Market Roundup
- USD/JPY +0.15%, EUR/USD -0.19%, GBP/USD -1.06%
- DXY +0.22%, DAX -0.5%, Brent -1.5%, Iron +4.5%, Gold +0.3%
- UK PM rules nothing in or out in EU talks – Spokeswoman
- UK foreign minister in the US to meet close advisers to Trump and senior Congressional leaders
- German Private banking Association – Time for ECB to start careful change in policy direction
- FTSE-100 hits new record high at 7239.26
- Germany Nov Industrial Output +0.4% vs revised 0.5% previous, 0.7% expected
- Germany Nov Trade Balance E21.7 bln vs revised 20.6bln previous, 21.3 bln expected
- Switzerland Nov Retail Sales +0.9% vs revised -0.7%
- Switzerland SNB Sight Deposits up in latest week both domestic and total
- UK Dec Halifax Dec House Prices +1.7% m/m vs revised +0.6% previous, +0.2% expected
- UK Dec Halifax Dec House Prices +6.5% 3m/yy vs 6.0% previous, 5.8% expected
- UK Dec Mortgage Rate 4.28% vs 4.3% previous
- EZ Nov Unemployment Rate 9.8% vs 9.8% previous, 9.8% expected
- EZ Jan Sentix index 18.2 vs 10.00 previous, 12.5 expected
- Hong Kong's overnight Yuan deposit rate falls to around 10 pct from 87 pct
- Yuan mid-point rate represents biggest daily percentage fall in more than 6 months
- UK PM May- will set out plan for Britain, including right deal for Brexit over coming weeks
- Chinese state tabloid warns Trump, “end one China policy and China will take revenge”
- Scotland's Sturgeon says "unacceptable" lack of knowledge on Brexit
Economic Data Ahead
- (1000 ET/1500 GMT) The Fed releases its labor market conditions index (LMCI) for the month of December. The indicator posted a rise of 1.5 in the previous month.
- (1030 ET/1530 GMT) The Bank of Canada releases Business Outlook Survey.
- (1500 ET/2000 GMT) The Federal Reserve reports U.S. consumer credit figures for the month of November. The indicator stood at $16.0 billion in October.
Key Events Ahead
- (0900 ET/1400 GMT) Federal Reserve Bank of Boston President Eric Rosengren speaks before the Connecticut Business & Industry Association's (CBIA) annual Economic Summit and Outlook, in Hartford, Connecticut.
- (1145 ET/1645 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.350 bln
- (1240 ET/1740 GMT) Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on monetary policy before the Rotary Club of Atlanta, in Atlanta, Georgia.
- (1430 ET/1930 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $850 mln
FX Beat
DXY: The dollar rose versus its major peers on expectations that the Fed could raise interest rates three times this year. The greenback against a basket of currencies traded 0.15 percent higher at 102.36, hovering away from a low of 101.30 hit on Thursday, it’s weakest since Dec. 14. FxWirePro's Hourly Dollar Strength Index stood at -40.53 (Neutral) by 1100 GMT.
EUR/USD: The euro tumbled, extending previous session losses, despite data showing investor sentiment in the Eurozone improved in January to its highest level since August 2015. Markets seem to have ignored the continents investor confidence index, as hints that the United States could raise interest rates three times this year strengthened the dollar. The European currency trades 0.2 percent down at 1.0512, hovering away from a high of 1.0622 hit on Friday, its highest since Dec 30. FxWirePro's Hourly Euro Strength Index stood at 12.30 (Neutral) by 1000 GMT. It should break below1.04800 for minor weakness and any break below targets 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 gained against the Japanese safe-haven yen, as U.S. non-farm payrolls report released on Friday revived expectations of inflationary pressure in the U.S. economy and boosted prospects of more Fed interest rate hikes this year. However, cautious sentiment around the global equities limited the upside in the major. The major trades 0.1 percent higher at 117.03, having hit a low of 115.07 on Friday, its lowest since Dec. 14. FxWirePro's Hourly Yen Strength Index stood at -14.10 (Neutral) by 1000 GMT. The major resistance is around 117.77 (76.4% retracement of 118.61 and 115.07) and a break above targets 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 tumbled more than 1 percent towards the 1.2100 handle, following Prime Minister Theresa May speech, in which she stated that Britain would definitely leave the EU bloc and added that it cannot keep "bits of EU membership". However, the major trimmed some losses following the release of better-than-expected UK Halifax House Price Index. Sterling trades 0.9 percent down at 1.2162, having hit a low of 1.2124, it’s lowest since Oct.28. FxWirePro's Hourly Sterling Strength Index stood at -142.34 (Highly Bearish) by 1000 GMT. The minor resistance is around 1.22278 and any break above will take the pair till 1.2308/1.2365/1.2435. Any close above 1.2450 will take it till 1.2510/1.2550 (61.8% retracement of 1.27747 and 1.22005). On the lower side, short term support stands at 1.2150 and any break below will drag it down till 1.2080/1.2000 level. Against the euro, the pound trades 0.9 percent down at 86.50 pence, after declining as low as 86.79, its weakest since Nov. 15.
USD/CHF: The Swiss franc edged lower, extending previous session losses, as the greenback rallied on growing expectations of Fed rate-hike actions in 2017. The dollar trades 0.1 percent up at 1.0182, attempting to retake the 1.0200 handle. FxWirePro's Hourly Swiss Franc Strength Index stood at 61.47 (Bullish) by 1000 GMT. The jump from 0.95493 and 1.03435 will come to end if the pair breaks below 1.0050 level. Any break below 1.0050 will drag it down till 1/0.9909/0.9830 (200- day MA). On the higher side, a break above 1.0209 (89- 4H EMA) will take it till 1.0345 (Dec 15 high)/1.04180 (161.8% retracement of 1.03435 and 1.02179) in the short term.
AUD/USD: The Australian dollar rose, regaining most of its lost ground on the back of better-than expected Australian building consents data. However, the upside remained capped as the U.S. dollar continued to rise, extending upbeat U.S. jobs data-led gains, which strengthened expectations of Fed rate hike as early as March. The Aussie trades 0.36 percent up at 0.7319, having touched a peak of 0.7356 last week, it’s highest since Dec. 16. FxWirePro's Hourly Aussie Strength Index stood at 129.50 (Highly Bullish) by 1100 GMT. On the higher side, any close above 0.7346 (200- 4H MA) will take the pair to next level till 0.7396 (38.2% retracement of 0.7783 and 0.7160)/0.7450. The minor support is around 0.7285 and a break below will drag it till 0.7260 (60 4H EMA)/0.7200.
NZD/USD: The New Zealand dollar edged up slightly, reversing some of its previous session losses, as the greenback extended its Friday's NFP-led strong gains. However, the major's recovery remained capped as improving conditions in the U.S labor market, supported the case for steeper Fed rate-hike path in 2017. The Kiwi trades 0.4 percent up at 0.6983, having hit a high of 0.7043 in the previous session, it’s strongest since Dec. 16. FxWirePro's Hourly Kiwi Strength Index was at 63.55 (Bullish) by 1100 GMT. Immediate resistance is located at 0.7000, a break above could take it till 0.7050 (Dec 16 High). On the downside, support is seen at 0.6948 (Session Low), a break below could drag it near 0.6900.
Equities Recap
European shares declined, while Britain's blue-chip FTSE 100 index hit a record high strengthened by a rise among basic resources stocks.
The pan-European STOXX 600 index increased 0.4 percent at 363.96 points, while the FTSEurofirst 300 index tumbled 0.4 percent at 1,438.59 points.
Britain's FTSE 100 trades 0.21 percent up at 7,255.33 points, while mid-cap FTSE 250 eased 0.07 percent at 18,328.15 points.
Germany's DAX slumped 0.34 percent at 11,559.60 points; France's CAC 40 trades 0.5 percent lower at 4,883.10 points.
Australia's S&P/ASX 200 index gained 0.94 at 5,809.50 points and South Korea's KOSPI sligtly edged down to 2,048.78 points.
Shanghai composite index advanced 0.5 percent at 3,171.24 points, while CSI300 index rose 0.5 percent at 3,363.90 points. Hong Kong’s Hang Seng shed 0.3 percent at 22,558.69 points.
Commodities Recap
Crude oil prices fell over 1 percent as Iran raised exports undermining efforts by other oil producers to curb a global fuel oversupply, while increased activity by the U.S. drillers for a 10th straight week also weighed on the market. International benchmark Brent crude was trading 1.2 percent lower at $56.12 per barrel by 1013 GMT, having hit a high of $57.44 in the previous session, its strongest since Jan 3. U.S. West Texas Intermediate crude fell 1.14 percent at $53.06 a barrel, after rising as high as $54.29 on Friday.
Gold prices rose, after rising to a 1-month high last week, however, prospects of more interest rate hikes from the U.S. Federal Reserve capped the upside. Spot gold gained 0.4 percent to $1,176.58 an ounce by 1016 GMT, having gained nearly 2 percent last week, its strongest weekly rise since early November. U.S. gold futures were up 0.1 percent at $1,174.10 per ounce.
Treasuries Recap
The U.S. Treasuries witnessed sell-off in the wake of the December employment report that saw a net +156k increase in non-farm payrolls and an uptick in the unemployment rate towards 4.7 percent (driven by workforce re-entry). The benchmark 10-year bond yields surged by 8 basis points to 2.42 percent, from Friday’s low of 2.34 percent.
The UK gilts trended higher following a speech by Prime Minister Theresa May that mentioned that Britain would definitely leave membership of the European Union and added that it cannot keep "bits of EU membership". The yield on the benchmark 10-year gilts fell more than 3 basis points to 1.35 percent, the super-long 40-year bond yield slid 2-1/2 basis points to 1.83 percent and the yield on short-term 2-year bounced 4 basis points to 0.13 percent.
The German bunds traded modestly higher as investors poured into safe-haven instruments amid losses in riskier assets including equities and crude oil. The yield on the benchmark 10-year bond, fell 1-1/2 basis points to 0.29 percent, the long-term 30-year bond yields dipped more than 1 basis point to 1.05 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.73 percent.
The New Zealand government bonds suffered at the time of closing, tracking rout in the global debt market. In intraday trading, the yield on the benchmark 10-year bond, rose 6-1/2 basis points to 3.26 percent, the yield on 7-year note jumped 6 basis points to 2.90 percent and the yield on the short-term 2-year note bounced 4-1/2 basis points to 2.26 percent.
The Australian government bonds slid as investors moved away from safe-haven instruments following weakness in the U.S. Treasuries. The yield on the benchmark 10-year Treasury note, jumped nearly 7 basis points to 2.44 percent, the yield on the 15-year note rose 5 basis points to 1.55 percent and the yield on short-term 2-year rose 5 basis points to 2.57 percent.
