Market Roundup
- Germany's 10-year government bond yield falls to eight-week low of 0.158 pct, down 5 bps on day – Tradeweb
- Bitcoin jumps above $1,000 for first time in three years, trades up over 2 percent on day at $1,020
- Brazil's 2017 GDP growth forecast 0.50 pct vs 0.50 pct previous week; 2016 GDP growth forecast -3.49 pct vs -3.49 pct previous week - Weekly central bank survey
- Brazil's 2017 year-end selic rate forecast 10.25 pct vs 10.50 pct previous week - Weekly central bank survey
- Brazil's 2017 inflation forecast 4.87 pct vs 4.85 pct previous week; 2016 inflation forecast 6.38 pct vs 6.40 pct previous week - Weekly central bank survey
- Saudi Arabia q3 real GDP yy decrease to 0.9 % vs prev 1.4 %
- Markit euro zone December final manufacturing new orders PMI 55.9 (56.1 flash, 54.4 Nov final); highest since April 2011
- Markit euro zone December final manufacturing output PMI 56.1 (56.1 flash, 54.1 Nov final); highest since April 2014
- Greek manufacturing PMI rises to 49.3 in December from 48.3 in November; downturn eases amid job cuts
- Eurozone Dec Markit Mfg final PMI stays flat at 54.9 (fcast 54.9 ) vs prev 54.9
- Germany Dec Markit/BME Mfg PMI increase to 55.6 (fcast 55.5 ) vs prev 55.5
- Italian December manufacturing PMI orders index rises to 54.7 vs 53.2 in Nov
- Italy Dec Markit/ADACI mfg PMI increase to 53.2 vs prev 52.2
- Czech December manufacturing PMI 53.8 vs 52.2 in November -Markit economics (Reuters forecast: 53.1)
- Spain December new manufacturing orders index rises to 57.1, the highest since January, from 55.4 in November
- Spain December manufacturing PMI rises to 55.3, highest since January, from 54.5 in November
- Dutch manufacturing PMI at 68-month high in December - Nevi/DPA
- Dutch manufacturing PMI rises to 57.3 in December from 57.0 in November - Nevi/DPA
- Hungary's seasonally-adjusted Dec PMI 52.2 vs revised 56.3 in Nov – publisher
- Polish manufacturing PMI rises to 54.3 in December vs 51.9 in November (Reuters forecast 52.2)
- Norway's s/a Dec PMI 51.4 points (Rtrs poll 49.5) vs 47.8 points in Nov
- Austrian unemployment rate 10.3 pct in December by national measure, labour ministry says
- Swedish manufacturing PMI 60.1 points in Dec
- Turkish December trade deficit $5.56 billion -customs and trade ministry
- Turkish December trade deficit -11.1 percent year on year -customs and trade ministry
- Turkey Dec manufacturing PMI decrease to 47.7 vs prev 48.8
- India Dec Nikkei Markit mfg PMI decrease to 49.6 vs prev 52.3
- Spain's economy minister says GDP growth in 2016 could have been stronger than 3.2 pct expansion in 2015
- Economy minister says Spain aims to issue net debt of around 35 bln eur in 2017, similar to 2016 levels
- President Erdogan says turkey will struggle to the end against terrorism - Statement cited by CNN Turk
- President Erdogan says turkey determined to destroy source of threats and attacks against it – Statement
Economic Data Ahead
- No major economic data releases are scheduled as most of equity, forex, money and commodity markets will remain closed on account of New Year's Day (observed).
FX Beat
DXY: The dollar index recovered from a two-week low though trade was thin due to many markets being closed for the New Year holiday. DXY climbed 0.45 percent to 102.67.
EUR/USD: Euro largely muted after manufacturing PMI data, extends slide after Friday's flash surge. The pair hits fresh year low at 1.03522on Dec 20th 2016 and slightly gained from that level. It is currently trading around 1.04875. It has jumped till 1.06530 from the year low of 1.03522. EUR/USD should break above 1.067000 for the minor bullishness. Any break above 1.06700 will take the pair till 1.08735 (Dec 8th 2016 high)/1.0935 (100- day MA)/1.1000. On the lower side, any break below 1.03500 confirms bearish continuation, a decline till 1.0255/1.01574 (161.8% retracement of 1.03522 and 1.06530).
EUR/GBP: EUR/GBP is trading an extremely narrow range. Upside was rejected shy of major trendline resistance at 0.8680 and 100-DMA at 0.7632. The pair has slipped below 5-DMA at 0.8524 and is on track to test 20-DMA at 0.8451. Stochs have turned lower from near ovebought levels and RSI is biased lower. We see potential 'shooting star' formation at highs, completion of pattern will see drag lower.
USD/JPY: USD/JPY bounced off 20-DMA at 116.50 and has re-taken 117 handle. The pair has broken 1H 200-SMA at 117.24, intraday bias higher. We see scope for further upside, test of 117.80 level likely. On the flipside break below 20-DMA could see test of 114 levels. Major support is seen at 20-DMA at 116.50, while 118.20 (trendline) is major resistance level.
AUD/USD: Aussie ignores weaker-than-expected official Chinese manufacturing and services PMI reports published over the weekend. Higher copper prices combined with broadly weaker Greenback keep the pair supported. Persisting weakness in the US treasury yields continue to underpin demand for the emerging market currencies. AUD/USD is holding above 5-DMA support at 0.7196. Major trendline support seen at 0.7160, weakness only on break below.
GBP/USD: Cable made a minor bottom at 1.22005 on Dec 28th 2016 and slightly jumped from that level. It is currently trading around 1.22930. The pair upside is capped by 21- day EMA and any minor bullishness can be seen only if it close above that level. Any close above 1.2400 will take the pair to next level till 1.2510/1.2550 (61.8% retracement of 1.27747 and 1.22005).Short term trend reversal only above 1.2800. On the lower side , short term support stands at 1.2200 and any break below will drag the pair down till 1.2150/1.2080 level.
USD/CHF: USD/CHF has recovered sharply from the low of 1.00569. The pair should break below 1.000 for further bearishness. The jump from 0.95493 and 1.03435 will come to end if the pair breaks below 1.000 level. Any break below 1.000 will drag the pair down till 0.9909/0.9820 (200- day MA). 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. The minor resistance is around 1.02500.
Equities Recap
Asia's major markets closed for the New Year holiday along with Britain and Switzerland in Europe. Euro zone stocks climbed to their highest in over a year on Monday - the first trading day of 2017 after data showed manufacturers in the currency bloc ramped up activity at the fastest pace in over five years.
Euro zone's blue-chip Euro STOXX 50 index highest since December 2015 after upbeat eurozone purchasing managers' index (PMI) data. Italy's top share index hit its highest level since January last year, outperforming other major European stock indexes.
Italy's FTSE MIB index was up 1.3 percent by 1000 GMT after rising to its highest since January 15 of 2016. Germany's DAX was up 0.9 percent at its highest in nearly 17 months, while France's CAC was up 0.3 percent after hitting a 13-month peak earlier in the day.
Treasuries Recap
Eurozone periphery bonds strengthened following gains in the benchmark German bunds. The French 10-year bond yields fell 4-1/2 basis points to 0.63 percent, Irish 10-year bonds yield dipped 3-1/2 basis points to 0.73 percent, Italian equivalent slid 8-1/2 basis points to 1.74 percent, Netherlands 10-year bonds yield ticked 4-1/2 basis points lower to 0.30 percent, Portuguese equivalents down nearly 8 basis points to 3.68 percent and the Spanish 10-year bonds yield tumbled 6-1/2 basis points to 1.32 percent.
German bunds traded firmer in thin trading activity during a relatively quiet session that witnessed data of little significance. We foresee that the bund prices will keep drifting between small gains and losses in thin trading due to global New Year holiday. Also, thin trading volumes were observed as markets in Japan, China, Hong Kong, the U.S. and the UK, among others, will be closed for the day on account of New Year's Day. The yield on the benchmark 10-year bond fell 3 basis points to 0.17 percent, the long-term 30-year bond yield also dipped 3 basis points to 0.92 percent and the yield on short-term 3-year bond slid 1-1/2 basis points to -0.76 percent.
Indian government bonds gained on rising speculation that the Reserve Bank of India will lower its repo rate by 25 basis points to 6 percent in its next month monetary policy meeting. Also, weak December manufacturing PMI lent support to safe-haven buying. The yield on the benchmark 10-year bonds fell 6 basis points to 6.45 percent, the yield on long-term 30-year note also dipped 6 basis points to 7.05 percent and the yield on short-term 2-year note slid 5 basis points to 6.33 percent.
