ended down 8-1/2 basis points to 3.01 percent and the yield on short-term 2-year note slid 7-1/2 basis points at 2.31 percent.
Australian government bonds gained following firmness in the United States Treasuries amid stronger demand in 5-year note auction and weak equities. The yield on the benchmark 10-year Treasury note fell 8-1/2 basis points to 2.78 percent, the yield on 15-year note also dipped 8-1/2 basis points to 3.25 percent, while the yield on short-term 2-year slid 7 basis points to 1.94 percent.
