Market Roundup
- EUR/USD 0.29%, USD/JPY 0.04%, GBP/USD 0.29%, EUR/GBP 0.03%
- DXY -0.19%, DAX 0.07%, FTSE 0.19%, Brent -1.1%, Gold 0.18%
- Barclays expects $1.3 billion writedown from US tax reform
- China regulator flags greater scrutiny on chips after price surge
- China short-term money rates jump, small lenders scramble for year-end cash
- US sanctions N.Korean missile experts, Russia offers to mediate
- Oil remains near 2015 highs on tight market outlook
- Gold edges up in thin trade as dollar dips
Economic Data Ahead
- (0855 ET/1255 GMT) Redbook Same-Store Sales Index (weekly) (prev +4.4% y/y)
- (1000 ET/1400 GMT) Consumer Confidence Index (Dec) (mkt 128.1, prev 129.5)
- (1000 ET/1400 GMT) Pending Home Sales Index (Nov) (mkt 108.7, -0.5% m/m; prev 109.3, +3.5% m/m)
- (1030 ET/1430 GMT) Dallas Fed Texas Service Sector Outlook Index (Dec) (prev 20.4)
- (1030 ET/1430 GMT) Dallas Fed Texas Service Revenues Index (Dec) (prev 24.4)
Key Events Ahead
- No events scheduled for the day
FX Beat
DXY: DXY breaches 92.75 support, hits fresh 3-1/2-week lows. Risks remain to the upside as markets await U.S. CB consumer confidence and pending home sales data due later in the NY session.
EUR/USD: EUR/USD remains supported amid fresh US dollar selling across the board, extends break higher towards 1.19 handle, recovering almost 80 pips after hitting low of 1.18170. EUR also remains supported from the substantial upward revision to Eurozone growth estimates by ECB earlier this month. Trend line resistance lies at 1.19200, any break above will take the pair to 1.19615 (Nov 27 th 2017 high)/1.200/1.2090. On the lower side, break below 1.1830 (50 4H MA) will drag the pair to next level till 1.1800 (200 4H EMA)/1.1755/1.1700. Minor weakness can be seen only below 1.1700.
USD/JPY: USD/JPY holds above 113 handle, remains range bound for 3rd consecutive session. Sentiment around the greenback remains undermined amid weaker Treasury yields, as markets remain wary over the Fed rate hike outlook for next year. 20-DMA at 112.84 is major support, while 113.53 (falling trendline) is immediate resistance. The pair is trading in a 'Symmetric Triangle' pattern and technical studies on intraday charts are inconclusive.
GBP/USD: Cable extends range trade after first round of Brexit negotiations. The pair extends consolidating in narrow range between 1.3420 and 1.33021. Close above 1.3420 needed for further upside. Bullish continuation only above 1.3550. On the lower side, near term support is around 1.3339 (200- 4H MA) and any break below will drag the pair till supports at 1.330/1.3220/1.3175. Short term bullish invalidation only below 1.30280.
USD/CHF: Data released earlier today showed UBS consumption indicator fell slightly in November, to 1.67 from 1.68 points. USD/CHF trades largely muted, trades confined in a range near 0.9800s. U.S. Conference board consumer confidence and pending home sales data to be released today may provide cues for further direction. Immediate resistance is around 0.99345 and any break above will take the pair till 0.9977 (Dec 8 th 2017 high)/1.000. Near term support is seen around 0.9835 and any violation below will drag the pair to next level till 0.9810 (200 – day EMA)/0.9770/0.9735.
AUD/USD: AUD/USD up 0.58% on the day at the time of writing. The pair is extending 200-DMA breakout, hits 9-week highs at 0.7772, bias higher. Technical studies support upside. Price action has pierced into daily cloud and momentum studies are highly bullish. Immediate resistance lies at 100-DMA at 0.7779. Violation there could see further gains. 200-DMA at 0.7692 is now strong support level and we see bullish invalidation on retrace below.
AUD/JPY: AUD/JPY grinds higher after 'Symmetric Triangle' breakout. The pair has resumed upside after brief consolidation. Technical studies support further gains. RSI strong above 70, momentum highly bullish. ADX is above 25 and rising with +ve DMI dominance. Next immediate resistance lies at 88.03 (61.8% Fib retrace of 90.305 to 84.349 fall). On the lower side, 100-DMA at 87.02 is immediate support, we see bullish invalidation on break below.
Equities Recap
Commodities helped cement gains across the major European benchmarks as the region emerged from a two-day trading holiday. Euro STOXX Index was slightly lower at 3,551.69 points after hitting the day's high at 3,568.91 points.
Britain's FTSE 100 was trading 0.15 percent higher at 7,604.42 points, Germany's DAX was down 0.04 percent at 13,068.06 points; France's CAC 40 was up 0.02 percent at 5,365.66 points at 1035 GMT.
Spain's IBEX 35 was down 0.23 percent at 10,158.80 points, while Italy's FTSE MIB was largely unchanged at 22,210.22 points.
U.S. Stock Index Futures up about 0.1 pct.
Commodities Recap
Oil prices ease slightly but remain near 2015 highs. U.S. West Texas Intermediate (WTI) crude futures were at $59.87 a barrel at 0754 GMT, down 10 cents from the previous close. Brent crude futures were at $66.80 a barrel, down 22 cents.
Spot gold rose 0.1 percent to $1,284.10 an ounce as of 0729 GMT, after hitting its highest since Dec. 1 at $1,284.70. U.S. gold futures were also up 0.1 percent to $1,289.30 an ounce.
Silver hits highest level in nearly four weeks. Spot silver rose 0.3 percent to touch its best since late November at $16.58. Platinum edged up 0.5 percent to hit a three-week high of $923.90.
Treasuries Recap
U.S.: The U.S. Treasuries remained flat as investors gear up to watch the 7-year auction, scheduled to be held December 28 by 18:00GMT. Also, today’s 5-year auction, due at 18:00GMT will provide further direction to the debt market. The yield on the benchmark 10-year Treasuries rose 1 basis point to 2.47 percent, the super-long 30-year bond yields hovered around 2.82 percent while the yield on the short-term 2-year traded flat at 1.92 percent.
UK: The UK gilts surged Wednesday even as investors remained side-lined in any major trading activity amid a muted trading session that witnessed data of little economic significance. The yield on the benchmark 10-year gilts, plunged nearly 2-1/2 basis points to 1.22 percent, the super-long 30-year bond yields slumped 2 basis points to 1.79 percent and the yield on the short-term 2-year traded flat at 0.45 percent.
EUR: The German bunds jumped Wednesday as investors look forward to the country’s consumer price-led inflation index (CPI) for the month of December, scheduled to be released on December 29 by 13:00GMT. The German 10-year bond yields, which move inversely to its price, fell nearly 1-1/2 basis points to 0.41 percent, the yield on 30-year note slipped 1 basis point to 1.22 percent and the yield on short-term 2-year also traded nearly 1 basis point higher at -0.63 percent.
NZD: New Zealand government bonds ended tad higher Wednesday as investors remained side-lie in any major trading activity amid a silent session that witnessed hardly any data of major economic significance, following the year-end holiday season. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.77 percent, the yield on 20-year also slipped by a basis point to 3.31 percent and the yield on short-term 2-year too ended 1 basis point lower at 1.91 percent.
JGBs: Japanese government bonds traded narrowly mixed on Wednesday as trading activity remained subdued after market participants take advantage of the shortened trading week between Christmas and New Year to take time off. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 0.051 percent, the yield on new long-term 40-year traded flat at 0.982 percent and the yield on short-term 2-year dipped 1/2 basis point at -0.137 percent.
AUS: Australian government bonds traded slightly lower on Wednesday as investors remain sidelined in any major deal in light trading after the Christmas holiday. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1/2 basis point to 2.722 percent, the yield on the long-term 30-year note traded nearly flat at 3.439 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 2.029 percent.
