Market Roundup
- Germany Import Prices YY Dec, 0.3%, 0.2% forecast, 0.8% previous
- Italy Producer Prices YY Dec, 2.0%, 2.5% previous
- ECB will only stop pumping out cash when confident about inflation- Praet
- China eyes black swans, gray rhinos as 2018 growth seen slowing to 6.5-6.8 pct - media
- U.S. lawmakers at NAFTA talks express optimism about modernizing trade pact
- Challenged on all fronts, Britain's May faces pressure over Brexit law
- Growing credit card conundrum fuels British bank concerns
- Oil dips as U.S. output rises, still set for strongest January in five years
- Gold slips as U.S. dollar claws back some ground
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Commerce Department releases personal income figures for December, which is expected to rise 0.3 percent, after posting similar gains in the previous month.
- (0830 ET/1330 GMT) The U.S. Commerce Department releases the personal consumption expenditures (PCE) price index for the month of December. The index rose at an annualized rate of 1.5 percent in the prior month while core PCE is likely to have increased 0.2 percent after rising 0.1 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. Personal spending is likely to rise 0.4 percent in the month of December, after surging 0.6 percent in November.
- (1030 ET/1530 GMT) The Dallas Fed releases its Manufacturing Business Index for the month of January. The index posted a rise of 29.7 percent in the previous month.
- (1645 ET/2145 GMT) The Statistics New Zealand releases its trade balance data for the month of December. The economy posted an annual trade deficit of $1,193 million in November.
- (1830 ET/2330 GMT) Japan's Statistics Bureau is expected to report that unemployment rate remained unchanged at 2.7 percent for the month of December.
- (1830 ET/2330 GMT) Japan's overall household spending probably declined at an annualized rate of 1.7 percent in December after posting a similar gain in November.
- (1850 ET/2350 GMT) Japan's Ministry of Economy, Trade, and Industry releases retail trade data for the month of December. The indicator is likely to post an annualized rise of 1.8 percent after advancing 2.1 percent in the prior month.
Key Events Ahead
- (1100 ET/1600 GMT) The European Central Bank Executive Board member Benoît Cœuré's speech.
- (1145 ET/1645 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $890 mn)
FX Beat
DXY: The dollar index bounced back from a 3-year low amid an ongoing upsurge in the U.S. Treasury bond yields. The greenback against a basket of currencies traded 0.3 percent up at 89.25 having touched a low of 88.44 on Friday, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -11.56 (Neutral) by 1000 GMT.
EUR/USD: The euro consolidated within narrow ranges, as the greenback rebounded greenback from 3-year lows. The European currency traded 0.1 percent down at 1.2420, having touched a high of 1.2538 on Thursday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 37.10 (Neutral) by 1000 GMT. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2351 (50.0% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2307 (38.2% retracement).
USD/JPY: The dollar rose against the Japanese yen, boosted by a rally in the U.S. Treasury bond yields. The major was trading 0.1 percent up at 108.68, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 126.06 (Highly Bullish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, ahead of the U.S. personal consumption expenditures, personal income and spending data for further momentum. Immediate resistance is located at 108.98 (78.6% retracement of 111.49 and 108.28), a break above targets 109.52 (61.8% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.
GBP/USD: Sterling eased as investors turned cautious as the EU is due to approve criteria for negotiating a transition period that would bridge Brexit in March 2019 and the start of new trading terms. The major traded 0.5 percent down at 1.4089, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at -120.32 (Highly Bearish) by 1000 GMT. Immediate resistance is located at 1.4263, a break above could take it near 1.4345. On the downside, support is seen at 1.3967 (10-DMA), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.3 percent down at 88.02 pence, having hit a low of 88.08 pence earlier, it’s lowest since Jan. 22.
USD/CHF: The Swiss franc declined, after rising for the fourth straight session, as the greenback rebounded from 3-year lows. The major trades 0.3 percent up at 0.9361, having touched a low of 0.9290 on Thursday, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 134.51 (Highly Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9434 (61.8% retracement of 0.9666 and 0.9290) and any break above will take the pair to next level till 0.9479 (50.0% retracement). The near-term support is around 0.9260 and any close below that level will drag it to next level till 0.9200.
Equities Recap
European shares tumbled, while the greenback rebounded from a 3-year low following a rise in the U.S. Treasury bond yields.
The pan-European STOXX 600 index slumped 0.2 percent to 399.70 points, while the FTSEurofirst 300 index edged down 0.2 percent to 1,570.57 points.
Britain's FTSE 100 trades 0.1 percent higher at 7,671.37 points, while mid-cap FTSE 250 gained 0.3 percent to 20,684.98 points.
Germany's DAX fell 0.4 percent at 13,292.24 points; France's CAC 40 trades 0.1 percent down at 5,523.08 points.
Commodities Recap
Crude oil prices declined, as soaring North American production undermined efforts led by OPEC and Russia to tighten supplies. International benchmark Brent crude was trading 0.6 percent down at $70.07 per barrel by 1036 GMT, having hit a high of $71.25 on Thursday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.2 percent up at $66.03 a barrel, after rising as high as $66.63 on Thursday, its highest since Dec. 2014.
Gold prices eased as the U.S. dollar gained some lost ground and continued gains in equities weakened the bid tone around the safe-haven metal. Spot gold was down 0.2 percent at $1,348.13 per ounce, as of 1038 GMT, having hit a high of 1,365.95 on Thursday, highest since Aug. 3, 2016. U.S. gold futures for February delivery slipped 0.5 percent to $1,345.80 per ounce.
Treasuries Recap
The U.S. 10-year Treasury yields reached to its highest since April 2014 Monday as markets engaged in massive selling across the board ahead of a host of events scheduled for this week – President Donald Trump is scheduled to deliver a keynote speech on January 31 by 02:00GMT and the ADP non-farm employment due on the same day by 13:15GMT. The yield on the benchmark 10-year Treasuries jumped 5-1/2 basis points to 2.71 percent, the super-long 30-year bond yields surged a little over 4 basis points to 2.95 percent and the yield on the short-term 2-year too traded 4 basis points higher at 2.16 percent.
The UK gilts traded a tad lower as investors maintained caution in a muted European session ahead of the Bank of England Governor Mark Carney’s speech and the country’s manufacturing PMI for the month of January, scheduled to be disclosed on January 30 and February 1 by 15:30GMT and 09:30GMT respectively. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.45 percent, the super-long 30-year bond yields hovered around 1.90 percent and the yield on the short-term 2-year traded 1/2 basis point higher at 0.63 percent.
The German bunds plummeted as investors wait to watch the country’s employment report for the month of January and the 5-year auction, both scheduled to be unveiled on January 31 by 08:55GMT and 10:40GMT respectively. The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to 0.65 percent, the yield on 30-year note surged nearly 2 basis points to 1.30 percent and the yield on short-term 2-year too climbed nearly 2-1/2 basis points to -0.52 percent.
The New Zealand government bonds ended Monday’s session on a mixed note despite a muted trading day that is scheduled to witness no data of major economic significance. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 2.94 percent, the yield on 20-year plunged 1-1/2 basis points to 3.44 percent and the yield on short-term 2-year ended nearly flat at 1.97 percent.
The Japanese government bonds fell during early Asian session at the start of the week on broad-based debt sell-off in the market, following the sudden slowdown in the Bank of Japan’s bond-buying program. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 0.08 percent, the yield on the long-term 30-year note hovered around 0.81 percent and the yield on short-term 2-year traded tad higher at -0.12 percent.
The Australian government bonds traded narrowly mixed as investors remain side-lined in any major trading activity amid a silent session that witnessed no data of major economic importance. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 2.839 percent, the yield on the long-term 30-year note slid 2 basis points to 3.460 percent and the yield on short-term 2-year rose 1/2 basis point to 2.093 percent.
