Market Roundup
- BoJ Policy Board leaves policy unchanged, to stick with YCC-NIRP-QQE, vote on YCC 7-2, Kiuchi-Sato dissents again, all as forecast, economy view brighter, exports and output picking up, weaker JPY no doubt a factor.
- Fed approves rule requiring banks to publicly disclose liquid assets.
- Italy government seeks approval to use up to E20 bln to save banks – Reuters.
- RBA December meeting minutes – Steady policy right for growth-inflation, economy weaker than previously forecast, rising AUD could complicate matters, inflation low for some time, terms of trade on up-up on commodities rise.
- New Zealand Nov food prices index -0.1% m/m, +0.6% y/y.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov producer prices, +0.1% m/m, -0.2% y/y forecast; last +0.7%, -0.4%.
- (0200 ET/0700 GMT) Switzerland Nov trade balance, CHF3.6 bln surplus forecast; last CHF2.678 bln surplus.
- (0300 ET/0800 GMT) Sweden Dec manufacturing confidence index, 108.0 forecast; last 108.5.
- (0300 ET/0800 GMT) Sweden Dec consumer confidence index, 105.0 forecast; last 105.8.
- (0400 ET/0900 GMT) Eurozone Oct current account; last E29.8 bln surplus nsa, E25.3 bln sa.
- (0400 ET/0900 GMT) Eurozone Oct net investment flows; last E53.0 bln inflow.
- (0600 ET/1100 GMT) Great Britain Dec CBI retail survey – sales +20.0% y/y forecast; last +26.0%.
Key Events Ahead
- (0130 ET/0630 GMT) BoJ Gov Kuroda press conference.
- N/A Sweden FinMin Andersson presents updated economic forecasts.
- N/A UK PM May parliamentary testimony on Brexit.
- (0430 ET/0930 GMT) ECB zero% 7-day refinance, E36.8 bln allotment forecast, E36.8 bln maturing.
- (0600 ET/1100 GMT) New Zealand Fonterra dairy auction, GDT price index.
FX Beat
DXY: The dollar stood firm versus its major peers after Federal Reserve Chairwoman Janet Yellen’s comments on stronger jobs market reinforced expectations of a faster pace of Fed tightening in 2017. The greenback against a basket of currencies traded 0.1 percent up at 103.20, hovering towards a 14-year high of 103.56 hit on Thursday. FxWirePro's Hourly Dollar Strength Index stood at 147.84 (Highly Bullish) by 0500 GMT
EUR/USD: The euro edged higher against the dollar, regaining some of its previous session losses after declining below the 1.0400 handle on Monday. The major fell to an intra-day low of 1.0392 the prior session, as the greenback gained momentum after Fed Chair Janet Yellen made positive comments on the labor market. The European currency trades 0.1 percent up at 1.04010, having hit a low of 1.0366 last week, it’s lowest since Jan. 2003. FxWirePro's Hourly Euro Strength Index stood at -7.49 (Neutral) by 0400 GMT. Investors now await Eurozone's current account data, amid a lack of relevant macro-fundamental drivers from the U.S. data docket. Immediate resistance is located at 1.0442, a break above targets 1.0500. On the downside, support is seen at 1.0366, a break below could drag it lower 1.0300.
USD/JPY: The dollar rose above the 117.00 handle after the Bank of Japan kept monetary policy steady and provided an upbeat view of the economy. The central bank kept interest rates unchanged at minus 0.1 percent and the 10-year government bond yield around zero percent, as widely expected. The major trades 0.4 percent higher at 117.52, pulling away from a low of 116.54 hit in the previous session. FxWirePro's Hourly Yen Strength Index stood at 107.47 (Highly Bullish) by 0400 GMT. Investors’ attention will remain on the BoJ Governor Kuroda's presser, as the U.S. economic calendar remains absolutely data empty. Immediate resistance is located at 118.00, a break above targets 118.60/ 119.00. On the downside, support is seen at 116.46 (9-EMA), a break below could take it near 116.00.
GBP/USD: Sterling steadied following a decline to a 4-week low in the previous session after Prime Minister Theresa May stated that Britain could cover European Union funding when it leaves the bloc. On Monday, the major shed as much as 1 percent, as increasing risk of a second Scottish independence referendum and uncertainty over business operations following the exit from the EU, weighed on market sentiment. Sterling trades flat at 1.2394, having declined to a low of 1.2354 in the previous session, its lowest since Nov. 21. FxWirePro's Hourly Sterling Strength Index stood at -36.82 (Neutral) by 0400 GMT. Investors will closely watch the UK's CBI Distributive Trades Survey-Orders data, amid a lack of macro-economic drivers from the U.S. data docket. Immediate resistance is located at 1.2449 (5-DMA), a break above could take it near 1.2494 (9-EMA). On the downside, support is seen at 1.2354 (Previous Session Low), a break below targets 1.2300. Against the euro, the pound was little changed at 83.88 pence, having hit a 10-day low of 84.49 pence the day before.
AUD/USD: The Australian dollar nudged higher, halting its 4-day losing streak after minutes of the Reserve Bank of Australia's December meeting indicated that the central bank was done cutting interest rates for now. However, further demand for the greenback boosted by Fed Yellen's upbeat assessment on the jobs market limited the upside in the major. The Aussie trades 0.1 percent higher at 0.7251, having hit a fresh low of 0.7240, it’s lowest since Jun. 3. FxWirePro's Hourly Aussie Strength Index stood at -62.57 (Bearish) by 0400 GMT. Investors' will continue to digest RBA's December meeting minutes, ahead of API weekly crude oil stock figures for further clues on the pair. Immediate support is seen at 0.7240 (Session Low), a break below could drag it lower till 0.7200. On the upside, resistance is located at 0.7285 (23.6% retracement of 0.7240 and 0.7430), a break above targets 0.7352 (5-DMA).
NZD/USD: The New Zealand dollar slumped, extending losses for the fifth consecutive session, as divergent monetary policy outlooks between the Federal Reserve and RBNZ continued to weigh on the major. The pair hit a fresh 6-month low after Fed Chairwoman Yellen’s comments on stronger jobs market strengthened expectations of further Fed rate-hike action next year, and boosted the greenback across the board. The Kiwi trades lower at 0.6925, having touched a low of 0.6915, it’s lowest since June 3. FxWirePro's Hourly Kiwi Strength Index was at -68.33 (Bearish) by 0500 GMT. Investors' will continue to track the U.S dollar price action, ahead of the Fonterra’s fortnightly dairy auction results for further momentum. Immediate resistance is located at 0.6950, a break above could take it near 0.6993 (5-DMA). On the downside, support is seen at 0.6915 (Session Low), a break below could drag it lower 0.6900.
Equities Recap
Asian shares eased, paring early gains as attacks in Turkey and Germany triggered risk-off sentiment, while the Japanese yen edged down after the Bank of Japan held policy steady and on Federal Reserve Chair Janet Yellen's upbeat comments.
MSCI's broadest index of Asia-Pacific shares outside Japan reversed earlier gains to trade flat.
Tokyo's Nikkei rose 0.5 percent to 19,495.26 points, Australia's S&P/ASX 200 index gained 0.50 percent to 5,590.10 points and South Korea's KOSPI was trading 0.30 percent up at 2,044.59 points.
Shanghai composite index fell 0.69 percent to 3,096.26 points, while CSI300 index was trading 0.74 percent lower at 3,304.36 points.
Hong Kong’s Hang Seng was trading 0.37 percent down at 21,752.40 points. Taiwan shares ended flat at 9,242.41 points.
Commodities Recap
Crude oil prices declined, extending losses from the previous session, as traders began to unwind positions ahead of the year-end holiday season. International benchmark Brent crude was 0.3 percent lower at $54.84 per barrel by 0402 GMT, hovering towards a 1-week low of $53.13 hit last week. U.S. West Texas Intermediate crude rose 1.63 percent at $52.95 a barrel, putting further distance between a low of $49.93 hit on Thursday, it’s lowest since Dec 8.
Gold prices nudged down, after gaining in the previous two sessions, as Federal Reserve Chair Janet Yellen's comments strengthened the chances of further rate hikes in 2017. Spot gold trades lower at $1,138.20 an ounce by 0406 GMT, within the sight of a low of $1,122.64 hit on Thursday, it’s weakest since Feb. 2. U.S. gold futures fell 0.3 percent to $1,139.10 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5605 percent higher by 0.02 bps, while 5-year yield was up by 0.012 bps at 2.0371 percent.
The Japanese government bonds traded modestly firmer after the Bank of Japan left its interest rate unchanged at -0.10 percent, while targeting 10-year bond yields at zero percent. The benchmark 10-year bond yield fell 1/2 basis point to 0.07 percent, the long-term 30-year bond yield also dipped nearly 1 basis point to 0.68 percent and the yield on short-term 2-year note dipped nearly 1 basis point to -0.18 percent.
The Australian government bonds traded modestly firmer on the Reserve bank of Australia’s slightly dovish tilt in the December meeting minutes. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.85 percent, the yield on 15-year note dipped 1 basis point to 3.33 percent and the yield on short-term 2-year slid 1/2 basis point to 1.95 percent.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 2-year rose 4 Canadian cents to yield 0.801 percent and the benchmark 10-year climbed 39 Canadian cents to yield 1.787 percent. On Thursday, the 10-year yield touched its highest since June 2015 at 1.859 percent.
