Market Roundup
- CFTC IMM CTA data – USD net longs steady latest week, JPY shorts 64.4k, largest since December ’15, GBP shorts 72.3k, lowest since September, EUR shorts down to 87.5k, previous week 114.5k.
- Foreign appetite for Canadian securities shows no signs of fading – Reuters.
- Japan end-Sept household wealth Y1752 trln, +0.6% y/y, corporate current deposits record high Y246 trln, +8.5%, BoJ JGB holdings Y413 trln, 37.9% of total, foreign JGB/bill holdings Y112 trln, 10.3%, GPIF/pension fund sell net Y366.4 bln JGBs in Q3, buy Y12.2 bln stocks, Y135.1 bln foreign bonds.
- BoJ sees weak-yen effect of yield curve control well worth the trouble
- Japan Nov trade surplus Y152.5 bln, Y227.4 bln eyed, exports -0.4% y/y, imports -8.8%, -2.0% and -12.6% eyed, exports to China +4.4% y/y, first rise since February, to Asia +3.4%, to US -1.8%.
- Japan Nov crude oil import volume -4.4% y/y, LNG +12.7%, thermal coal +2.2%.
- China ViceFinMin Zhu – Should prevent trade wars that could hurt both countries, will take appropriate measures, ‘unwaveringly’ safeguard China’s core interests – Reuters.
- China CASS - ’17 GDP growth at @6.5%, CPI +2.2% - Reuters.
- As CNY weakens, Chinese rush to open foreign currency accounts – Reuters.
- China Nov new home prices +27.9% y/y, Oct +12.3%, Beijing +26.4%, Shanghai +29.0%, Shenzen +27.9%, Oct +27.5%, +31.1%, +31.7%.
- Australia – ‘16/17 budget deficit A$36.5 bln, A$37.1 bln previous estimate, ‘17/18 deficit A$28.7 bln vs A$26.1 bln, ‘16/17 GDP +2%, +3% thru ‘19/20.
- Fitch – Australia budget forecasts consistent with AAA ratings.
- New Zealand Dec ANZ biz confidence +21.7%, own activity outlook +39.6%, Nov +20.5, +37.6, optimism noted in construction sector
- New Zealand Q4 Westpac/MM consumer confidence index 113.1, Q3 107.9, largest rise in four years, recovering dairy prices helped.
- New Zealand Nov BNZ/BNZ PSI +1.3 point to 57.9, strong despite the earthquake.
Economic Data Ahead
- (0400 ET/0900 GMT) Germany Dec Ifo business climate index, 110.7 eyed; last 110.4.
- (0400 ET/0900 GMT) Germany Dec Ifo current conditions index, 115.9 eyed; last 115.6.
- (0400 ET/0900 GMT) Germany Dec Ifo expectations index, 105.6 eyed; last 105.5.
- (0500 ET/1000 GMT) Eurozone Q3 labor costs, wages; last +1.0% y/y, +0.9%.
- (0900 ET/1400 GMT) Belgium Dec consumer confidence index; last -7.0.
- (0945 ET/1445 GMT) United States Dec Markit PMI services – flash; last 54.6.
- (0945 ET/1445 GMT) United States Dec Markit PMI composite – flash; last 54.9.
Key Events Ahead
- N/A BoJ Policy Board two-day meeting.
- N/A France treasury bill auctions.
- N/A US Electoral College meets will confirm/not US President-elect Trump.
- (0600 ET/1100 GMT) New Zealand Fonterra dairy auction, GDP price index.
- (0600 ET/1100 GMT) Norway NOK6 bln zero% NST37 1-year treasury bill auction.
- (1200 ET/1700 GMT) ECB/Buba Weidmann speaks at Brussels conference.
- (1330 ET/1830 GMT) FOMC Chair Yellen speaks at U. Baltimore mid-year commencement.
FX Beat
DXY: The dollar edged lower versus its major peers as some investors took profits after rising to multi-year highs. The greenback against a basket of currencies traded 0.2 percent down at 102.68, pulling away from a 14-year high of 103.56 hit on Thursday. FxWirePro's Hourly Dollar Strength Index stood at 88.18 (Slightly Bullish) by 0500 GMT.its rise last week to a 14-year peak against a currency basket, though it remained underpinned by expectations of more U.S. interest hikes in the coming year.
EUR/USD: The euro rose, pulling further away from a 14-year low, as the greenback declined against a basket of currencies on profit taking and easing U.S. treasury yields. However, the gains in the major were capped, as the dollar remained underpinned by expectations of more U.S. interest hikes in the 2017. The European currency trades 0.04 percent up at 1.0455, recovering from a low of 1.0366, its lowest since Jan. 2003. FxWirePro's Hourly Euro Strength Index stood at -0.97 (Neutral) by 0400 GMT. Investors now await Eurozone's construction output data and labor cost figures, ahead of the U.S. preliminary Markit service PMI due later in the day. Immediate resistance is located at 1.0496, a break above targets 1.0534. On the downside, support is seen at 1.0400, a break below could drag it lower 1.0366.
USD/JPY: The dollar declined, extending losses from the previous session as a bout of profit-taking and weaker-than expected U.S. housing data sets weighed on the greenback. Markets look past Fed’s hawkishness witnessed last week, as attention turns towards the Bank of Japan policy decision due tomorrow. The BoJ is widely expected to stand pat on its 10-year government bond yield target as the weaker yen aided Japan's economic prospects. The major trades 0.5 percent lower at 117.34, drifting away from a high of 118.66 hit last week, its strongest since early Feb. FxWirePro's Hourly Yen Strength Index stood at -77.43 (Slightly Bearish) by 0400 GMT. Investors will continue to track board based market sentiment, ahead of the U.S. preliminary Markit service PMI data. Immediate resistance is located at 118.60, a break above targets 119.00. On the downside, support is seen at 116.24 (9-EMA), a break below could take it near 115.00.
GBP/USD: Sterling eased, reversing some of its previous session gains, as heightened prospects of faster Fed rate hikes in 2017 underpinned the bid tone around the dollar. The major rose to 1.2500 earlier in the session helped by a minor bout of weakness in the U.S. dollar, however, it failed to extend gains as worries over the start of formal negotiations on Britain's exit from the EU continued to weigh on the pound. Sterling trades 0.1 percent lower at 1.2470, after declining as low as 1.2376 on Thursday, its lowest since Nov. 23. FxWirePro's Hourly Sterling Strength Index stood at 42.25 (Neutral) by 0400 GMT. Trading activity is likely to remain subdued around the major amid a lack of macro-fundamental drivers from the UK. Immediate resistance is located at 1.2500, a break above could take it near 1.2545 (21-DMA). On the downside, support is seen at 1.2415, a break below targets 1.2350. Against the euro, the pound trades 0.2 percent lower at 83.82 pence, having hit a 10-day high of 83.13 pence on Thursday.
AUD/USD: The Australian dollar steadied near a 6-month trough after the government forecast a smaller-than-expected budget deficit this year. Treasurer Scott Morrison estimated an A$10 billion deterioration in the government's budget deficit over the next four years. The Aussie trades 0.1 percent lower at 0.7291, within a range of a low of 0.7266 hit on Friday, it’s lowest since Jun. 3. FxWirePro's Hourly Aussie Strength Index stood at -142.46 (Highly Bearish) by 0500 GMT. Investors' will continue to digest Australia's Mid-Year Economic and Fiscal Outlook report, ahead of the U.S. economic data for further momentum on the pair. Immediate support is seen at 0.7266 (Previous Session Low), a break below could drag it lower 0.7250. On the upside, resistance is located at 0.7327 (23.6% retracement of 0.7266 and 0.7524), a break above targets 0.7327 (7-EMA).
NZD/USD: The New Zealand dollar gained, snapping its three day losing streak, after a survey by ANZ showed business confidence grew for the month of December. ANZ business confidence came in higher at 21.7, beating previous reading of 20.5, while the activity outlook improved 39.6 percent against prior 37.6 percent. The Kiwi trades 0.2 percent higher at 0.6974, after declining to a low of 0.6930 in the previous session, it’s lowest since early June. FxWirePro's Hourly Kiwi Strength Index was at -129.87 (Highly Bearish) by 0500 GMT. Investors’ will continue to absorb upbeat ANZ business confidence report, ahead of the U.S. economic data for further direction the major. Immediate resistance is located at 0.7000, a break above could take it near 0.7054 (7-EMA). On the downside, support is seen at 0.6930 (Previous Session Low), a break below could drag it till 0.6900.
Equities Recap
Asian shares traded near 4-week lows, as weaker treasury yields and easing greenback weighed on the overall risk sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan hit a 4-week low and was trading 0.1 percent down.
Tokyo's Nikkei declined 0.1 percent at 19,382.21 points, Australia's S&P/ASX 200 index rose 0.61 percent to 5,566.70 points and South Korea's KOSPI was trading 0.03 percent up at 2,042.80 points.
Shanghai composite index fell 0.07 percent to 3,120.41 points, while CSI300 index was trading 0.31 percent lower at 3,335.88 points.
Hong Kong’s Hang Seng was trading 0.75 percent down at 21,856.07 points. Taiwan shares shed 0.9 percent at 9,239.32 points.
Commodities Recap
Crude oil prices rose, extending gains for the third straight day, as markets expect a tighter crude supply in 2017 after the decision by OPEC and other producers to cut output to restrain oil glut. International benchmark Brent crude was 0.5 percent higher at $55.55 per barrel by 0403 GMT, pulling away from a 1-week low of $53.13 hit last week. U.S. West Texas Intermediate crude rose 0.6 percent at $52.31 a barrel, after declining as low as $49.93 on Thursday, it’s lowest since Dec 8.
Gold prices nudged higher, hovering further away from a 10-1/2 months low touched in the previous week, as the U.S. dollar eased on profit taking against a basket of currencies. Spot gold edged 0.4 percent higher to $1,137.95 an ounce by 0407 GMT, having hit a $1,122.64 on Thursday, it’s weakest since Feb. 2. U.S. gold futures gained 0.1 percent to $1,139 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.5862 percent lower by 0.011 bps, while 5-year yield was down by 0.008 bps at 2.0571 percent.
The Australian government bonds slumped as investors moved away from safe-haven buying amid gains in riskier assets including crude oil and equities. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.86 percent, the yield on 15-year note jumped 1-1/2 basis points to 3.34 percent and the yield on short-term 2-year climbed 1 basis point to 1.93 percent.
The New Zealand government bonds closed lower after the recent private survey showed that the country’s business confidence grew in December. The yield on the benchmark 10-year bond closed 3 basis points higher at 3.46 percent, the yield on 7-year note ended 4 basis points to 3.01 percent and the yield on short-term 2-year note jumped 3-1/2 basis points at 2.30 percent.
