Market Roundup
- USD/JPY +0.45%, EUR/USD -0.3%, GBP/USD -0.4%
- DXY +0.27%, DAX +0.3%, Brent _1.0%, Iron +3.62%, Gold +0.01%
- 1.2091 = fresh 11week low for cable after 1.2100 option barrier erased
- France needs immigration quotas, presidential election frontrunner Fillon said on Wednesday
- UK Nov Industrial Output +2.0% y/y vs revised -0.9% previous, +0.6% expected
- UK Nov Manufacturing Output +1.2% y/y vs revised -0.5% previous, +0.4% expected
- UK Nov Trade Balance Non-EU –GBP3.577 bln vs revised -2.116 previous, -3.0 expected
- UK Nov Trade Balance –GBP12.16 bln vs revised -9.885 bln previous, -11.2 bln expected
- DoubleLine’s Gundlach – Trouble for equity markets if Treasury 10 yield hits 3%
- Senior BoJ officials – Central banks have considerable impact on yields
- Japan end-Dec foreign reserves $1.2169 trln, end-Nov $1.2193 trln
- ANZ prices Y114 bln 7/10-year samurais, MUFJ and Mizuho leads
- Banks forced to cover tracks of China’s FX regulator
- France President-candidate Macron – Euro may not exist in ten years
Economic Data Ahead
- (0900 ET/1400 GMT) Mexico will release its industrial output data for the month of November. The economy's industrial production is expected to rise 0.5 percent year-over-year, after declining 1.4 percent in the previous month.
- (1000 ET/1500 GMT) The National Institute of Economic and Social Research releases Britain's gross domestic product estimate in the three months to December. The indicator stood at 0.4 percent in the previous month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending January 6.
- (1520 ET/2020 GMT) The Brazilian central bank will meet to set its benchmark Selic rate and is expected to cut interest rates by 50 basis points to 13.25 percent.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports merchandise trade balance for the month of December. The economy posted a surplus of 152.5 billion yen in November.
- (1850 ET/2350 GMT) Japan's Ministry of Finance is likely to report that Current Account (N.S.A) surplus narrowed to 1,500.0 billion yen in November from 1,719.9 billion yen in October.
- (1850 ET/2350 GMT) Japan's Customs Office will release Trade Balance (BOP Basis) figures for the month of November. The economy posted a trade surplus of 587.6 billion yen in the earlier month.
Key Events Ahead
- (1100 ET/1600 GMT) The U.S. President-elect Donald Trump is scheduled to hold a news conference in New York.
- (1120 ET/1620 GMT) Federal Reserve Bank of New York President William Dudley will attend an event, "The Culture Imperative – An Interbank Symposium", in New York.
- N/A The U.S. Chamber of Commerce President Tom Donohue will deliver his annual address to outline the organization's 2017 goals, followed by a press conference.
- (1300 ET/1800 GMT) Treasury auctions $20 bln reopened 10-year notes
FX Beat
DXY: The dollar rose versus its major peers, as investors eagerly awaited the U.S. President-elect Donald Trump's news conference for hints on his policies on international trade, currencies, tax and fiscal spending. The greenback against a basket of currencies traded 0.3 percent up at 102.35, having hit a low of 101.51 on Tuesday. FxWirePro's Hourly Dollar Strength Index stood at 72.17 (Bullish) by 1100 GMT.
EUR/USD: The euro fell towards the 1.0500 handle, as the greenback strengthened ahead of the U.S. President-elect Donald Trump's first formal news conference. The presser is expected to provide more details on the potential policies and fiscal spending plans in a bid to boost the U.S. economic growth. The European currency trades 0.3 percent lower at 1.0516, having hit a high of 1.0627 on Tuesday, its highest since Dec 30. FxWirePro's Hourly Euro Strength Index stood at -70.10 (Bearish) by 1000 GMT. The pair should break above 1.06702 (61.8% retracement of 1.08735 and 1.03422) and break above 61.8% fibo level will take it till 1.0745/1.08700. It should break below 1.0480 for minor weakness and any break below 1.04300/1.03800. On the higher side, any break above 1.0670 will take the pair to next level till 1.0745/1.8000.
USD/JPY: The dollar rallied above the 116.00 handle, ahead of a scheduled news conference by President-elect Donald Trump. Moreover, higher crude oil prices and positive sentiment in the European equity markets weakened the Japanese safe-haven Yen's appeal. The major trades 0.5 percent higher at 116.35, drifting away from a low of 115.19 hit in the previous session, its lowest since Jan. 6. FxWirePro's Hourly Yen Strength Index stood at 29.78 (Neutral) by 1000 GMT. The major resistance is around 116.50 (89- 4H EMA) and any break above will take the pair till 117.77 (76.4% retracement of 118.61 and 115.07)/118/118.65. On the lower side, minor support is around 114.98 (50% retracement of 111.35 and 118.66) and any break below targets 114.10/112.85.
GBP/USD: Sterling slumped below the 1.2100 handle after data showed the UK trade deficit widened in November. Britain's goods trade deficit widened to 12.163 billion pounds, while Construction Output contracted in the same period. However, the major trimmed losses as industrial and manufacturing output rebounded in November, indicating that the economy kept its momentum despite June's shock Brexit vote. Sterling trades 0.3 percent down at 1.2135, having hit a low of 1.2096 earlier in the session, its lowest since Oct. 25. FxWirePro's Hourly Sterling Strength Index stood at -137.76 (Highly Bearish) by 1000 GMT. The minor resistance is around 1.2220 and any break above will take the pair till 1.2304 (61.8% retracement of 1.24325 and 1.0960)/1.2365/1.2435. Any close above 1.2450 will take it to next level till 1.2510/1.2550 (61.8% retracement of 1.27747 and 1.22005). On the lower side, short term support stands at 1.20800 and any break below will drag it down till 1.2000/1.19040 level.
USD/CHF: The Swiss franc declined, extending previous session losses, as the greenback strengthened ahead of U.S. President-elect Donald Trump's news conference. The dollar trades 0.3 percent up at 1.0196, having touched an intra-day high of 1.0203. FxWirePro's Hourly Swiss Franc Strength Index stood at -97.60 (Slightly Bearish) by 1000 GMT. Any break below 1.0050 will drag the pair down till 1/0.9909/0.9830 (200- day MA). On the higher side, a break above 1.0200 (89- 4H EMA) will take it to next level till 1.0240/1.0300/1.0345 (Dec 15 High).
AUD/USD: The Australian dollar hovered near 1-month highs, as upbeat sentiment surrounding commodity and global equity markets boosted the bid tone around the major. However, the upside remained capped, as the President-elect Donald Trump’s first news conference post-election strengthened the bid tone around the U.S. dollar. The major trades 0.3 percent up at 0.7386, having hit a fresh high of 0.7396 earlier in the session, its highest since Dec. 15. FxWirePro's Hourly Aussie Strength Index stood at 135.74 (Highly Bullish) by 1000 GMT. On the higher side, any close above 0.7435 (89- day EMA) will take the pair to next level till 0.7500 (200-day MA). The minor support is around 0.7320 (30-day EMA) and a break below will drag it till 0.7250 (61.8% retracement of 0.7163 and 0.73960)/0.7200.
NZD/USD: The New Zealand dollar gained, attempting a minor recovery to re-take the 0.7000 handle, amid stalled greenback buying interest. Investors refrained from placing big bets as President-elect Donald Trump's first news conference is expected to trigger a fresh bout of volatility in the markets. The major trades 0.15 percent up at 0.7002, having hit a high of 0.7047 on Tuesday, it’s strongest since Dec. 16. FxWirePro's Hourly Kiwi Strength Index was at -56.58 (Bearish) by 1000 GMT. Immediate resistance is located at 0.7050 (Dec 16 High), a break above could take it till 0.7100. On the downside, support is seen at 0.6952 (21-DMA), a break below could drag it lower0.6950.
Equities Recap
European shares rose, while the U.S. dollar rallied across the board as investors await President-elect Donald Trump's news conference due later in the day.
The pan-European STOXX 600 index increased 0.1 percent to 364.42 points, while the FTSEurofirst 300 index rose 0.1 percent to 1,441.06 points.
Britain's FTSE 100 trades 0.2 percent up at 7,289.67 points, while mid-cap FTSE 250 eased 0.18 percent at 18,380.61 points.
Germany's DAX advanced 0.3 percent at 11,617.5 points; France's CAC 40 trades 0.2 percent higher at 4,898.3 points.
Tokyo's Nikkei gained 0.33 percent to 19,364.67 points, Australia's S&P/ASX 200 index rose 0.11 percent to 5,767.20 points and South Korea's KOSPI slumped 0.18 percent to 2,045.12 points.
Shanghai composite index fell 0.8 percent at 3,136.75 points, while CSI300 index declined 0.7 percent at 3,334.50 points. Hong Kong’s Hang Seng added 0.8 percent at 22,935.35 points.
Commodities Recap
Crude oil prices rose nearly 1 percent, boosted by reports of Saudi supply cuts to Asia, however, a lack of detail of these reductions and signs of rising supplies from other producers prevented prices from rising further. International benchmark Brent crude was trading 0.97 percent higher at $54.11 per barrel by 1002 GMT, having hit a low of $53.57 earlier in the session, its weakest since Dec. 15. U.S. West Texas Intermediate crude rose 0.91 percent at $51.21 a barrel, after declining as low as $50.69 earlier.
Gold prices rose, hitting fresh 6-week high, as economic and political uncertainties strengthened its safe-haven appeal. Spot gold was up 0.1 percent at $1,188.08 an ounce by 1006 GMT, having reached its highest level since Nov. 30 at $1,191.17 earlier in the session.
Treasuries Recap
The U.S. Treasuries were little changed during a relatively quiet session light on significant economic data. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.39 percent, the super-long 30-year bond yield barely moved 1 basis point higher to 2.98 percent while the yield on short-term 2-year note moved around 1/2 basis point higher to 1.20 percent.
The UK gilts traded flat, as markets await Bank of England (BoE) Governor Mark Carney’s speech scheduled for Thursday for further guidance before the European Central Bank (ECB) meets to decide on the monetary policy action. The yield on the benchmark 10-year gilts, barely rose 1/2 basis point to 1.36 percent, the super-long 30-year bond yield hovered around 2 percent while the yield on short-term 2-year slid nearly 2 basis points to 0.19 percent.
The German bunds traded narrowly mixed ahead of the 10-year auction scheduled later in the day. Also, the United States President-elect Donald Trump’s news conference later in the day will provide further clarity on market movements. The yield on the benchmark 10-year bond, fell nearly 1 basis point to 0.28 percent, the long-term 30-year bond yields also dipped close to 1 basis point to 1.04 percent while the yield on short-term 2-year bond rose almost 1 basis point to -0.72 percent.
The Japanese government bonds traded nearly flat as investors remain sidelined in any big deal as major market participants are eyeing to focus on the United States President-elect Donald Trump’s speech later in the day for further guidance in the debt market. The benchmark 10-year bond yield, hovered around 0.05 percent, the long-term 30-year bond yields stood flat at 0.75 percent and the yield on short-term 2-year note remained steady at -0.17 percent
The New Zealand government bonds remained modestly weak at the time of closing amid a relatively subdued trading session Wednesday. In intraday trading, the yield on the benchmark 10-year bond, rose 1 basis point to 3.22 percent, the yield on 7-year note also climbed 1 basis point to 2.86 percent and the yield on the short-term 2-year note moved 1/2 basis point higher to 2.24 percent.
The Australian government bonds slumped as investors cashed in profits ahead of the United States President-elect Donald Trump’s speech later in the day. The yield on the benchmark 10-year Treasury note, rose nearly 2 basis points to 2.75 percent, the yield on 15-year note also climbed close to 2 basis points to 3.18 percent and the yield on short-term 2-year bounced 1 basis point to 1.88 percent.
