Market Roundup
- DXY to fresh 14-year high of 103.65 yesterday, Asia 103.06-38
- Japan government ups economic assessment for the first time since March ’15, household spending-exports-business sentiment up, moderate recovery still with some sectors lagging but to improve more.
- Market scramble: Japan's whale (GPIF) seen making a splash at market's high tide – Nikkei.
- South Korea FX authority – Traders should be cautious near USD/KRW 1200 –Reuters.
- Australia set for strong M&A year though foreign investor limits dampen sentiment – Reuters.
- Australian companies expected to post first profit increase in 2 years.
- Australia Nov Westpac/MI leading index 97.16, Oct 97.14, 6-mo AR deviation from trend +0.11%, Oct +0.51%.
- New Zealand Nov trade deficit NZ$705 mln, year-to-date NZ$3.18 bln deficit, exports NZ$3.86 bln, imports NZ$4.56 bln.
- New Zealand Fonterra GDT price index -0.5% at dairy auction, increased supply halts price recovery, NZ Nov production -5% y/y however, Australia Oct -11%, NZ collection -7% over last season – Reuters.
- New Zealand posts another strong month for permanent visitors in November.
Economic Data Ahead
- (0200 ET/0700 GMT) Norway Oct labor force survey – unemployment, 4.8% forecast; last 4.8%.
- (0245 ET/0745 GMT) France Nov producer prices; last +0.8% m/m.
- (0400 ET/0900 GMT) Italy Nov wage inflation; last +0.1% m/m, +0.6% y/y.
- (0430 ET/0930 GMT) Great Britain Nov PSNB, GBP11.3 bln forecast; last GBP4.3 bln, PSNCR -GBP3.41 bln.
- (0430 ET/0930 GMT) Great Britain Nov – ex-banks, GBP12.1 bln forecast; last GBP4.8 bln.
- (0900 ET/1400 GMT) Belgium Dec leading indicator, -1.3 forecast; last -1.8.
- (1000 ET/1500 GMT) Eurozone Dec consumer confidence index – flash, -6.0 forecast; last -6.1.
- (1000 ET/1500 GMT) United States Nov existing home sales, 5.5 mln AR, -1% m/m forecast; last 5.6 mln, +2%.
Key Events Ahead
- (0330 ET/0830 GMT) Riksbank policy announcement, no change in -0.5% repo rate forecast.
- (0430 ET/0930 GMT) ECB 3-month LTRO, E5.0 bln allotment forecast, E4.57 bln maturing.
- (0500 ET/1000 GMT) Riksbank Gov Ingves, Nessen press conference.
FX Beat
DXY: The dollar eased against its major competitors as it ran into a corrective mode after rising to multi-year highs on Tuesday. The greenback against a basket of currencies traded 0.1 percent down at 103.13, having touched a fresh 14-year high of 103.65 in the previous session. FxWirePro's Hourly Dollar Strength Index stood at 22.24 (Neutral) by 0500 GMT
EUR/USD: The euro steadied, after declining to a fresh 14-year low in the previous session, as the dollar continued to strengthen across the board after upbeat comments from Federal Reserve Chair Janet Yellen on the U.S. labor market. Trading activity in the major is likely to remain muted amid a lack of macro-fundamental drivers from the Eurozone. The European currency trades 0.2 percent up at 1.0411, having hit a low of 1.0352 on Tuesday, it’s lowest since Jan. 2003. FxWirePro's Hourly Euro Strength Index stood at -43.54 (Neutral) by 0400 GMT. Investors will continue to track overall market sentiment, ahead of the U.S. existing home sales and Eurozone preliminary consumer confidence figures. Immediate resistance is located at 1.0424 (38.2% retracement of 1.0352 and 1.0539), a break above targets 1.0500. On the downside, support is seen at 1.0350, a break below could drag it lower 1.0300.
USD/JPY: The dollar fell below the 118.00 handle, mainly driven by corrective mode in the U.S dollar against its major peers. However, the downside appears limited as expectations of U.S. interest rates rising more rapidly during the President-elect Donald Trump Administration provided some support to the pair. The major trades 0.2 percent lower at 117.60, within the sight of a low of 116.54 hit earlier in the week. FxWirePro's Hourly Yen Strength Index stood at 109.91 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on the U.S. existing home sales data, amid a subdued economic calendar and thin volumes ahead of the holiday season. Immediate resistance is located at 118.42, a break above targets 118.70/ 119.00. On the downside, support is seen at 117.05 (7-EMA), a break below could take it near 116.49.
GBP/USD: Sterling edged up, after declining to a 1-month low in the previous session on the back of renewed concerns over the Brexit process. On Tuesday, the selling pressure around the pound intensified after Scotland's premier said she intended to push for independence from the rest of the UK in order to retain access to Europe's single market post-Brexit. Sterling trades 0.1 percent up at 1.2379, having declined to a low of 1.2312 on Tuesday, its lowest since Nov. 21. FxWirePro's Hourly Sterling Strength Index stood at -42.51 (Neutral) by 0400 GMT. Investors will closely watch the UK's public sector net borrowings and the U.S. existing home sales data for further momentum on the major. Immediate resistance is located at 1.2407 (5-DMA), a break above could take it near 1.2448 (7-EMA). On the downside, support is seen at 1.2349 (Session Low), a break below targets 1.2300. Against the euro, the pound was trading 0.2 percent lower at 84.10 pence, hovering towards a 10-day low of 84.49 pence hit earlier in the week.
AUD/USD: The Australian dollar edged down after recovering from a near 7-month low in the previous, as expectations of multiple United States interest rate hikes in 2017 strengthened the greenback. The major initially rose to an intra-day high of 0.7273 on the back of moderate gains in copper prices, however, divergent monetary policy outlooks between the Federal Reserve and RBA weighed on the pair. The Aussie trades lower at 0.7259, having hit a low of 0.7222 on Tuesday, it’s lowest since Jun. 3. FxWirePro's Hourly Aussie Strength Index stood at -122.19 (Highly Bearish) by 0400 GMT. Investors' will continue to track board based market sentiment, amid subdued trading activity in the run up to Christmas. Immediate support is seen at 0.7222 (Previous Session Low), a break below could drag it till 0.7200. On the upside, resistance is located at 0.7284 (5-DMA), a break above targets 0.7300.
NZD/USD: The New Zealand dollar rose, after slumping to a near 7-month low in the previous session following mixed domestic fundamentals. Data released overnight showed visitor arrivals rose 0.5 percent, indicating that the demand for goods and services in the economy strengthened during December. However, the gains in the major were capped as a drop in milk prices in the latest dairy auction and a higher-than-expected trade deficit of NZ$750 million in November, weighed on investor sentiment. The Kiwi trades 0.2 percent higher at 0.6928, having touched a low of 0.6882 on Tuesday, it’s lowest since early June. FxWirePro's Hourly Kiwi Strength Index was at -148.45 (Highly Bearish) by 0500 GMT. Investors will continue to digest New Zealand's latest economic data set, ahead of the U.S. existing home sales figures. Immediate resistance is located at 0.6953 (5-DMA), a break above could take it near 0.6990 (7-EMA). On the downside, support is seen at 0.6900, a break below could drag it till 0.6882 (Previous Session Low).
Equities Recap
Asian shares gained, strengthened by risk-on sentiment, while the U.S. dollar against a basket of currencies traded near 14-year peak on expectations that President-elect Donald Trump's administration might boost profits and growth.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, after following a string of losses.
Tokyo's Nikkei fell 0.33 percent at 19,429.92 points, Australia's S&P/ASX 200 index gained 0.47 percent at 5,617.30 points and South Korea's KOSPI was trading 0.1 percent higher at 2,043.89 points.
Shanghai composite index rose 0.98 percent to 3,133.53 points, while CSI300 index was trading 0.82 percent higher at 3,336.30 points.
Hong Kong’s Hang Seng was trading 0.58 percent up at 21,857.38 points. Taiwan shares shed 0.4 percent at 9,204.26 points.
Commodities Recap
Crude oil prices traded within narrow ranges, with trading activity subdued as markets started to wind down ahead of the Christmas weekend. International benchmark Brent crude was flat at $55.47 per barrel by 0348 GMT, having touched a 1-week high of $55.89 on Tuesday. U.S. West Texas Intermediate crude was little changed at $53.47 a barrel, hovering towards a high of $54.48, its highest since July 2015.
Gold prices steadied, regaining some of its earlier losses, as the U.S. dollar nudged slightly lower on profit taking. Spot gold was up 0.2 percent at $1,134.43 an ounce by 0352 GMT, having declined 0.6 percent in the previous session. U.S. gold futures were 0.2 percent higher at $1,135.80 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5569 percent lower by 0.011 bps, while 5-year yield was down by 0.007 bps at 2.0389 percent.
The Australian government bonds were drifting between small gains and losses in quiet trading session ahead of long global Christmas holidays. The yield on the benchmark 10-year Treasury note fell 2-1/2 basis points to 2.85 percent, the yield on 15-year note dipped 2 basis points to 3.32 percent, while the yield on the short-term 2-year bounced 2 basis point to 1.97 percent.
The New Zealand government bonds closed lower after recent data showed that the country’s trade deficit narrowed in November. The yield on the benchmark 10-year bond closed 1 basis point higher at 3.46 percent, the yield on 7-year note ended up 2 basis points to 3.04 percent and the yield on short-term 2-year note rose 2-1/2 basis points at 2.32 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year down 4.5 Canadian cents to yield 0.826 percent and the benchmark 10-year falling 20 Canadian cents to yield 1.807 percent. The difference in yield between Canada's 2-year bond and its U.S. equivalent narrowed by 3.3 basis points to a spread of -39.4 basis points, as some recent underperformance for U.S. Treasuries was pared.
