Market Roundup
- Japan Dec flash mfg PMI 52.5, Nov 52.6, new orders 54.1 vs 53.6, new export orders 52.4 vs 53.2.
- Australia Nov Westpac/MI leading index 97.55, -0.21 vs trend, Oct 97.71.
- New Zealand Q3 c/a deficit NZ$4.75 bln, NZ$4.9 bln forecast, year-to-Sept NZ$8.1 bln def.
- New Zealand Fonterra GDT price index +1.9% at latest auction, rebound but gain less than expected, volume down again too.
- BAML survey -Investors cut US equity holdings to 8-year low, see Japan shares as undervalued, Japan stocks world's second most popular market - NEN, RTRS.
- Japan index: Onwards and upwards - Reuters BreakingViews.
- BoJ polling firms' wage plans as oil price slide threatens CPI target - RTRS.
- Sources - China ready to moderate sharp offshore yuan falls - Reuters.
- China PBOC Fan Gang - Economy faces headwinds amid adjustment - Sec Times.
- ThomsonReuters/INSEAD Q4 Asia business sentiment index 58, 4-year low, Q3 60, China slowdown cited, biggest risk.
- Emerging Asia to lean on $255 bln China-Japan liquidity wall against Fed fallout - Reuters.
- Foreign selling of US Treasuries in October most since '78 when series began, $55.2 bln sold, Sept $17.4 bln bought, China-Japan holdings lower, overall net capital inflow $68.9 bln in October.
- BoC Gov Poloz - Will not match potential rate hikes by the US Fed - Reuters.
- BoE Gov Carney - Committed to inflation target, won't follow through on rate Hikes is wrong thing to do, eyes more macro-prudential policy - FT.
Economic Data Ahead
- (0300 ET/0800 GMT) France Dec PMI mfg - flash, 50.5 forecast; last 50.6.
- (0300 ET/0800 GMT) France Dec PMI services - flash,50.8 forecast; last 51.0.
- (0300 ET/0800 GMT) France Dec PMI composite - flash; last 51.0.
- (0330 ET/0830 GMT) Germany Dec PMI mfg - flash, 53.0 forecast; last 52.9.
- (0330 ET/0830 GMT) Germany Dec PMI services - flash, 55.5 forecast; last 55.6.
- (0330 ET/0830 GMT) Germany Dec PMI composite - flash; last 55.2.
- (0358 ET/0858 GMT) Eurozone Dec PMI mfg - flash, 52.8 forecast; last 52.8.
- (0358 ET/0858 GMT) Eurozone Dec PMI services - flash, 54.1 forecast; last 54.2.
- (0358 ET/0858 GMT) Eurozone Dec PMI composite - flash, 54.2 forecast; last 54.2.
- (0430 ET/0930 GMT) Great Britain Nov claimant count, +1.5k forecast; last +3.3k.
- (0430 ET/0930 GMT) Great Britain Oct ILO unemployment, 5.3% forecast; last 5.3%.
- (0430 ET/0930 GMT) Great Britain Oct avge weekly earnings - 3-mo avge, +2.5% y/y forecast; last +3.0%.
- (0430 ET/0930 GMT) Great Britain Oct - ex-bonus, +2.3% y/y forecast; last +2.5%.
- (0500 ET/1000 GMT) Eurozone Nov inflation - final, -0.2% m/m, +0.1% y/y forecast; flash +0.1%, +0.1%.
- (0500 ET/1000 GMT) Eurozone Nov - ex-food/energy, -0.2% m/m, +0.9% y/y forecast; last +0.2%, +1.0%.
- (0500 ET/1000 GMT) Switzerland Dec ZEW investor sentiment index; last 0.
- (0500 ET/1000 GMT) Eurozone Oct trade balance, E21.5 bln surplus forecast; last E20.5 bln surplus.
- (0830 ET/1330 GMT) United States Nov housing starts, 1.14 mln AR forecast; last 1.06 mln, -11.0% m/m.
- (0830 ET/1330 GMT) United States Nov bldg permits, 1.15 mln AR forecast; last 1.16 mln, +5.1% m/m.
- (0915 ET/1415 GMT) United States Nov industrial output, -0.1% m/m forecast; last -0.2%.
- (0915 ET/1415 GMT) United States Nov capacity utilization, 77.4% forecast; last 77.5%.
- (0915 ET/1415 GMT) United States Dec Markit PMI mfg - flash, 52.6 forecast; last 52.8.
Key Events Ahead
- N/A ECB Governing/General Council meetings (till tomorrow).
- N/A Portugal -1 bln 3/12-mo bill, Greece E1 bln 13-week bill auctions.
- N/A Sweden SEK 15 and 10 bln 3/6-month treasury bill auctions.
- (0430 ET/0930 GMT) ECB 3-month LTRO tender, E10 bln allotment forecastm, bln maturing.
- (0815 ET/1315 GMT) Sweden Financial Stability Board meeting.
- (0830 ET/1330 GMT) Canada Oct int'l securities transaction data.
- (1400 ET/1900 GMT) FOMC policy announcement/1930 GMT FOMC Chair Yellen press conference.
FX Beat
USD: The dollar index last stood at 98.078, having gained 0.6 percent on Tuesday, off from a peak of 98.292, its highest level since Dec. 9. It came off a near 1-week high on Wednesday, but its losses were limited as the market counted down the hours to a likely hike in U.S. interest rates.
EUR/USD: The euro slipped around 0.6 percent, retreating from a 6-week high of $1.1060 on Tuesday. It currently trades 0.08% higher at 1.0933 levels after having touched a daily high of 1.0948 levels. Federal Reserve policy meet at which interest rates are expected to rise for the first time in nearly a decade, puts further pressure on the pair. Immediate support is seen around 1.0835 levels, with resistance located at 1.0956 levels (5 - DMA). Against the euro, the Canadian dollar rebounded to C$1.5013.
USD/JPY: The dollar was steady at 121.87 yen, drifting further away from a 6-week trough of 120.35 struck Monday. The pair currently trades at 121.88 levels, having touched a daily high of 121.94 levels and a low of 121.59 levels. The downside is limited as solid bounce in Asian stocks makes for a favourable sentiment across the financial markets. However, in the day ahead, the major is likely to remain underpinned ahead of the Fed decision, with a expected 25 bps hike in interest rates. It faces resistance at 122.03 levels (10 -DMA), with support located at 121.53 levels (Dec10 Close).
AUD/USD: The Australian dollar edged up 0.2 percent to $0.7208, paring losses after having shed 0.7 percent on Tuesday. It has fallen nearly 12 percent so far this year. The Aussie could fall further on lower commodity prices and as reluctant investors to take big bets before a likely rate hike in U.S. interest rates. The pair last stood at $0.7204, having touched a high of $0.7216 and low of $0.7188. Support was found at $0.7182 (Dec 11 -Low) with immediate resistance located at $0.7240 (10 -DMA).
NZD/USD: The New Zealand dollar edged up to $0.6759, having climbed to a 7-week high the previous day. The global dairy price auction held early Wednesday morning also dragged on the kiwi, as the fortnightly auction showed that dairy prices had risen for a second sale, but by less than the market expected. The kiwi broke key resistance between $0.6800 and $0.6825 on Tuesday, but could not sustain the level after a rally in the U.S. dollar. It currently trades at 0.6758 after falling to a low of 0.6740 and sees support at 0.6716 levels (10 - DMA) with resistance at 0.6789 levels (Dec 14 - High).
Equities Recap
Asian stocks gained on Wednesday, as Wall Street rose before a likely hike in U.S. interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5 percent while Shanghai stocks edged up 0.4 percent.
Australia's S&P/ASX 200 Index closed up 2.21 pct at 5,018.00 points, while Nikkei ended up 2.61 pct at 19,049.91 with Seoul Shares up 1.98 pct.
Commodities Recap
Gold climbed higher on Wednesday as investors awaited the conclusion of a Federal Reserve policy meeting at which the U.S. central bank is expected to raise rates for the first time in nearly a decade. Spot gold rose 0.5 percent to $1,065.60 an ounce by 0322 GMT following two days of losses.
Crude oil dropped in Asian trade on Wednesday, snapping gains that pulled prices back from testing 11-year lows, as investors awaited the outcome of a Federal Reserve meeting, where interest rates are likely to be raised. U.S. crude prices settled at $37.35 a barrel, up 2.9 percent, while Brent crude added 0.3 percent to $38.04. West Texas Intermediate dropped 55 cents to $36.91 a barrel by 0219 GMT after rising more than $1 on Tuesday.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.267 percent up by 0.002.
Australian government bond futures eased, with the 3-year bond contract off 3 ticks at 97.840. The 10-year contract dropped 4.5 ticks to 97.0650, while the 20-year contract was down 5 ticks to 96.5750.
New Zealand government bonds eased, sending yields as much as 4.5 basis points higher.
Canadian government bond prices were lower across the maturity curve. The 10-year dropped 16 Canadian cents to yield 1.49 percent and the 2-year price was down 2.5 Canadian cents to yield 0.52 percent. The Canada-U.S. 10-year spread was 2.8 basis points wider at -78.1 basis points, trading at its deepest negative level in nearly four months, as Treasuries underperformed.
