Market Roundup
- Brexit bedlam: May's EU divorce deal crushed by 230 votes in parliament
- Shutdown bites economy, U.S. Coast Guard, as talks to end impasse stall
- China c.bank injects record net $83 bln in open market operations
- USTR promises exclusion process for higher tariffs if China talks fail
- USTR saw little progress on structural issues in China trade talks, Senator Grassley says
- Japan Nov Machinery Orders YY, 0.8%, 0.4% f'cast, 4.5% prev
- Japan Dec Corp Goods Price YY, 1.5%, 1.8% f'cast, 2.3% prev
- Australia Jan Consumer Sentiment, -4.7%, 0.1% prev
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Dec CPI Final MM, 0.1% f'cast, 0.1% prev
- (0200 ET/0700 GMT) Germany Dec CPI Final YY, 1.7% f'cast, 1.7% prev
- (0200 ET/0700 GMT) Germany Dec HICP Final MM, 0.3% f'cast, 0.3% prev
- (0200 ET/0700 GMT) Germany Dec HICP Final YY, 1.7% f'cast, 1.7% prev
- (0430 ET/0930 GMT) Great Britain Dec Core CPI MM, 0.3% f'cast, 0.3% prev
- (0430 ET/0930 GMT) Great Britain Dec Core CPI YY, 1.8% f'cast, 1.8% prev
- (0430 ET/0930 GMT) Great Britain Dec CPI MM, 0.2% f'cast, 0.2% prev
- (0430 ET/0930 GMT) Great Britain Dec CPI MM, 2.1% f'cast, 2.3% prev
Key Events Ahead
- (0340 ET/0840 GMT) ECB's Governing Council member Ewald Nowotny to deliver the opening address at a Euromoney conference on central and eastern Europe in Vienna
- (0345 ET/0845 GMT) Riksbank Deputy Governor Cecilia Skingsley will discuss developments on the payments market at Moody’s Credit Trends in Stockholm.
- (0400 ET/0900 GMT) Hungarian central bank Deputy Governor Marton Nagy, Czech National Bank board member Vojtech Benda and Polish central bank Vice President Anna Trzecinska to participate in a panel discussion about monetary policy at a Euromoney conference on central and eastern Europe in Vienna
- (0430 ET/0930 GMT) Germany's Economy Minister Peter Altmaier holds a conference on the digital transformation in German cities and regions in Berlin, Germany
- (0500 ET/1000 GMT) Bank of Greece Governor Yannis Stournaras speaks at event hosted by Piraeus Bank in Athens
- (1230 ET/1730 GMT) ECB policymaker and French central bank chief Francois Villeroy de Galhau gives a New Year address to the French financial sector in Paris in Paris, France.
- (1400 ET/1900 GMT) Federal Reserve issues the Beige Book of economic condition in Washington D.C.
- (1830 ET/2330 GMT) Fed's Neel Kashkari speaks on "Ten Years After the Global Financial Crisis, the System is Safer" at the Intelligence Squared Debate in New York.
FX Beat
DXY: The dollar index held gains near a 1-week peak, while investors assessed Brexit options after British lawmakers voted down British Prime Minister Theresa May's deal to leave the European Union. The greenback against a basket of currencies trades flat at 95.93, having touched a high of 96.26 on Tuesday, its highest since Jan. 4. FxWirePro's Hourly Dollar Strength Index stood at 51.04 (Bullish) by 0400 GMT.
EUR/USD: The euro declined, hovering towards a near 2-week low touched in the previous session, after the President of the ECB, Mario Draghi, stated that the euro zone's economy is not heading for a recession but its slowdown could last longer than expected. The European currency traded 0.1 percent down at 1.1407, having touched a low of 1.1382 on Tuesday, its lowest since Jan. 4. FxWirePro's Hourly Euro Strength Index stood at -92.13 (Slightly Bearish) by 0400 GMT. Investors’ attention will remain on a series of data from the Eurozone economies, ahead of the U.S. import and export price index, housing market index and FOMC member Kashkari's speech. Immediate resistance is located at 1.1442 (December 10 High), a break above targets 1.1500 (November 7 High). On the downside, support is seen at 1.1382 (January 15 Low), a break below could drag it till 1.1342 (Dec. 26 Low).
USD/JPY: The dollar declined, as uncertainty around Brexit and hopes for a rate hike pause by the U.S. Federal Reserve boosted the bid tone around the Japanese yen. The major was trading 0.2 percent down at 108.47, having hit a low of 107.77 earlier in the month, its lowest since Jan 4. FxWirePro's Hourly Yen Strength Index stood at -46.36 (Neutral) by 0400 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. import and export price index, housing market index and FOMC member Kashkari's speech. Immediate resistance is located at 109.08 (January 8 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 107.35 (April 20 Low).
GBP/USD: Sterling consolidated within a narrow range, after lawmakers voted down Prime Minister Theresa May's deal to withdraw Britain from the European Union. On Tuesday, the Parliament voted 432-202 against May's deal, the worst parliamentary defeat for a government in recent British history. The major traded flat at 1.2858, having hit a high of 1.2929 on Monday; it’s highest since November 15. FxWirePro's Hourly Sterling Strength Index stood at 157.19 (Highly Bullish) 0400 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2946 (November 12 High), a break above could take it near 1.3030 (November 15 High). On the downside, support is seen at 1.2795 (November 26 Low), a break below targets 1.2723 (November 15 Low). Against the euro, the pound was trading flat at 88.72 pence, having hit a high of 88.55 on Tuesday, it’s lowest since November 28.
AUD/USD: The Australian dollar steadied near the 0.7200 handle, as investor sentiment strengthened after China's central bank made the largest ever net injection of cash into the financial system. The Aussie trades flat at 0.7201, having hit a high of 0.7234 on Friday; it’s highest since December 13. FxWirePro's Hourly Aussie Strength Index stood at -51.26 (Bearish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7116 (January 8 Low), a break below targets 0.7085 (December 20 Low). On the upside, resistance is located at 0.7246 (December 13 High), a break above could take it near 0.7273 (December 6 High).
NZD/USD: The New Zealand dollar gained, halting a 2-day losing streak after China's central bank made its biggest daily net cash injection of $51.6 billion via reverse repo operations to tackle growing concern over risks facing the slowing economy. The Kiwi trades 0.1 percent up at 0.6821, having touched a high of 0.6848 on Tuesday, its highest level December 19. FxWirePro's Hourly Kiwi Strength Index was at 101.87 (Highly Bullish) by 0400 GMT. Immediate resistance is located at 0.6862 (Nov.14 High), a break above could take it near 0.6911 (Dec. 11 High). On the downside, support is seen at 0.6777 (Dec. 14 Low), a break below could drag it below 0.6726 (Jan. 7 Low).
Equities Recap
Asian shares plunged, as worries over slowing China demand and political uncertainty in Britain sent investors seeking safety in safe-haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent,.
Tokyo's Nikkei declined 0.7 percent to 20,419.31 points, Australia's S&P/ASX 200 index gained 0.4 percent to 5,835.20 points and South Korea's KOSPI surged 0.4 percent to 2,105.73 points.
Shanghai composite index fell 0.2 percent to 2,564.83 points, while CSI300 index traded 0.3 percent down at 3,119.37 points.
Hong Kong’s Hang Seng traded 0.2 percent lower at 26,767.68 points. Taiwan shares shed 0.4 percent to 9,763.81 points.
Commodities Recap
Crude oil prices rose, extending previous session gains, boosted by OPEC-led supply cuts, although increasing signs of a global economic slowdown limited upside. International benchmark Brent crude was trading 0.1 percent up at $60.56 per barrel by 0426 GMT, having hit a high of $62.46 on Friday, its highest since December 7. U.S. West Texas Intermediate was trading 0.2 percent higher at $52.05 a barrel, after rising as high as $53.29 on Friday, its highest since the December 7.
Gold prices surged, supported by uncertainty around Brexit, after lawmakers voted down British Prime Minister Theresa May's deal to leave the European Union. Spot gold gained 0.1 percent at $1,289.60 per ounce at 0431 GMT, having touched a high of $1,298.42 earlier in the month, its highest level since June 15. U.S. gold futures were also firm at $1,288.80 per ounce.
Treasuries Recap
The Australian government bonds slightly gained across the curve during Asian trading session after the United Kingdom’s lawmakers pulled out of a Brexit deal plan in a voting concluded late yesterday. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 2.276 percent, the yield on the long-term 30-year bond slipped 1/2 basis point to 2.827 percent and the yield on short-term 2-year traded tad lower at 1.871 percent.
The yields on New Zealand government bonds dipped around 1 basis point across the curve.
The Canadian government bond prices were higher across a flatter yield curve, with the two-year up 0.5 Canadian cent to yield 1.883 percent and the 10-year rising 16 Canadian cents to yield 1.945 percent. The gap between Canada's two-year yield and its U.S. equivalent narrowed by 1.8 basis points to a spread of 63.1 basis points in favor of the U.S. bond.
