Market Roundup
- Public holiday in Japan - Labour Thanksgiving Day
- UK’s Hammond to tackle still large budget deficit and inject dynamism into economy - Treasury
- UK's Hammond to soften slightly the rate at which low-paid workers lose tax credits – Treasury
- UK'S Hammond to announce 1.4 bln pounds in new funding to help build 40,000 new homes – Treasury
- UK's Hammond to soften slightly the rate at which low-paid workers lose tax credits – Treasury
- China C. Bank official in Shanghai says PBOC will crackdown on capital flight and closely monitor abnormal capital flows
- USD/CNH posts fresh high surpassing Mon’s 6.9175 peak
- Value of Australia's construction work done down s.a. 4.9% in Q3 from revised 3.1% fall in Q2 -ABS
Economic Data Ahead
- (0400 ET/0900 GMT) Eurozone Markit Manufacturing Flash PMI Nov 53.30 f/c 53.50 last
- (0400 ET/0900 GMT) Eurozone Markit Composite Flash PMI Nov 53.30 f/c 53.30 last
- (0400 ET/0900 GMT) Eurozone Markit Services Flash PMI Nov 53.00 f/c 52.80 last
Key Events Ahead
- (0530 ET/1030 GMT) Portugal 5Y E0.750B 3.850% 15/04/21 EUR0.5-0.75BN
- (0530 ET/1030 GMT) Germany 10Y 3.000B 15/08/26 TAP06:30
- (0730 ET/1230 GMT) UK Chancellor Hammond to deliver 2016 Autumn Statement
FX Beat
DXY: The dollar strengthened across the board after data showed U.S. home resale’s rose to their highest level in more than 9-1/2 years in October. The greenback against a basket of currencies trades up at 101.01, within the sight of a 13-1/2 -year high of 101.48 hit on Friday. FxWirePro's Hourly Dollar Strength Index stood at -1.39 (Bias Neutral) by 0500 GMT.
EUR/USD: The euro consolidated between a narrow range, as the dollar strengthened after strong U.S. housing data further bolstered expectations for a Federal Reserve rate hike in December and more tightening next year. The U.S. home resale’s jumped in October to their highest level in more than 9-1/2 years, supported by an improving labor market, indicating that the economic growth picked up early in the fourth quarter. The European currency traded flat at 1.0624, having touched a high of 1.0657 in the previous session. FxWirePro's Hourly Euro Strength Index stood at -33.87 (Bias Neutral) by 0400 GMT. Markets attention now remains on preliminary Markit manufacturing PMI from both the continents and the U.S. durable goods orders, ahead of FOMC latest policy meeting minutes for further momentum on the pair. Immediate resistance is located at 1.0664 (7-EMA), a break above could take it over 1.0700. On the downside, support is seen at 1.0569 (11-Month Low), a break below could drag it lower 1.0550.
USD/JPY: The dollar traded near 6-month highs, as markets cautiously awaited for the minutes of the Federal Reserve's November policy meeting. On Tuesday, the major eased to a low of 110.26, however, it closed above the 111.00 handle, after data showed U.S. October home resale’s rose to their highest level in more than 9-1/2 years. The upside lacks momentum as a pull-back in benchmark U.S. 10-year Treasury yields from their recent highs dented the bid tone around the greenback. The pair trades lower at 111.06, after rising as high as 111.36 on Monday, it’s strongest since May. FxWirePro's Hourly Yen Strength Index stood at -125.11 (Bias Highly Bearish) by 0400 GMT. Investors now await U.S. durable goods data, Markit flash manufacturing PMI and FOMC minutes due later in the day. Trading in the yen is likely to remain subdued, with Japanese markets closed for a public holiday. Immediate resistance is located at 111.44, a break above targets 112.00. On the downside, support is seen at 110.09 (7-EMA), a break below could take it near 109.39 (10-DMA).
GBP/USD: Sterling declined, after rising to a 1-week high in the previous session on the view that Brexit will be slower and softer than had been initially anticipated. On Tuesday, the major ended 0.8 percent down at 1.2423, after rising as high as 1.2512, its highest since Nov. 14. Sterling trades lower at 1.2415, attempting to sustain gains above the 1.2400 handle. FxWirePro's Hourly Sterling Strength Index stood at 30.09 (Bias Neutral) by 0400 GMT. Markets will closely watch British government's autumn budget statement, which is expected to show some modest infrastructure spending and housing stimulus. Focus also remains’ on Federal Reserve's latest policy meeting minutes for further cues on the December meeting decision. Immediate resistance is located at 1.2461 (10-DMA), a break above could take it near 1.2500. On the downside, support is seen at 1.2388 (20-DMA), a break below targets 1.2350. Against the euro, the pound trades down at 85.55 pence, having hit a high of 84.89 pence on Monday, it’s highest since Sept.
AUD/USD: The Australian dollar edged up, extending gains for the third consecutive session, supported by rising commodities amid risk-on market profile. Markets seem to have ignored Australia's downbeat construction data, which showed a surprisingly sharp fall of 4.9 percent in the third quarter, compared to estimates of 1.7 percent. The major is still down three cents in the two weeks since Republican Donald Trump won the U.S. Presidency. The Aussie trades 0.3 percent higher at 0.7427, having retreated from a 5-month trough of 0.7311 touched on Monday. FxWirePro's Hourly Aussie Strength Index stood at 146.98 (Bias Highly Bullish) by 0500 GMT. Investors focus remains U.S. initial jobless claims, durable goods orders, preliminary manufacturing PMI, new home sales and FOMC November Meeting minutes for further clues on the strength of the U.S. economy. Immediate support is seen at 0.7386 (5-DMA)), a break below could drag it lower 0.7360. On the upside, resistance is located at 0.7454 (9-EMA), a break above targets 0.7500.
NZD/USD: The New Zealand dollar nudged up, but continued to consolidate between a narrow range, amid a holiday-thinned Asian session. Rising commodities prices, positive sentiment in global equity and a less volatile market underpinned sentiment for carry trades. The Kiwi trades up at 0.7064, hovering just above a low of 0.6985 hit on Monday, it’s lowest since Jul. 26. However, further recovery lacks momentum as markets nervously await the FOMC minutes release due later in the day. FxWirePro's Hourly Kiwi Strength Index was at 74.12 (Bias Slightly Bullish) by 0500 GMT. Investors’ attention now shifts on series of U.S. economic data, however, swings in the Treasury yields and December Fed rate hike bets will be the main driver for the moves in the pair. Immediate resistance is located at 0.7089 (9-EMA), a break above could take it over 0.7100. On the downside, support is seen at 0.7031 (Previous Session Low), a break below could drag it near 0.7000.
Equities Recap
Asian shares advanced to 1-week highs, following overnight gains on the Wall Street, amid thinned-holiday-trading, while markets nervously await FOMC latest policy meeting minutes.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent, pulling further away from 4-month lows hit on Monday.
Japanese banks will be closed in observance of Labor Thanksgiving Day.
Australia's S&P/ASX 200 index advanced 1.35 percent to 5,486.60 points and South Korea's KOSPI was trading 0.54 percent higher at 1,994.21 points.
Shanghai composite index rose 0.18 percent to 3,254.08 points, while CSI300 index was trading 0.50 percent higher at 3,485.79 points.
Hong Kong’s Hang Seng was trading 0.22 percent up at 22,735.96 points. Taiwan shares added 0.5 percent at 9,178.23 points.
Commodities Recap
Crude oil prices nudged up, as markets expect OPEC to cut crude output by 4.0 - 4.5 percent for all of its members by the end of this month. International benchmark Brent crude was trading 0.14 percent higher at $49.07 per barrel by 0358 GMT, after rising as high as $49.93 in the previous session, its highest since Oct. 31. U.S. West Texas Intermediate crude rose 0.2 percent at $47.97 a barrel, having hit a 3-week high of $49.93 the day before.
Gold prices steadied, as investors remained cautious ahead of minutes from the November Federal Reserve policy meeting for further clues on an anticipated interest rate hike. Spot gold edged up 0.1 percent to $1,213.55 an ounce by 0403 GMT, having shed 0.15 percent in the previous session. U.S. gold futures rose 0.1 percent at $1,212.60 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3137 percent down by 0.005 bps, while 5-year yield was at 1.7778 percent.
The Australian government bonds slumped as investors moved away from safe-haven buying following hawkish comments from the Reserve Bank of Australia Assistant Governor Christopher Kent. The yield on the benchmark 10-year Treasury note rose more than 6 basis points to 2.73 percent (highest since January this year), the yield on 15-year note jumped 4-1/2 basis points to 3.12 percent and the yield on short-term 3-year bounced 4 basis points to 1.93 percent.
The New Zealand government bonds slumped as investors moved away from safe-haven buying after the Federal Reserve December rate hike probability finally reached 100 percent, boosting demand for riskier assets. The yield on the benchmark 10-year bond rose 5-1/2 basis points to 3.14 percent, the yield on 7-year note also ended 4 basis points higher to 2.77 percent and the yield on short-term 2-year note bounced 3-1/2 basis points to 2.13 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 3 Canadian cents to yield 0.659 percent and the benchmark 10-year rising 22 Canadian cents to yield 1.545 percent.
