Market Roundup
- USD/JPY +0.09%, GBP/USD +0.01%, EUR/USD +0.003%
- DXY +0.24%, DAX -0.16%, Brent +0.8%, Gold -0.09%
- EZ Nov NSA Current Account 40.5bln vs previous, revised 32.6bln
- EZ Nov SA Current Account 36.1bln vs previous, revised 28.3bln
- EZ Nov Net Investment Flow -6.3bln vs previous, revised 68.0bln
- UK Dec RICS house price balance +24, +30 eyed, Nov +29, 1st fall since July
- Switzerland Dec producer prices flat y/y vs -0.6% previous. 0.2% vs 0.1% m/m
- PM May: Britain must face up to period of momentous change
- May: Wants bold and ambitious trade agreement between UK & EU
- Hammond: UK will 'find ways' to compete if no EU trade deal
- Dijsselbloem: England will be totally outdated/impoverished, with massive unemployment
- Germany Schaeuble: Will do best to make relationship btw EU/Britain as close as possible
Economic Data Ahead
- (0745 ET/1245 GMT) The European Central Bank will announce its interest rate decision.
- (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to an annualized rate of 1.20 million units in December from 1.10 million units in November.
- (0830 ET/1330 GMT) The U.S. building permits are likely to have increased to a 1.225 million-unit pace in December from a 1.201 million-unit pace in November.
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 7,000 to a seasonally adjusted 254,000 for the week ended Jan. 14 while continuing claims for the week ended Jan. 6 is expected to decline to 2.073 m from 2.089 m.
- (0830 ET/1330 GMT) Philadelphia Federal Reserve manufacturing survey is likely to show that business activity decreased to 15.8 in January from 21.5 in December.
- (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of November. Manufacturing sales are likely to have increased 1.0 percent after declining 0.8 percent in October.
- (0830 ET/1330 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of November.
- (0830 ET/1330 GMT) The Statistics Canada will release investment in foreign securities figures for the month of November.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending January 13.
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 13.
Key Events Ahead
- (0830 ET/1330 GMT) European Central Bank President releases the monetary policy statement and gives a press conference.
- (1145 ET/1645 GMT) FedTrade operation 30-year Ginnie Mae (max $1.425 bn)
- (1545 ET/2045 GMT) Federal Reserve Bank of San Francisco President John Williams will speak before the Solano Economic Development Corporation Annual Luncheon Meeting in Fairfield, California.
- (2000 ET/0100 GMT) Federal Reserve Chair Janet Yellen speaks on "The Economic Outlook and the Conduct of Monetary Policy" before the Stanford Institute for Economic Policy Research in Stanford, California.
FX Beat
DXY: The dollar eased versus its major peers as traders were cautious ahead of U.S. President-elect Donald Trump's inauguration on Friday. The greenback against a basket of currencies traded 0.1 percent down at 101.14, having hit a low of 100.26 on Tuesday, it’s weakest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -41.74 (Neutral) by 1100 GMT.
EUR/USD: The euro gained, as the greenback extended its broad-based retreat from Fed Yellen’s hawkish comments induced rally. Investors now await the ECB monetary policy decision, where it is expected to keep interest rates unchanged, however, markets anticipate more dovish stance from Draghi’s speech. The European currency traded 0.3 percent higher at 1.0658, having touched a high of 1.0719 earlier in the week, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at 58.13 (Bullish) by 1000 GMT. The major intraday resistance is around 1.0670 and any break above will take it till 1.0720/1.0735 level. On the lower side, support is at 1.0610 and any break below will drag it till 1.0579 (Jan 16 Low)/1.0529 (20- day MA).
USD/JPY: The dollar slightly edged down after rising to a 6-day high earlier in the day on the back of hawkish comments by Federal Reserve Chair Janet Yellen. Moreover, surging U.S. Treasury bond yields and reinforced expectations of steeper Fed rate-tightening cycle kept the bid tone around the greenback intact. The major trades 0.05 percent down at 114.59, after rising to a high of 114.89 earlier, it’s strongest since Jan. 13. FxWirePro's Hourly Yen Strength Index stood at -58.48 (Bearish) by 1000 GMT. The major resistance is around 115 (10- day MA) and any break above will take the pair till 115.05 (30- day EMA). On the lower side, minor support is around 112.85 (60- day EMA) and any break below targets 112.
GBP/USD: Sterling advanced, regaining the 1.2300 handle as the U.S. dollar buying interest stalled across the board. Markets seem to have digested hawkish comments from the Fed Chair Janet Yellen, as focus shifted on the UK PM Theresa May speech at the World Economic Forum (WEF) in Davos. Sterling trades 0.5 percent higher at 1.2325, after rallying to a high of 1.2416 on Tuesday, it’s highest since Jan. 6. FxWirePro's Hourly Sterling Strength Index stood at 81.09 (Slightly Bullish) by 1000 GMT. The upside stays capped by 1.2435 (Jan 6 High) and any break above will take it till 1.2475 (61.8% retracement of 1.27780 and 1.19860). On the lower side, short term support stands at 1.2200 and any break below will drag it till 1.2080/ 1.2030/ 1.2000. Against the euro, the pound trades 0.2 percent up at 86.46 pence, hovering towards a high of 86.27 hit earlier in the week, it’s strongest since Jan. 9.
USD/CHF: The Swiss franc rose, reversing some of its previous session losses as the dollar retreated on a corrective slide. The major trades 0.1 percent lower at 1.0061, having hit a low of 0.9996 on Tuesday, it’s lowest since Nov. 17. FxWirePro's Hourly Swiss Franc Strength Index stood at -55.13 (Bearish) by 1000 GMT. Any violation above 1.0085 will take the pair to next level till 1.01365 (Ja16 High)/1.01520 (61.8% retracement of 1.02440 and 0.99965. On the lower side, any close below 1 confirms that jump from 0.9549 till 1.03435 got over and a decline till 0.9950/ 0.9820 is possible.
AUD/USD: The Australian dollar rallied to a fresh 2-month high above the 0.7500 handle, regaining most of its previous session losses, amid renewed U.S. dollar selling pressure across the board. The Aussie trades 0.6 percent higher at 0.7554, having hit a peak of 0.7573 earlier in the session, it’s strongest since Nov. 15. FxWirePro's Hourly Aussie Strength Index stood at 49.42 (Neutral) by 1100 GMT. On the higher side, the pair trades slightly above major resistance 0.7550 and any close above 0.7545 (61.8% retracement of 0.7778 and 0.71599) will take it to next level till 0.7600/0.7645. The minor support is around 0.7470 (7-day EMA) and a break below will drag it till 0.7415 (60- day EMA)/0.7359 (30- day EMA).
NZD/USD: The New Zealand dollar rose after a sharp reversal in the previous session, amid a mild greenback retracement. The major advanced as high as 0.7200, however, it failed to break above as upbeat release of U.S. CPI print and hawkish comments from the Fed Chair Janet Yellen provided some support to the greenback. The Kiwi trades 0.6 percent up at 0.7172, having touched a high of 0.7219 on Tuesday, it’s strongest since Dec. 14. FxWirePro's Hourly Kiwi Strength Index was at 73.83 (Bullish) by 1100 GMT. Immediate resistance is located at 0.7200, a break above could take it over 0.7220. On the downside, support is seen at 0.7085 (10-DMA), a break below could drag it till 0.7045 (Jan 12 Low).
Equities Recap
European shares tumbled, weighed down by oil stocks, while investors cautiously awaited the European Central Bank monetary policy meeting.
The pan-European STOXX 600 index decreased 0.3 percent to 361.85 points, while the FTSEurofirst 300 index slumped 0.37 percent to 1,428.71 points.
Britain's FTSE 100 trades slumped 0.6 percent to 7,203.02 points, while mid-cap FTSE 250 tumbled 0.48 percent at 18,224.20 points.
Germany's DAX edged down 0.04 percent at 11,595.07 points; France's CAC 40 trades 0.2 percent lower at 4,843.71 points.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.2 percent.
Tokyo's Nikkei rose 0.94 percent to 19,072.25 points, Australia's S&P/ASX 200 index gained 0.13 percent to 5,686.30 points and South Korea's KOSPI climbed 0.1 percent to 2,072.79 points.
Shanghai composite index fell 0.4 percent to 3,101.30 points, while CSI300 index dropped 0.3 percent at 3,329.29 points. Hong Kong’s Hang Seng shed 0.2 percent at 23,049.96 points.
Commodities Recap
Crude oil edged up, rebounding from a 1-week low after the International Energy Agency stated that global oil markets were tightening with demand increasing, while OPEC and other producers implemented production cuts. International benchmark Brent crude was trading 0.1 percent higher at $54.30 per barrel by 0940 GMT, having hit a low of $53.75 in the previous session, its lowest since Jan. 11. U.S. West Texas Intermediate crude added 0.1 percent at $51.42 a barrel, after slumping as low as $50.89 on Wednesday.
Gold prices slightly nudged higher, as the dollar eased across the board ahead of U.S. President-elect Donald Trump's inauguration on Friday. Spot gold was up 0.1 percent at $1,204.58 per ounce by 0951 GMT, after dropping to a low of $1,197.49 earlier in the session. U.S. gold futures fell as much as over 1 percent to $1,197.10.
Treasuries Recap
The U.S. Treasuries were pushed lower after the Federal Reserve Governor Janet Yellen delivered a host of hawkish comments late Wednesday, adding that the country’s employment and inflation goals seem to near achievement of the Fed’s target. The yield on the benchmark 10-year Treasury rose 3 basis points to 2.36 percent, the super-long 30-year bond yield jumped 4 basis points to 2.42 percent, the yield on short-term 2-year note moved higher by over 2-1/2 basis points to 1.22 percent and the yield on the long-term 30-year note also moved higher by 2-1/2 basis points to 3.01 percent.
The UK gilts sunk following heavy sell-off witnessed in the U.S. Treasuries post the hawkish comments delivered by the Federal Reserve Chair Janet Yellen late Wednesday. The yield on the benchmark 10-year gilts, rose nearly 4 basis points to 1.38 percent, the super-long 30-year bond yields also moved higher by 3-1/2 basis points to 2.02 percent while the yield on short-term 2-year jumped 2 basis points to 0.22 percent.
The German bunds sunk as investors wait to watch the European Central Bank (ECB) monetary policy meeting scheduled for later in the day. The yield on the benchmark 10-year bonds fell over 2-1/2 basis points to 0.38 percent, the long-term 30-year bond yields also plunged 2-1/2 basis points to 1.12 percent and the yield on short-term 3-year bond slid 1 basis point to -0.68 percent.
The Japanese government bonds traded weak, tracking U.S. Treasuries and on account of reports citing moods of economic growth optimism. The benchmark 10-year bond yield, rose 2 basis points to 0.07 percent, the long-term 30-year bond yields jumped 3 basis points to 0.76 percent and the yield on the short-term 2-year note remained rose nearly 1/2 basis point to -0.22 percent.
The New Zealand government bonds closed modestly higher as investors covered previous short positions. The yield on the benchmark 10-year bond, ended 1 basis point higher at 3.22 percent, the yield on 7-year note also ended near 1 basis point lower at 2.90 percent and the yield on short-term 2-year note also dipped 1/2 basis point to 2.28 percent.
The Australian government bonds sunk, following overnight hawkish comments from the Federal Reserve Chair Janet Yellen, with the 10-year benchmark yields hitting a 2-week high. The yield on the benchmark 10-year Treasury note, jumped 8-1/2 basis points to 2.76 percent, the yield on 15-year note bounced nearly 10 basis points to 3.21 percent and the yield on short-term 2-year moved higher nearly 4 basis points to 1.89 percent.
