Market Roundup
- UK PM May asks lawmakers to send a message to Brussels on Brexit deal
- U.S. shutdown costs pegged at $3 bln as government reopens
- Japan cuts view of exports as U.S.-China trade war hurts trade
- U.S. sanctions Venezuelan state oil firm, escalating pressure on Maduro
- U.S. charges China's Huawei with conspiring to violate Iran sanctions
- Canada receives formal U.S. extradition request for Huawei CFO -CBC
- U.S.' Mnuchin expects progress in 'complicated' China trade talks
- New Zealand vows to shake up financial industry after report slams life insurers
- Australia to keep banks' extra capital buffer at zero for now
- Australia Dec NAB Business Conditions, 2, 11 prev
- Australia Dec NAB Business Confidence, 3, 3 prev
Economic Data Ahead
- (0245 ET/0745 GMT) France Jan Consumer Confidence, 88 f'cast, 87 prev
Key Events Ahead
- N/A Fed's FOMC starts its two-day meeting on interest rates
- N/A ECB's Ewald Nowotny and other central bankers attend fintech conference - Vienna
- N/A Bank of Lithuania's Marius Jurgilas participates at FinTech conference - Paris
- N/A Riksbank Governor's Stefan Ingves participates in panel discussion on fintech with IMF's Christine Lagarde - Paris
- (0330 ET/0830 GMT) Swedish central bank's Martin Floden talks about Swedish economy and monetary policy
- (0530 ET/1030 GMT) ECB's Villeroy speaks at Paris fintech conference - Paris
- (1030 ET/1530 GMT) Fed Dallas's issues January Service Sector Outlook Survey - Dallas
- (1230 ET/1730 GMT) BoE's Andy Haldane speaks at Society of Professional Economists event – London
FX Beat
DXY: The dollar index slumped on growing expectations Fed will keep rates steady this year given the state of economic growth outside the U.S. The greenback against a basket of currencies trades 0.1 percent down at 95.69, having touched a low of 95.64 on Monday, its lowest since Jan. 15. FxWirePro's Hourly Dollar Strength Index stood at -120.76 (Highly Bearish) by 0500 GMT.
EUR/USD: The euro surged, extending gains for the third straight session, as the greenback eased on expectations the Fed will adopt a more cautious stance on policy than they did in 2018, weighed down by signs of a peak in U.S. corporate earnings and the loss of economic momentum. The European currency traded 0.1 percent up at 1.1432, having touched a high of 1.1443 on Monday, its highest since Jan. 15. FxWirePro's Hourly Euro Strength Index stood at 103.34 (Highly Bullish) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone, ahead of the U.S. consumer confidence. Immediate resistance is located at 1.1455 (November 2 High), a break above targets 1.1484 (December 4 High). On the downside, support is seen at 1.1370 (Jan. 17 Low), a break below could drag it till 1.1325 (Jan. 2 Low).
USD/JPY: The dollar slumped to an 11-day peak, amid worries over escalation in U.S.-China trade tensions after the U.S. Justice Department charged China's Huawei Technologies Co Ltd with fraud. The major was trading 0.05 percent down at 109.31, having hit a low of 109.13 earlier, its lowest since January 18. FxWirePro's Hourly Yen Strength Index stood at -114.92 (Highly Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer confidence. Immediate resistance is located at 109.88 (Jan. 18 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 108.70 (Jan. 2 Low), a break below could take it lower at 108.44 (Jan. 8 Low).
GBP/USD: Sterling eased, extending previous session losses, as investors remained cautious ahead of crucial votes in the British parliament that will aim to break a Brexit impasse. The major traded 0.1 percent down at 1.3148, having hit a high of 1.3217 on Friday; it’s highest since October 16. FxWirePro's Hourly Sterling Strength Index stood at 12.08 (Neutral) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3257 (October 12 High), a break above could take it near 1.3298 (September 20 High). On the downside, support is seen at 1.3082 (October 15 Low), a break below targets 1.3021 (November 6 Low). Against the euro, the pound was trading 0.1 percent down at 86.90 pence, having hit a high of 86.16 on Friday, it’s highest since May 2017.
AUD/USD: The Australian dollar eased after data showed National Australia Bank's index of business conditions fell nine points to 2 in December, while confidence held at 3, as sales, profits and employment declined. The Aussie trades 0.05 percent down at 0.7163, having hit a high of 0.7203 on Monday; it’s highest since January 18. FxWirePro's Hourly Aussie Strength Index stood at 77.59 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7115 (Jan. 22 Low), a break below targets 0.7085 (December 20 Low). On the upside, resistance is located at 0.7246 (December 13 High), a break above could take it near 0.7300 (November 20 High).
NZD/USD: The New Zealand dollar gained, as the greenback eased ahead of the Federal Open Market Committee policy meeting, where Chairman Jerome Powell is widely expected to acknowledge growing risks to the U.S. economy. The Kiwi trades 0.3 percent up at 0.6848, having touched a high of 0.6872 on Monday, its highest level December 18. FxWirePro's Hourly Kiwi Strength Index was at 120.60 (Highly Bullish) by 0500 GMT. Immediate resistance is located at 0.6911 (Dec. 11 High), a break above could take it near 0.6944 (Dec. 5 High). On the downside, support is seen at 0.6799 (Jan. 15 Low), a break below could drag it below 0.6726 (Jan. 7 Low).
Equities Recap
Asian shares plunged as concerns over U.S.-China trade deal heightened after the United States levelled criminal charges against China's telecom giant Huawei.
MSCI's broadest index of Asia-Pacific shares outside Japan declined.
Tokyo's Nikkei surged 0.1 percent to 20,664.64 points, Australia's S&P/ASX 200 index rose 0.5 percent to 5,874.20 points and South Korea's KOSPI rallied 0.2 percent to 2,181.48 points.
Shanghai composite index gained 0.1 percent to 2,600.31 points, while CSI300 index traded 0.5 percent up at 3,198.63 points.
Hong Kong’s Hang Seng traded 0.1 percent lower at 27,545.59 points. Taiwan shares shed 0.8 percent to 9,931.59 points.
Commodities Recap
Crude oil prices rebounded from a near 2-week low after Washington imposed sanctions on Venezuelan state-owned oil firm in order to curb the OPEC member's crude exports to the United States. International benchmark Brent crude was trading 0.1 percent up at $60.02 per barrel by 0442 GMT, having hit a low of $59.47 on Monday, its lowest since January 15. U.S. West Texas Intermediate was trading 0.05 percent higher at $52.08 a barrel, after falling as low as $51.31 on Monday, its lowest since the January 17.
Gold prices rallied to a more than 7-month high amid worries over escalation in U.S.-China trade tensions after the U.S. Justice Department charged China's Huawei Technologies Co Ltd with fraud. Spot gold rose 0.1 percent at $1,304.00 per ounce by 0519 GMT, having touched a high of $1,304.45 earlier, its highest level since June 14. U.S. gold futures were also steady at $1,302.70 per ounce.
Treasuries Recap
The Japanese government bonds continued to trade in a steady mode on the second trading day of the week amid a muted session that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.003 percent, the yield on the long-term 30-year note flat at 0.652 percent while the yield on short-term 2-year plunged 15-1/2 basis points to -0.155 percent.
The Australian government bonds slumped across the curve during Asian trading session as markets remain optimistic for a possible U.S.-China trade deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 3-1/2 basis points to 2.247 percent, the yield on the long-term 30-year bond also jumped 4 basis points to 2.763 percent and the yield on short-term 2-year also traded nearly 3 basis points higher at 1.851 percent.
The Canadian government bond prices were higher across a flatter yield curve, with 10-year rising 12 Canadian cents to yield 1.963 percent.
