Market Roundup
- Theresa May to lay out clean break from EU – Financial Times.
- Britain will not seek half in-half out EU deal – Reuters.
- May prepares EU migration curbs, at expense of single market membership - FT.
- Asked about GBP, BoE Gov Carney says it moves up and down – Reuters.
- BoE Gov Carney – UK expansion increasingly consumption-led, likely slower, households looking through Brexit-related uncertainties, MPC willing to tolerate above-target inflation with limits – Reuters.
- IMF - Trump presidency and China growth boost global outlook.
- Japan EconMin Ishihara – Recent market moves reflect global economic uncertainties – Reuters.
- BPCE updates guidance on three-tranche samurai via Daiwa, Mizuho, et al -IFR.
- China CASS Yu – Free-floating CNY nothing to fear – Shanghai Securities News.
- China to lower ’17 growth target to around 6.5% - Reuters.
- Mexico CB DepGov Guzman – FX intervention remains in toolkit – Reuters.
- ECB prints money at record pace amid bank bonds bonanza – Reuters.
- European bond trading falls 3.7% in ’16 despite US election surge – Trax.
- Australia Nov owner-occupied housing finance +0.9% m/m, as forecast, value of investment housing finance +4.9%.
- Australia Dec new vehicle sales +0.3% m/m, Nov -0.7%, ’16 sales look to be record with 1.18 mln units sold, SUVs take record 37% share.
- New Zealand Q4 business confidence +28%, capacity utilization 92.7%, Q3 +26%, 92.5%, confidence at two-year high.
- New Zealand Dec REINZ median house prices +0.4% m/m, +11.8% y/y, Auckland cools.
Economic Data Ahead
- (0245 ET/0745 GMT) France Nov budget balance; last E85.5 bln deficit.
- (0400 ET/0900 GMT) Italy Nov trade balance; last E4.3 bln surplus, EU - E450 mln surplus.
- (0430 ET/0930 GMT) Great Britain Dec CPI, +0.3% m/m, +1.4% y/y forecast; last +0.2%, +1.2%.
- (0430 ET/0930 GMT) Great Britain Dec – core, +0.3% m/m, +1.5% y/y forecast; last +0.2%, +1.4%.
- (0430 ET/0930 GMT) Great Britain Dec RPI, +0.4% m/m, +2.3% y/y forecast; last +0.3%, +2.2%.
- (0430 ET/0930 GMT) Great Britain Dec RPIX; last +0.3% m/m, +2.5% y/y, index 265.5.
- (0430 ET/0930 GMT) Great Britain Dec PPI output, +0.4% m/m, +2.9% y/y forecast; last unch, +2.3%.
- (0500 ET/1000 GMT) Germany Jan ZEW economic sentiment index, 18.3 forecast; last 13.8.
- (0500 ET/1000 GMT) Germany Jan ZEW current conditions index, 65.0 forecast; last 63.5.
- (0600 ET/1100 GMT) New Zealand Jan Fonterra GDT dairy auction; last -3.9%, 3463 tonnes.
- (0830 ET/1330 GMT) United States Jan NY Fed Empire State manufacturing index, 9.0 forecast; last 9.0.
Key Events Ahead
- N/A Davos World Economic Forum (till Jan 20), China Pres Xi Jinping to speak.
- N/A UK PM May Brexit speech.
- N/A European Parliament president election.
- N/A Vienna Central-Eastern European Forum ’17, various attendees/speakers.
- N/A Belgium ’27 bond syndication via BNP Paribas, Citi, CA, ING.
- (0430 ET/0930 GMT) ECB weekly refi, E32 billion allotment forecast, Spain 6/12-mo t-bill auctions.
- (0530 ET/1030 GMT) Germany E5 bln zero% 2018 Schatz auction.
- (0845 ET/1345 GMT) NY Fed Dudley at New York National Retail Federation event.
- (1000 ET/1500 GMT) Fed Gov Brainard speaks at Washington, DC Brookings Institution.
- (1730 ET/2230 GMT) FOMC Chair Yellen webcast town hall meeting with educators.
- (1800 ET/2300 GMT) SF Fed Williams speaks at Sacramento business event.
FX Beat
DXY: The dollar eased versus its major peers, weighed down by concerns over U.S. President-elect Donald Trump's protectionist policies. The greenback against a basket of currencies traded 0.36 percent down at 101.20, within the sight of a low of 100.72 hit last week, it’s lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -121.35 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro rose above the 1.0600 handle, as the greenback tumbled on the back of falling Treasury yields amid persisting risk-off market sentiment. Moreover, the major was also supported by EUR/GBP cross strength, as the British pound weakened on hard Brexit concerns. The European currency trades 0.4 percent higher at 1.0635, having touched a high of 1.0684 last week, its highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at 46.22 (Neutral) by 0400 GMT. Investors’ attention remains on the Eurozone's ZEW Economic Sentiment Survey, ahead of several Federal Reserve officials’ speeches for further clues on the prospects of U.S interest rate hikes. Immediate resistance is located at 1.0650, a break above targets 1.0700. On the downside, support is seen at 1.0581 (10-DMA), a break below could drag it lower 1.0550.
USD/JPY: The dollar declined, extending losses for the seventh consecutive session, as concerns over U.S. President-elect Donald Trump's protectionist policies and hard Brexit fears undermined risk sentiment. On Monday, the major fell over 1-month low below the 114 handle but attempted a minor recovery to close at 114.18. The pair trades 0.2 percent lower at 113.94, after slumping as low as 113.62 on Monday, it’s lowest since Dec. 8. FxWirePro's Hourly Yen Strength Index stood at 58.82 (Bullish) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of speeches by Federal Reserve Bank of New York President William Dudley, Federal Reserve Board Governor Lael Brainard, and U.S. Treasury Secretary Jack Lew. Immediate resistance is located at 114.51 (10-DMA), a break above targets 115.05 (9-EMA). On the downside, support is seen at 113.62 (Previous Session Low), a break below could take it lower 113.50.
GBP/USD: Sterling extended its recovery mode above the 1.2000 handle, as investors cautiously await the UK PM May’s speech due later in the day, which may point towards huge economic uncertainties for the British economy. Sterling trades 0.3 percent higher at 1.2078, having hit a low of 1.1987 in the previous session, its lowest since Oct. 7. FxWirePro's Hourly Sterling Strength Index stood at -101.01 (Highly Bearish) by 0400 GMT. Investors now await series of UK economic data including retail sales, producer price index and consumer price index, ahead of PM May’s speech. Immediate resistance is located at 1.2100, a break above could take it near 1.2147 (7-EMA). On the downside, support is seen at 1.9087 (Previous Session Low), a break below targets 1.1948 (Oct 7 Low) / 1.1900. Against the euro, the pound trades 0.2 percent down at 88.10 pence, having hit a low of 88.51 the day before, it’s lowest since Nov. 9.
AUD/USD: The Australian dollar rose, hovering around the 0.7500 handle, as the greenback weakened across the board on profit-taking following a huge rally. The major was also supported by better-than-expected Australia's new motor vehicle sales figures in December and upbeat home loans figures in November. However, declining global equities and subdued commodity prices weighed on market sentiment, limiting the major's upside. The Aussie trades 0.4 percent higher at 0.7503, after hitting a high of 0.7518 on Thursday, it’s strongest since Dec. 14. FxWirePro's Hourly Aussie Strength Index stood at 99.65 (Slightly Bullish) by 0500 GMT. Investors will continue to digest positive domestic economic data, ahead of the U.S. CPI report and Fed speeches. Immediate support is seen at 0.7443 (7-EMA), a break below could drag it till 0.7403 (10-DMA). On the upside, resistance is located at 0.7524, a break above targets 0.7600.
NZD/USD: The New Zealand dollar rallied after data showed business confidence rose to 28 percent in the fourth quarter, surpassing previous reading of 26 percent. Investors' attention remains on the Global Dairy Trade price auction, which is likely to show a mild improvement after falling 3.9 percent in the prior auction. The Kiwi trades 0.5 percent up at 0.7136, having hit a high of 0.7147 on Monday, it’s strongest since Dec. 14. FxWirePro's Hourly Kiwi Strength Index was at 137.50 (Highly Bullish) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of Federal Reserve officials' speeches and Global Dairy Trade price auction due later in the day. Immediate resistance is located at 0.7150, a break above could take it till 0.7200. On the downside, support is seen at 0.7080 (7-DMA), a break below could drag it lower 0.7050.
Equities Recap
Asian shared declined as investors cautiously await British Prime Minister Theresa May's speech due later in the day, in which she will lay out plans to exit the European Union.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent.
Tokyo's Nikkei fell 1.11 percent to 18,882.67 points, Australia's S&P/ASX 200 index declined 0.89 percent to 5,697.20 points and South Korea's KOSPI was trading 0.39 percent up at 2,072.26 points.
Shanghai composite index slumped 0.34 percent to 3,093.00 points, while CSI300 index was trading 0.2 percent lower at 3,312.09 points.
Hong Kong’s Hang Seng was trading 0.4 percent higher at 22,817.14 points. Taiwan shares added 0.6 percent at 9,354.53 points.
Commodities Recap
Crude oil prices edged up, extending previous session gains after Saudi Arabia said it would firmly stick to a commitment to cut output. International benchmark Brent crude was trading 0.1 percent up at $55.72 per barrel by 0400 GMT, having touched a low of $53.57 last week, its weakest since Dec. 15. U.S. West Texas Intermediate crude rose 0.2 percent at $52.62 a barrel, after falling as low as $50.69.
Gold prices advanced, after touching more than 7-week highs in the previous session, as investors remain cautious ahead of a speech by British Prime Minister Theresa May on plans for a "hard Brexit". Spot gold gained 0.2 percent to $1,205.89 per ounce by 0404 GMT, having hit a high of $1,208.41 in the prior session, its strongest since Nov. 23. U.S. gold futures were up 0.6 percent at $1,203.70 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3581 percent lower by 0.022 bps, while 5-year yield was down by 0.023 bps at 1.8589 percent.
The Japanese government bonds traded nearly flat as investors remain sidelined as major market participants are eyeing to focus on the UK PM May’s speech 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 0.74 percent and the yield on the 3-year note remained steady at -0.17 percent.
The Australian bonds traded nearly flat in thin trading activity during a relatively quiet session that witnessed data of little significance. The 10-yield on the benchmark 10-year Treasury note hovered around 2.70 percent, the yield on 15-year note remained steady at 3.14 percent and the yield on short-term 2-year stood flat at 1.86 percent.
The New Zealand government bonds closed higher as investor speculation remain cloudy ahead of the United Kingdom’s Prime Minister Theresa May's Brexit speech. The yield on the benchmark 10-year bond ended 2 basis points lower at 3.14 percent, the yield on 7-year note also closed down 1 basis point to 2.81 percent and the yield on the short-term 2-year note also moved down 1 basis point to 2.20 percent.
Canadian government bond prices were higher across the yield curve as investors sought shelter in safe haven assets. The 2-year price rose 1.5 Canadian cents to yield 0.792 percent and the 10-year climbed 17 Canadian cents to yield 1.695 percent.
