Market Roundup
- German government spokesman says Merkel to meet president Steinmeier to inform him about status of coalition talks
- Germany's Merkel cancels news conference with Dutch Prime Minister Rutte after coalition talks fail-chancellery
- ECB's Lautenschlaeger says we have serious misgivings about banks setting up EU subsidiary with UK branch
- ECB's lautenschlaeger says some banks seem to be considering the idea of establishing a subsidiary in the euro area
- ECB's Lautenschlaeger says we won’t accept more inventive set-ups either
- ECB's Lautenschlaeger says euro-area entities must be sufficiently independent from group entities that are located outside the EU
- ECB's Lautenschlaeger says banks need to do more on NPLS
Economic Data Ahead
- No major economic data releases
Key Events Ahead
- (0715 ET/1215 GMT) European Central Bank executive board member Sabine Lautenschlager will speak at IIF European CRO Forum in Frankfurt
FX Beat
DXY: The dollar index trimmed early session gains, as uncertainty over the U.S. tax bill continued to hurt dollar bulls' sentiments. The greenback against a basket of currencies traded flat at 93.72, having touched a high of 94.04 earlier, its highest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at -37.86 (Neutral) by 1000 GMT.
EUR/USD: The euro rebounded after falling to a 6-day low earlier in the day, as investors digested the broader political risks of a failure of German Chancellor Angela Merkel to form a three-way coalition government. The European currency traded up at 1.1789, having touched a low of 1.1722 earlier, its lowest since Nov. 14. FxWirePro's Hourly Euro Strength Index stood at -51.45 (Bearish) by 1000 GMT. Immediate resistance is located at 1.1836 (Oct. 26 High), a break above targets 1.1880. On the downside, support is seen at 1.1722 (Session Low), a break below could drag it lower 1.1700.
USD/JPY: The dollar steadied after falling to a 1-month low earlier in the day, as some signs of stability in equity markets dented the safe-haven Japanese yen's demand. The major was trading 0.05 percent up at 112.10, having hit a low of 111.88 earlier, its lowest since Oct. 16. FxWirePro's Hourly Yen Strength Index stood at 82.13 (Slightly Bullish) by 1000 GMT. Immediate resistance is located at 112.50, a break above targets 113.01 (5-DMA). On the downside, support is seen at 111.65 (Oct. 16 Low), a break below could take it near 111.09 (Sept. 20 Low).
GBP/USD: Sterling rallied to a 2-1/2 week high, as the weekend news on the progress of Brexit negotiations boosted the bid tone around the British pound. On Sunday, finance minister Philip Hammond stated that Britain will submit proposals on how to settle its separation bill with the European Union before an EU summit next month. Sterling traded 0.4 percent up at 1.3257, having hit a high of 1.3279 earlier, it’s highest since Nov. 2. FxWirePro's Hourly Sterling Strength Index stood at 165.45 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.3280, a break above could take it near 1.3320. On the downside, support is seen at 1.3135 (Nov. 16 Low), a break below targets 1.3061 (Nov 13 Low). Against the euro, the pound was trading 0.2 percent up at 88.94 pence, having hit a high of 88.72 pence earlier, it’s highest since Nov. 13.
USD/CHF: The Swiss franc slightly eased as the greenback gained amid risk-on sentiment seen among the global equity markets. The major trades 0.2 percent up at 0.9894, having touched a low of 0.9846 on Wednesday, it’s lowest since Oct. 24. FxWirePro's Hourly Swiss Franc Strength Index stood at 36.29 (Neutral) by 1000 GMT. The near-term support is around 0.9847 (233- day MA) and any convincing break below will drag the pair to next level till 0.9805 (38.2% retracement of 0.9420 and 1.00390)/ 0.9770. The major resistance is around 0.9949 (20- day MA) and any break above will take it to next level till 0.9980/1.000/1.0040.
AUD/USD: The Australian dollar steadied after falling to a 5-month low in the previous session as a sharp slide in the U.S. Treasury bond yields benefited the major. The Aussie trades flat at 0.7562, having hit a low of 0.7535 on Friday; it’s lowest since Jun. 22. FxWirePro's Hourly Aussie Strength Index stood at -109.09 (Highly Bearish) by 1000 GMT. Immediate support is seen at 0.7535 (Previous Session Low), a break below targets 0.7500. On the upside, resistance is located at 0.7612 (78.6% retracement of 0.7883 and 0.7535), a break above could take it near 0.7670 (61.8% retracement).
Equities Recap
European shares rose, reversing early session losses, while sterling advanced to a 2-1/2 week high on news of the progress of Brexit negotiations.
The pan-European STOXX 600 index rallied 0.1 percent to 384.19 points, while the FTSEurofirst 300 index gained 0.2 percent to 1,511.96 points.
Britain's FTSE 100 trades 0.1 percent lower at 7,373.21 points, while mid-cap FTSE 250 rose 0.2 percent to 19,844.54 points.
Germany's DAX eased 0.2 percent at 12,974.69 points; France's CAC 40 trades 0.05 percent up at 5,319.20 points.
Commodities Recap
Crude oil prices declined as traders turned cautious ahead of an OPEC meeting at the end of the month, where the producers are expected to decide whether to continue output cuts in order to balance markets. International benchmark Brent crude was trading 0.6 percent down at $62.29 per barrel by 1011 GMT, having hit a low of $61.06 on Friday, its lowest since Nov. 3. U.S. West Texas Intermediate was trading 0.1 percent down at $56.55 a barrel, after falling as low as $54.87 on Tuesday, its lowest since Nov. 3.
Gold prices slumped after rising to a one-month high hit in the previous session on uncertainty over progress on a potential overhaul of the U.S. tax code. Spot gold was 0.1 down percent at $1,291.83 per ounce by 1014 GMT, having hit a high of $1,296.76 an ounce on Friday, its strongest level since Oct. 16. U.S. gold futures for December delivery dropped 0.4 percent to $1,291.20.
Treasuries Recap
The U.S. Treasuries slightly gained as investors remained sidelined in any major trading activity amid a silent session that witnessed data of little economic significance. The yield on the benchmark 10-year Treasuries slipped 1 basis point to 2.34 percent, the super-long 30-year bond yields fell 1-1/2 basis points to 2.77 percent and the yield on short-term 2-year note remained tad lower at 1.72 percent.
The German bunds traded range-bound as investors wait to watch the European Central Bank President Mario Draghi deliver a keynote speech today by 14:00GMT and 16:00GMT respectively. The German 10-year bond yields, which move inversely to its price, hovered around 0.36 percent, the yield on the 30-year note fell 1 basis point to 1.24 percent and the yield on short-term 2-year traded flat at -0.70 percent.
The New Zealand bonds closed higher as investors’ sentiment was dented by weaker commodity prices and a central bank disinclined to raise interest rates. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4-1/2 basis points to 3.200 percent, the yield on 20-year note also dipped 4-1/2 basis points to 3.405 percent and the yield on short-term 2-year ended 2-1/2 basis points lower at 2.000 percent.
The Japanese bonds traded nearly flat as investors remain sidelined in any big deal amid lack of any major domestic events. The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.04 percent, the long-term 30-year bond yields stood flat at 0.82 percent and the yield on the 3-year note remained steady at -0.17 percent.
The Australian bonds gained as investors remained cautious ahead of the Reserve Bank of Australia (RBA) minutes for the November monetary policy meeting. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2 basis points to 2.564 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.346 percent and the yield on short-term 2-year declined 1 basis point to 1.784 percent.
