Market Roundup
- Trump holds firm on border wall, offers steel option as compromise
- Trump: Weakness in China economy gives Beijing incentive for trade deal
- UK factories view border delays as a major Brexit risk - EEF
- PM May says if Brexit deal is rejected, UK will be in uncharted territory
- Britons would now vote to stay in EU, want second referendum - poll
- France's Macron reeling as tough stance against 'yellow vests' backfires
- Japan Dec Services PMI, 51.0, 52.3 previous
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov Industrial Orders MM, -0.4% f'cast, 0.3% prev
- (0200 ET/0700 GMT) Germany Nov Retail Sales MM Real 0.3% f'cast, -0.3% prev
- (0200 ET/0700 GMT) Germany Nov Retail Sales YY Real -0.7% f'cast, 5.0% prev
- (0430 ET/0930 GMT) EZ Jan Sentix Index -2.8 prev, -0.3 prev
- (0500 ET/1000 GMT) EZ Nov Retail Sales MM 0.1% f'cast, 0.3% prev
- (0500 ET/1000 GMT) EZ Nov Retail Sales YY 1.7% prev
Key Events Ahead
- (1240 ET/1740 GMT) Fed's Raphael Bostic speaks on the economic outlook and monetary policy before a fireside chat hosted by the Rotary Club of Atlanta.
FX Beat
DXY: The dollar index declined to a 5-day low amid a dovish turn by the Federal Reserve. The greenback against a basket of currencies trades 0.3 percent down at 95.96, having touched a low of 95.93 earlier, its lowest since Dec. 5.
EUR/USD: The euro surged to a 5-day peak, as the greenback eased following a decline in the U.S. 2-year and 10-year Treasury yields, indicating that bond traders see less chance of the Fed raising rates this year on the increased likelihood of a growth slowdown in the U.S. economy. The European currency traded 0.2 percent up at 1.1423, having touched a high of 1.1496 on Wednesday, its highest since Nov. 7. Investors’ attention will remain on Eurozone Retail Sales, Sentix Investor Confidence, ahead of the U.S. ISM non-manufacturing PMI and speech from FOMC member Bostic. Immediate resistance is located at 1.1454 (December 27 High), a break above targets 1.1485 (December 20 High). On the downside, support is seen at 1.1360 (December 7 Low), a break below could drag it till 1.1327 (November 23 Low).
USD/JPY: The dollar declined, hovering towards a 9-1/2 month low touched on Thursday, amid growing expectations that the Federal Reserve would put its policy tightening on pause in 2019. The major was trading 0.2 percent down at 108.24, having hit a low of 104.65 last week, its lowest since March 26. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ISM non-manufacturing PMI and speech from FOMC member Bostic. Immediate resistance is located at 108.89 (January 3 High), a break above targets 109.46 (April 26 High). On the downside, support is seen at 107.65 (April 23 Low), a break below could take it lower 106.98 (April 18 Low).
GBP/USD: Sterling rallied above the 1.2700 handle, despite concerns about whether British Prime Minister Theresa May can convince lawmakers to back her Brexit withdrawal arrangement before scheduled departure date in March. The major traded 0.2 percent up at 1.2746, having hit a low of 1.2373 on Thursday; it’s lowest since April 2017. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2815 (December 31 High), a break above could take it near 1.2884 (November 19 High). On the downside, support is seen at 1.2661 (August 15 Low), a break below targets 1.2600. Against the euro, the pound was trading 0.1 percent down at 89.61 pence, having hit a low of 90.92 on Thursday, it’s lowest since August 18.
AUD/USD: The Australian dollar rose to a 2-1/2 month peak, amid expectations policymakers around the world will take measures to support slowing economic growth. The Aussie trades 0.2 percent up at 0.7127, having hit a low of 0.6744 on Thursday; it’s lowest since April 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7046 (5-DMA), a break below targets 0.6981 (Jan. 2 Low). On the upside, resistance is located at 0.7200 (December 19 High), a break above could take it near 0.7268 (November 22 High).
NZD/USD: The New Zealand dollar advanced to a fresh 2-1/2 month peak after Beijing announced a new round of trade talks with Washington last week. The Kiwi trades 0.2 percent up at 0.6748, having touched a high of 0.6755, its highest level December 21. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6790 (Dec. 21 High), a break above could take it near 0.6817 (Dec. 17 High). On the downside, support is seen at 0.6691 (Dec. 31 Low), a break below could drag it below 0.6653 (Jan. 2 Low).
Equities Recap
Asian shares nudged higher as strong U.S. jobs data soothed some of the market's fears about the global outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan traded jumped 1.3 percent.
Tokyo's Nikkei rose 2.4 percent to 20,038.97 points, Australia's S&P/ASX 200 index gained 1.2 percent to 5,683.20 points and South Korea's KOSPI rallied 1.3 percent to 2,036.56 points.
Shanghai composite index surged 0.8 percent to 2,535.78 points, while CSI300 index traded 0.7 percent up at 3,057.34 points.
Hong Kong’s Hang Seng traded 0.7 percent higher at 25,809.48 points. Taiwan shares added 2.2 percent to 9,590.30 points.
Commodities Recap
Crude oil prices surged, extending gains for the sixth straight session, supported by optimism that talks could soon resolve the trade war between the United States and China. International benchmark Brent crude was trading 0.6 percent up at $57.71 per barrel by 0508 GMT, having hit a high of $58.28 on Friday, its highest since December 18. U.S. West Texas Intermediate was trading 0.8 percent up at $48.65 a barrel, after rising as high as $49.20 on Friday, its highest since the December 18.
Gold prices gained, boosted by a weaker dollar on expectations that the U.S. Federal Reserve might apply brakes on its monetary tightening cycle in 2019. Spot gold was up 0.5 percent at $1,290.75 per ounce by 0512 GMT, having touched a high of $1,298.42 on Friday, its highest level since June 15. U.S. gold futures gained about 0.4 percent to $1,290.70 per ounce.
Treasuries Recap
The Japanese government bonds remained mixed on the first trading day of the week ahead of the country’s 10-year auction and November household spending data, scheduled to be released on January 8 and 10 by 03:35GMT and 23:30GMT respectively. The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 1-1/2 basis points to -0.016 percent, the yield on the long-term 30-year note jumped 2-1/2 basis points to 0.683 percent and the yield on short-term 2-year traded lower by 16-1/2 basis points at -0.164 percent.
The Australian government bonds slumped across the curve during early Asian session as investors remained optimistic about progress in the US-China trade talks.The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 6-1/2 basis points to 2.279 percent, the yield on the long-term 30-year bond also jumped 6 basis points to 2.782 percent and the yield on short-term 2-year up 4 basis points to 1.877 percent.
