Market Roundup
- EUR/USD -0.2%, USD/JPY -0.2%, GBP/USD -0.16%, EUR/GBP 0.38%
- DXY flat, DAX -0.31%, FTSE 0.05%, Brent 0.25%, Gold 0.38%
- EU gives formal green light to new Brexit phase
- EZ Eurostat Trade NSA, Eur Oct, 18.9B, 26.4B previous
- German growth may ebb beyond 2018: Bundesbank
- EU not in rush to reform EZ as economy performing-Lithuanian president
- Eurozone needs 19 healthy economies, not special budget- Dutch PM
- Oil prices rise on North Sea pipeline outage, but growing US output looms
- Gold edges up as dollar slips on US tax bill worries
Economic Data Ahead
- (0700 ET/1200 GMT) Bank of England releases its Quarterly Bulletin.
- (0830 ET/1330 GMT) The Federal Reserve Bank of New York is expected to report that New York State manufacturing activity index grew 18.6 percent in December after rising 19.4 percent in November.
- (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of October. Manufacturing sales are likely to have increased 0.8 percent after rising 0.5 percent in September.
- (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.3 percent in November, after increasing 0.9 in the prior month.
- (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 77.2 percent in November from 77.0 percent in October.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0815 ET/1315 GMT) Bank of Englan's Haldane will attend a conference – Palmero
- (0845 ET/1345 GMT) FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.525 bn)
FX Beat
DXY: The dollar index tumbled amid renewed concerns over the U.S. tax bill after two Senate Republicans advised changes to the proposed tax overhaul plan. The greenback against a basket of currencies traded 0.3 percent down at 93.45, having touched a low of 93.28 the day before, its lowest since Dec. 6. FxWirePro's Hourly Dollar Strength Index stood at -94.86 (Slightly Bearish) by 1000 GMT.
EUR/USD: The euro rose after declining from a 9-day high in the previous session, as the German central bank raised growth projections, stating that the economy will continue to enjoy an export-driven boom. The European currency traded 0.2 percent up at 1.1796, having touched a high of 1.1862 the day before, its highest since Dec. 5. FxWirePro's Hourly Euro Strength Index stood at -100.96 (Highly Bearish) by 0900 GMT. The pair is facing strong resistance at 1.18548 (61.8% fibo) and any convincing break above will take it to next level till 1.1900/19612 (Nov 27th, 2017 high). On the lower side, major support is around 1.1700 and any break below will drag the pair to next level till 1.1660/1.1600.
USD/JPY: The dollar slumped to an over 1-week low on the back of rising uncertainty about a U.S. tax cuts package, coupled with perceived dovish FOMC outlook and prevalent negative trading sentiment around European equity markets. The major was trading 0.2 percent down at 112.18, having hit a low of 112.03 earlier, its lowest since Dec. 6. FxWirePro's Hourly Yen Strength Index stood at 85.08 (Slightly Bullish) by 0900 GMT. On the lower side, any close below 111 confirms minor weakness, a decline till 110/108.15 likely. The minor support is around 112.90 (55- 4H EMA). Any convincing close above 114 will take the pair to next level till 114.73/115.
GBP/USD: Sterling eased after rising to a 6-day high in the prior session following the latest remarks from the EU Commission President Jean-Claude Juncker citing that the second phase of Brexit talks will be far more difficult than the first. The major traded 0.1 percent down at 1.3416, having hit a high of 1.3465 the day before, it’s highest since Dec. 8. FxWirePro's Hourly Sterling Strength Index stood at 5.77 (Neutral) by 0900 GMT. On the lower side, near-term support is around 1.3300 and any break below will drag it to next level till 1.3225/1.3175. The near-term resistance is around 1.3550 and any break above will take it to next level till 1.3600/1.3680. Against the euro, the pound was trading 0.3 percent down at 87.91 pence, having hit a high of 87.60 pence earlier, it’s highest since Dec. 8.
USD/CHF: The Swiss franc rose as the greenback eased after two U.S. Republican senators on Thursday were reported to have sought changes to the proposed legislation to overhaul the U.S. tax code. The major trades 0.1 percent down at 0.9881, having touched a low of 0.9840 the day before, it’s lowest since Dec. 5. FxWirePro's Hourly Swiss Franc Strength Index stood at 6.48 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.99273(61.8 % fibo) and any break above will take the pair to next level till 0.9945/0.9977 (Dec 8th, 2017 high). The near-term support is around 0.9845 (55 day EMA) and any violation below that level will drag it to next level till 0.9800/ 0.9770/ 0.9735.
AUD/USD: The Australian dollar rallied to an over 1-month high amid fresh selling seen in the U.S. dollar versus its main peers. The Aussie trades 0.1 percent up at 0.7674, having hit a high of 0.7694 earlier; it’s highest since Nov. 10. FxWirePro's Hourly Aussie Strength Index stood at 43.97 (Neutral) by 1000 GMT. On the lower side, the near term support is around 0.7500 and any convincing break below will drag the pair till 0.7435/0.7380. The near-term resistance is around 0.7681 (233- day MA) and any convincing break above targets 0.7730/0.7780.
Equities Recap
European stocks tumbled, undermined by disappointing updates from fashion brands and continued weakness in bank stocks, while the greenback eased amid renewed concerns over the U.S. tax bill.
The pan-European STOXX 600 index eased 0.2 percent to 388.21 points, while the FTSEurofirst 300 index slumped 0.1 percent to 1,529.53 points.
Britain's FTSE 100 trades 0.05 percent lower at 7,447.40 points, while mid-cap FTSE 250 fell 0.3 percent to 19,981.46 points.
Germany's DAX eased 0.3 percent at 13,034.80 points; France's CAC 40 trades 0.2 percent down at 5,347.29 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, boosted by the Forties pipeline outage in the North Sea and ongoing OPEC-led production cuts. International benchmark Brent crude was trading 0.1 percent up at $63.45 per barrel by 0905 GMT, having hit a high of $65.80 on Tuesday, its highest since Jul. 2015. U.S. West Texas Intermediate was trading 0.3 percent higher at $57.29 a barrel, after rising as high as $58.53 on Tuesday, its highest since Dec. 1.
Gold prices rose after easing from a 1-week high in the previous session and were heading for their first weekly gain in four weeks, as the dollar sagged on concerns about the progress of U.S. tax reform. Spot gold was 0.4 percent up at $1,256.21 an ounce at 0910 GMT, after touching its highest since Dec. 7 at $1,258.95 on Thursday and has gained around 1 percent so far this week. U.S. gold futures were up 0.2 percent at $1,259 an ounce.
Treasuries Recap
The U.S. Treasuries continued to fall after the Federal Reserve kept its interest rates outlook unchanged in its last monetary policy meeting of this year concluded Wednesday. The yield on the benchmark 10-year Treasuries climbed 1-1/2 basis points to 2.36 percent, the super-long 30-year bond yields rose nearly 1 basis point to 2.72 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points higher at 1.82 percent.
The UK gilts traded flat as investors refrained from any major trading activity amid a muted session that witnessed data of least economic significance. The yield on the benchmark 10-year gilts, hovered around 1.16 percent, the super-long 30-year bond yields remained flat at 1.73 percent and the yield on the short-term 2-year steadied around 0.45 percent.
The German bunds jumped on the last trading day of the week after the European Central Bank (ECB) decided to continue its debt-buying operation even beyond September 2018, if required. The German 10-year bond yields, which move inversely to its price, plunged nearly 2 basis points to 0.29 percent, the yield on 30-year note slumped nearly 3 basis points to 1.10 percent and the yield on short-term 2-year traded flat at -0.73 percent.
The New Zealand government bonds sharply rallied at the time of closing in response to the country’s coalition government downward revision of its economic and fiscal forecasts in its half-yearly update released early Thursday. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 6 basis points to 2.78 percent, the yield on 20-year note plunged 7-1/2 basis points to 3.32 percent while the yield on short-term 2-year ended 1 basis point lower at 1.95 percent.
The Japanese government bonds traded nearly flat in subdued trade as investors remained sidelined in any major deal ahead of the upcoming Christmas holidays. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.046 percent, the yield on long-term 40-year remained steady 0.959 percent and the yield on short-term 3-year stood flat at -0.150 percent.
The Australian bonds gained as investors bought back bonds sold after the previous session's disappointing 10- year sale. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4-1/2 basis points to 2.525 percent, the yield on the long-term 30-year note dipped 4-1/2 basis points to 3.256 percent and the yield on short-term 2-year declined 3 basis points to 1.893 percent.
