Market Roundup
- Japan Nov core machinery orders +5.7% m/m, +4.1% y/y, -1.4%, -0.7% eyed.
- Value of core orders largest since June ’08.
- Moody’s – Recent JGB yield gains won’t hurt government funding costs.
- Bitcoin jolted by regulation worries, falls 7 pct on the extended sell-off.
- China to further cut debt ratios at big state-owned firms as profit growth surges.
- China sets yuan mid-point at more than 2-yr high.
- Nations to consider more N.Korea sanctions, U.S. warns on the military option.
- U.S. House Republicans mull funding extension; 'Dreamer' deal not set.
- Back Brexit law or risk chaos, PM May's Conservatives tell lawmakers.
Economic Data Ahead
- No major economic data releases.
Key Events Ahead
- (0645 ET/1145 GMT) BOE Member of Monetary Policy Committee Michael Saunders: Launch of Financial Intermediary and Broker Association in London.
- (1000 ET/1500 GMT) Senate Banking Committee holds a vote on the nomination of Jerome Powell to be chairman of the Federal Reserve in Washington.
- (1000 ET/1500 GMT) The Bank of Canada issues its monetary policy report in Ottawa.
- (1115 ET/1615 GMT) Bank of Canada's Stephen Poloz and Carolyn Wilkins will hold a press conference to discuss the monetary policy in Ottawa.
- (1500 ET/2000 GMT) Federal Reserve Bank of Chicago’ Charles Evans, Federal Reserve Bank of Dallas’ Robert Kaplan participate in a discussion on current economic conditions and monetary policy before the American Council of Life Insurers Executive Roundtable in Palm Beach.
- (1630 ET/2130 GMT) Federal Reserve Bank of Cleveland President Loretta Mester gives a lecture on monetary policy communications in New Brunswick, New Jersey.
FX Beat
DXY: The dollar index bounded after falling to a 3-year low earlier in the session on expectations major central banks would eventually normalize monetary policy. The greenback against a basket of currencies traded 0.1 percent up at 90.61, having touched a low of 90.11, its lowest since January 2015. FxWirePro's Hourly Dollar Strength Index stood at -8.11 (Neutral) by 0500 GMT.
EUR/USD: The euro trimmed gains after rising to a fresh 3-year peak above the 1.2300 handle, as uncertainty surrounding the German Chancellor Merkel's ability to form a coalition government weighed on market sentiment. The European currency traded flat at 1.2259, having touched a high of 1.2322 earlier, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 111.04 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on Eurozone consumer price index, ahead of U.S. industrial production report, NAHB housing market index and Fed officials speeches. Immediate resistance is located at 1.2340, a break above targets 1.2370. On the downside, support is seen at 1.2237 (78.6% retracement of 1.1916 and 1.2269), a break below could drag it lower 1.2169 (61.8% retracement).
USD/JPY: The dollar rebounded after slumping to a fresh 4-month low earlier in the session on yesterday's comments from BoJ Governor Kuroda, who reiterated his commitments that he will continue to pursue policies that will push inflation toward the 2 percent target. The major was trading 0.4 percent up at 110.85, having hit a low of 110.19 earlier, its lowest since Sept 15. FxWirePro's Hourly Yen Strength Index stood at -16.22 (Neutral) by 0400 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. industrial production report, NAHB housing market index and Fed officials speeches. Immediate resistance is located at 110.95 (23.6% retracement of 110.19 and 113.38), a break above targets 111.41 (38.2% retracement). On the downside, support is seen at 110.19 (Session Low), a break below could take it near 110.00.
GBP/USD: Sterling eased after rising to a 1-1/2 year above the 1.3800 handle earlier in the day on expectations that some European Union member states are prepared to offer Britain more favorable terms when it leaves the bloc. The major traded 0.1 percent down at 1.3781, having hit a high of 1.3836 earlier, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at 84.70 (Slightly Bullish) by 0400 GMT. Investors’ focus will remain on BoE MPC member Saunders speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3840, a break above could take it near 1.3890. On the downside, support is seen at 1.3757 (78.6% retracement of 1.3458 and 1.3836), a break below targets 1.3693 (61.8% retracement). Against the euro, the pound was trading flat at 88.89 pence, having hit a low of 89.29 pence on Friday, it’s lowest since Nov. 28.
AUD/USD: The Australian dollar declined after rising to a fresh near 4-month high earlier on the back of upbeat domestic home loans data, which rose 2.1 percent in November, beating expectations of -0.2 percent and previous reading of -0.6 percent. The Aussie trades 0.1 percent down at 0.7949, having hit a high of 0.7999; it’s highest since Sept. 21. FxWirePro's Hourly Aussie Strength Index stood at 9.81 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7926 (61.8% retracement of 0.7807 and 0.7999), a break below targets 0.7904 (50.0% retracement). On the upside, resistance is located at 0.8000, a break above could take it near 0.8040.
NZD/USD: The New Zealand dollar tumbled, extending previous session losses after data showed ANZ commodity price index slumped to 2.2 percent in December from a 0.9 percent fall recorded in the month before. The Kiwi trades 0.4 percent down at 0.7241, having touched a high of 0.7314 on Monday, its highest level since Sept. 25. FxWirePro's Hourly Kiwi Strength Index was at -164.47 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7320, a break above could take it near 0.7360. On the downside, support is seen at 0.7203 (10-DMA), a break below could drag it lower 0.7133 (Jan 10 Low).
Equities Recap
Asian shares declined from a record high, dragged down by falling oil and commodity prices, while the greenback rebounded after falling to a 3-year low on global central banks' policy normalization view.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.15 percent from its record high.
Tokyo's Nikkei eased 0.3 percent to 23,887.93 points, Australia's S&P/ASX 200 index fell 0.5 percent to 6,015.80 points and South Korea's KOSPI declined 0.4 percent to 2,512.13 points.
Shanghai composite index rose 0.5 percent to 3,454.38 points, while CSI300 index was trading 0.2 percent up at 4,265.39 points.
Hong Kong’s Hang Seng was trading 0.3 percent lower at 31,837.18 points. Taiwan shares added 0.2 percent to 11,004.80 points.
Commodities Recap
Crude oil prices declined, extending previous session losses, as some analysts warned of a downward correction after a more than 13-percent price rise in a month. International benchmark Brent crude was trading 0.4 percent down at $69.01 per barrel by 0431 GMT, having hit a high of $70.33 on Monday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.4 percent down at $63.61 a barrel, after rising as high as $64.86 on Monday, its highest since Dec. 2014.
Gold prices edged up as the U.S. dollar consolidated near three-year lows against a basket of currencies. Spot gold was trading flat at $1,338.26 an ounce by 0435 GMT, after touching its strongest since Sept. 11 at $1,344.47 on Monday. U.S. gold futures were up 0.2 percent at $1,340 an ounce.
Treasuries Recap
The 10-year U.S Treasury yield stood at 2.562 percent higher by 0.019 bps, while 5-year yield was 0.019 bps up at 2.373 percent.
The Japanese government bonds traded narrowly mixed after the Bank of Japan kept its bond purchases unchanged in its open market operation held today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 0.082 percent, the yield on the long-term 30-year note dipped nearly 1/2 basis point to 0.832 percent and the yield on short-term 2-year rose 1/2 basis point to -0.130 percent.
The Australian government bonds slumped as investors preferred riskier assets following a rise in Westpac’s consumer sentiment for January. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.761 percent, the yield on the long-term 30-year note climbed 1/2 basis point to 3.446 percent and the yield on short-term 2-year up 1-1/2 basis points to 2.089 percent.
The Canadian government bond prices were mixed across the yield curve, with the two-year down half a Canadian cent to yield 1.778 percent and the 10-year rising 12 Canadian cents to yield 2.175 percent.
