Market Roundup
- EUR/USD 0.78%, USD/JPY -0.41%, GBP/USD 0.52%, EUR/GBP 0.18%
- DXY -0.67%, DAX -0.42%, FTSE -0.14%, Brent -0.09%, Gold 0.36%
- DXY working through tech suport, eyes 200MMA at 88.295
- Euro holds three-year highs as dollar weakens further
- EZ Eurostat Trade NSA, Eur Nov, 26.3B, 18.9B previous
- Berlin and Paris step up push for eurozone reform deal
- BOJ Kuroda's optimism on economy, price outlook sends yen to 4-month high
- China c.bank injects 398 bln yuan via MLF, citing tight liquidity
- Oil hovers below $70 highs, clouded by rise in U.S. output
- Gold hits over 4-month high as dollar index slumps to 3-year lows
Economic Data Ahead
- (1600 ET/2100 GMT) The New Zealand Institute of Economic Research (NZIER) will report its Business Confidence for the fourth quarter. The indicator came in at 5 percent in the prior quarter.
- (1745 ET/2245 GMT) The Statistics New Zealand will release Electronic Card Retail Sales figures for the month of December. The index posted a rise of 1.2 percent in the previous month.
Key Events Ahead
- 1315 ET/1815 GMT) BoE’s Silvana Tenreyro speaks on "The Fall in Productivity Growth: Causes and Implications" at the 2018 Peston Lecture at Queen Mary University
FX Beat
DXY: The dollar slumped to a fresh 3-year low on optimism around growth buoys expectations of tighter policy from ECB and BoJ amid holiday-thinned trading. The greenback against a basket of currencies traded 0.5 percent down at 90.47, having touched a low of 90.28 earlier, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -158.24 (Highly Bearish) by 1000 GMT.
EUR/USD: The euro rose to a fresh 3-year high above the 1.2200 handle on hopes that European Central Bank policymakers could be set to further trim their monetary stimulus. The European currency traded 0.5 percent up at 1.2260, having touched a high of 1.2296 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 135.78 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.2280, a break above targets 1.2320. On the downside, support is seen at 1.2193 (78.6% retracement of 1.1916 and 1.2269), a break below could drag it lower 1.2135 (61.8% retracement).
USD/JPY: The dollar tumbled to 4-month lows below the 111.00 handle after Bank of Japan Governor Haruhiko Kuroda highlighted Japan's economic recovery and reiterated the central bank's resolve to maintain its massive stimulus programme until 2 percent inflation is achieved stably. The major was trading 0.4 percent down at 110.59, having hit a low of 110.52 earlier, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at -56.29 (Bearish) by 1000 GMT. Investors’ will continue to track broad-based market sentiment, as U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 111.20 (23.6% retracement of 110.52 and 113.38), a break above targets 111.61 (38.2% retracement). On the downside, support is seen at 110.50, a break below could take it near 110.10.
GBP/USD: Sterling rallied to its highest levels since Brexit vote above the 1.3800 handle amid ongoing selling bias in the dollar across its major competitors and on news that Netherlands and Spain were open to a deal for Britain to remain as close as possible to the Europe bloc. The major traded 0.5 percent up at 1.3799, having hit a high of 1.3815 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 130.90 (Bullish) by 1000 GMT. Immediate resistance is located at 1.3830, a break above could take it near 1.3870. On the downside, support is seen at 1.3739 (78.6% retracement of 1.3458 and 1.3815), a break below targets 1.3679 (61.8% retracement). Against the euro, the pound was trading 0.1 percent down at 88.91 pence, having hit a low of 89.29 pence the session before, it’s lowest since Nov. 28.
USD/CHF: The Swiss franc advanced to a near 4-month peak, as the greenback against a basket of currencies slipped to its lowest since January 2015. The major trades 0.7 percent down at 0.9612, having touched a low of 0.9606 earlier, it’s lowest since Sept. 20. FxWirePro's Hourly Swiss Franc Strength Index stood at 63.12 (Bullish) by 1000 GMT. On the higher side, near-term resistance is around 0.9657 (78.6% retracement of 0.9845 and 0.9606) and any break above will take the pair to next level till 0.9700/0.9762 (5-DMA). The near-term support is around 0.9600 and any close below that level will drag it to next level till 0.9570.
AUD/USD: The Australian dollar jumped to a near 4 -month high as its U.S. counterpart declined as investors continued to price-in heightened odds of faster policy tightening in Europe and Japan. The Aussie trades 0.5 percent up at 0.7953, having hit a high of 0.7967 earlier; it’s highest since Sept. 25. FxWirePro's Hourly Aussie Strength Index stood at 42.28 (Neutral) by 1000 GMT. Immediate support is seen at 0.7934 (78.6% retracement of 0.7807 and 0.7967), a break below targets 0.7907 (61.8% retracement). On the upside, resistance is located at 0.7980, a break above could take it near 0.8040.
Equities Recap
European shares decline following two weeks of gains, while the euro rose to a 3-year high on expectations that the ECB policymakers were gearing up to further trim their monetary stimulus.
The pan-European STOXX 600 index rallied 0.2 percent to 397.78 points, while the FTSEurofirst 300 index edged down 0.2 percent to 1,564.26 points.
Britain's FTSE 100 trades 0.05 percent lower at 7,774.22 points, while mid-cap FTSE 250 rose 0.2 percent to 20,905.72 points.
Germany's DAX fell 0.2 percent at 13,213.41 points; France's CAC 40 trades 0.2 percent down at 5,503.60 points.
Commodities Recap
Crude oil prices slightly eased, following a rise in U.S. and Canadian drilling activity, however, production cuts by OPEC and Russia supported prices below December 2014 highs. International benchmark Brent crude was trading 0.3 percent down at $69.62 per barrel by 0922 GMT, having hit a high of $70.01 on Thursday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.5 percent down at $64.14 a barrel, after rising as high as $64.75 on Thursday, its highest since Dec. 2014.
Gold prices rallied to their highest in more than four months, boosted by a weaker U.S. dollar, which slumped to three-year lows against a basket of currencies. Spot gold was up 0.3 percent at $1,341.87 an ounce by 0942 GMT after touching its strongest since Sept. 11 at $1,344.47. U.S. gold futures were up 0.5 percent at $1,341.90 an ounce.
Treasuries Recap
The U.S. markets remain closed on account of Martin Luther King, Jr. Day.
The UK gilts jumped despite expectations of a fall in the country’s consumer price-led inflation index (CPI) for the month of December, scheduled to be released on January 16 by 09:30GMT. Also, the 5-year auction, due on January 18 will add further direction to the debt market. The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.32 percent, the super-long 30-year bond yields slid 1 basis point to 1.83 percent and the yield on the short-term 2-year hovered around 0.58 percent.
The German bunds gained as investors await the country’s 30year auction, scheduled to be held on January 17 by 10:40GMT. Also, of prime importance is eurozone’s consumer price inflation (CPI), due to be released on the same day by 10:00GMT, which will add further direction to the debt market. The German 10-year bond yields, which move inversely to its price, slumped 2 basis points to 0.50 percent, the yield on 30-year note slid 1 basis point to 1.32 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points lower at -0.57 percent.
The New Zealand government bonds ended Monday’s session on a weaker note as investors’ risk sentiments improved ahead of the GlobalDairyTrade price auction to be held on January 16 for further direction in the debt market. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2 basis points to 2.89 percent, the yield on 20-year climbed 2-1/2 basis points to 3.37 percent and the yield on short-term 2-year also ended 2-1/2 basis points higher at 2.00 percent.
The Japanese government bonds traded narrowly mixed after Bank of Japan Governor Haruhiko Kuroda reiterated the central bank will continue to keep its yield curve control (YCC) unchanged near zero until 2 percent inflation is achieved. However, the benchmark 10-year yield rose following this positive comment on economy and inflation. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.078 percent, the yield on the long-term new 40-year note dipped nearly 1 basis point to 0.995 percent and the yield on short-term 2-year remained flat at -0.132 percent
The Australian government bonds traded mixed as investors remain sidelined in any major trading activity amid a silent session that witnessed no data of major economic importance. Also, trading volumes today are likely to be thin as U.S. markets remain closed for Martin Luther King birthday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1-1/2 basis points to 2.748 percent, the yield on the long-term 30-year note dipped 1 basis point to 3.432 percent and the yield on short-term 2-year up 2 basis points to 2.062 percent.
