Market Roundup
- EUR/USD 0.82%, USD/JPY -0.69%, GBP/USD 0.72%, EUR/GBP 0.12%
- DXY -0.82%, DAX -0.93%, FTSE -0.54%, Brent -2.83%, Gold 0.91%
- Trump, U.S. Congress careen toward partial government shutdown
- GB Q3 GDP QQ, 0.6%, 0.6% f'cast, 0.6% prev
- GB Q3 GDP YY, 1.5%, 1.5% f'cast, 1.5% prev
- GB Dec GfK Consumer Confidence, -14, -14 f'cast, -13 prev
- GB Q3 Current Account (GBP), -26.52 bln, -21.20 bln f'cast, -20.31 bln, 19.95 bln rvsd
- DE Jan GfK Consumer Sentiment, 10.4, 10.3 f'cast, 10.4 prev
- DE Nov Import Prices YY, 3.1%, 3.6% f'cast, 4.8% prev
- FR Dec Business Climate, 104, 103 f'cast, 105 prev
- FR Q3 GDP QQ Final, 0.3%, 0.4% f'cast, 0.4% prev
- BOJ sets high bar on stimulus despite Kuroda's dovish language
- China pledges to step up tax cuts, keep liquidity ample to aid growth
- Sterling heads for best week in seven but Brexit concerns still weigh
Economic Data Ahead
- (0830 ET/1330 GMT) US Q3 GDP Final 3.5% f'cast, 3.5% prev
- (0830 ET/1330 GMT) US Q3 Core PCE Prices Final, 1.5% f'cast, 1.5% prev
- (0830 ET/1330 GMT) US Nov Durable Goods, 1.6% f'cast, -4.3% prev
- (1000 ET/1500 GMT) US Nov Adjusted Consumption, 0.3% f'cast, 0.6% prev
- (1000 ET/1500 GMT) US Nov Personal Income MM, 0.3% f'cast, 0.5% prev
- (1000 ET/1500 GMT) US Nov Core PCE Price Index YY, 1.9% f'cast, 1.8% prev
- (1000 ET/1500 GMT) US Dec U Mich Sentiment Final, 97.5 f'cast, 97.5 prev
- (1000 ET/1500 GMT) US Dec U Mich Conditions Final, 115.2 f'cast, 115.2 prev
Key Events Ahead
- (0830 ET/1330 GMT) Fed Philadelphia issues 'Non-manufacturing Business Outlook Survey for December' - Philadelphia
- (1000 ET/1500 GMT) Bank of Canada releases business outlook report - Ottawa
FX Beat
DXY: The dollar is on track for biggest weekly drop in 10 months. Threat of a U.S. government shutdown and lower bond yields on the back of concerns of slowing economic growth weigh. DXY consolidates previous session's losses, breaks into cloud. Scope for further weakness.
EUR/USD: Euro erases gains, slips into the red as we head into the NY session. Upside was capped at 100-EMA and further upside only on break above. Turmoil in Washington regarding the funding for Trump’s wall and the probability of government shutdown likely to keep pressure. US GDP and PCE data will be in focus for direction. Immediate resistance lies at 100-EMA at 1.1485, while immediate support lies at 55-EMA at 1.1410.
USD/JPY: USD/JPY edges higher from 15-week low at 110.81. The pair finds strong support at 110.80 (nearly converged 200-DMA and trendline). Break below to see further downside. Risk-off action and downbeat U.S. data overnight adding pressure. Focus now on US GDP and PCE data for further direction. Probability of government shutdown likely to keep pressure on the dollar. Treasury yields remain low and it will be difficult for the dollar to sustain any gains if yields continue to fall.
GBP/USD: Mixed UK data keeps the Cable largely muted. The pair edged higher to test 21-EMA at 1.2692 before paring gains to currently trade at 1.2664 at the time of writing. Focus now on U.S. macro economic data for further impetus. Technical studies are biased lower. 5-DMA at 1.2637 is immediate support, while 21-EMA at 1.2692 is immediate resistance. Political turmoil and the probability of government shutdown in the U.S. keeps scope for upside.
EUR/CHF: EUR/CHF rejected at daily cloud. The pair is trading unchanged at 1.1303 at the time of writing, with session highs at 1.1324 and lows at 1.1290. Technical indicators are mixed and do not provide any clear directional bias. Breakout above daily cloud will see further upside. Next major resistance aligns at 110-EMA at 1.1394. On the flipside, 20-DMA is strong support at 1.1294. Break below could see dip till 1.1225 (Dec 11 low).
AUD/USD: Antipodeans dumped on risk-off. AUD/USD recovery attempts were capped below 5-DMA at 0.7148 on Thursday's trade. The major has formed a Doji candle on Thursday, technical indicators support downside and we do not see any major signs of reversal. Price action hovers around 78.6% Fib and further weakness to see dip till 0.7021 (Oct 26 low). Long-term trend remains bearish and bearish invalidation only above 200-DMA.
Equities Recap
European markets trade lower on growth fears and U.S. government shutdown threat. The pan-European STOXX 600 index was down 0.54 percent at 334.76 points, while the FTSEurofirst 300 index was down 0.73 percent at 1,323.16 points.
Britain's FTSE 100 was down 0.38 percent at 6,686.46 points, while mid-cap FTSE 250 was down 0.17 percent at 17,417.61 points.
Germany's DAX was down 0.40 percent at 10,568.42 points; France's CAC 40 was down 0.81 percent at 4,654.42 points.
Commodities Recap
Oil edges higher on expectations of higher OPEC's output cuts. Benchmark Brent crude futures were up 41 cents, or 0.75 percent, at $54.76 per barrel at 0836 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 45 cents, or 1 percent, to $46.34 per barrel.
Gold holds gains amid equity sell-off and as dollar remained under pressure. Spot gold was little changed at $1,259.34 per ounce at 0915 GMT. U.S. gold futures declined 0.3 percent to $1,263.7 per ounce on Friday.
Among other precious metals silver fell 0.6 percent to $14.68 per ounce while platinum fell 0.4 percent to $790.49 per ounce.
Treasuries Recap
U.S.: The U.S. Treasuries remained tad during late afternoon session Friday ahead of the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released today by 13:30GMT. The yield on the benchmark 10-year Treasuries rose 1/2 basis point to 2.794 percent, the super-long 30-year bond yields rose 1 basis point to 3.021 percent and the yield on the short-term 2-year hovered around 2.672 percent.
UK: The United Kingdom’s gilts suffered during Friday’s afternoon session, after the country’s gross domestic product (GDP) remained unchanged, as per market expectations, during the third quarter of this year, released early today ahead of an upcoming long holidays owing to Christmas and New Year. The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.288 percent, the super-long 30-year bond yields rose nearly 1-1/2 basis points to 1.807 percent and the yield on the short-term 2-year traded nearly 2 basis points higher at 0.757 percent.
JGBs: The Japanese government bonds gained on the last trading day of the week Friday as investors covered previous short positions on the back of disappointing consumer price inflation (CPI) data for the month of November. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell to 0.025 percent, the yield on the long-term 30-year note also slumped to 0.720 percent and the yield on short-term 2-year also traded lower at -0.150 percent.
AUD: Australian government bonds slumped across the curve during early Asian session Friday as investors cashed in profits by closing their short positions ahead of the holidays. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 5 basis points to 2.381 percent, the yield on the long-term 30-year bond also jumped 5 basis points to 2.859 percent and the yield on short-term 2-year up 5 basis points to 1.985 percent.
