Market Roundup
- United States Nov biz borrowing for new equipment -12% m/m at $6.1 bln, volume -21%.
- Japan tax revenue estimated at 25-year high of Y57.6 trln FY '16/17, '16/17 budget all-time high of Y96.7 trln, new bond issuance to 8-yr low - Reuters.
- New Zealand Q4 Westpac/MM consumer confidence 110.7, largest rise in 2-yrs, Q3 106.
- New Zealand November net migration up.
- Bond carnage last week as investors bailed ahead of Fed - BAML.
- CFTC data - IMM CTAs pare net USD longs to lowest since early November, EUR net shorts lowest since mid-November, JPY net shorts down large.
- SF Fed Williams - Wants low rates, hot economy in '16, growth @2% "17-18, next rate hike may not coincide with Yellen press conference, still work to do, eyes four hikes in '16, oil/USD to level out - Reuters interview.
- Fed Gov Powell - Starting now on gradual rate increases "right way" - American Public Media "Marketplace".
- BoC Gov Poloz - Q4 growth softer than Q3, more positive on '16, no intention to influence CAD rate, CAD following oil, negative interest rates possible, strengthening USD good - Reuters.
- BoE MPC Weale - Tighter policy need less immediate - Sunday Telegraph.
- ECB/Austria CB Nowotny - Too early to think of raising rates - ORF radio.
- Left-wing parties take lead in Spanish elections, ruling PP win most votes but short of majority, Socialists second, Podemos third - Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Nov producer prices, -0.2% m/m, -2.5% y/y forecast; last -0.4%, -2.3%.
- (0300 ET/0800 GMT) Sweden Dec consumer confidence index, 97.3 forecast; last 95.8.
- (0300 ET/0800 GMT) Sweden Dec manufacturing confidence index; last 107.6.
- (0600 ET/1100 GMT) Great Britain Dec CBI distributive trades index, 21.0 forecast; last 7.0.
- (0830 ET/1330 GMT) United States Nov Chicago Fed national activity index, -0.17 forecast; last -0.04.
- (1000 ET/1500 GMT) Eurozone Dec consumer confidence index - flash, -5.85 forecast; last -6.0.
Key Events Ahead
- (0700 ET/1200 GMT) Sweden FinMin Andersson presents latest economic forecasts.
FX Beat
USD: The dollar was steady in Asian trading on Monday, as holiday calm replaced the previous week's heavy market action driven by monetary policy moves in the United States and Japan. The dollar index was steady at 98.713, though below a 2-week high of 99.294 marked on Thursday.
EUR/USD: The euro was steady from Friday's levels as it is currently trades at 1.0869 levels, 0.05% up, after making a high of 1.0882 levels and a low of 1.0846 levels. Speculators have slashed their bullish bets on the U.S. dollar for a third straight week through Dec. 15, with net longs falling to their lowest since early November. Resistance is located at 1.0902 levels (50- DMA), with immediate support at 1.0836 levels (Dec- 4 Low) on the downside.
USD/JPY: The yen is trading at 121.43 levels against the greenback, after having touched a daily high of 121.50 levels. It had spiked to a more than 2-week high of 123.590 shortly after the BOJ's announcement before erasing its gains, on the perception that the minor steps made it less likely that the BOJ would ease monetary policy further. Immediate resistance is seen at 121.46 (cloud top), while support on the downside lies at 121.00 (78.6% Fib of 123.76-120.34 fall & Psychological Level).
AUD/USD: The Australian dollars struggled for momentum on Monday as traders were reluctant to make any significant moves in a holiday-heavy week. The Aussie currently trades at 0.7165 levels, after having touched a 1-month trough of $0.7097 last week and was down 12 percent for the year. It sees support at 0.7112 levels (Dec 18 Low), on the up side it faces resistance at 0.7194 levels (50- DMA). It held its ground against a battered Canadian dollar at C$0.9990, having briefly popped above parity on Friday.
NZD/USD: The New Zealand dollar is benefiting after its U.S. counterpart was weighed down by disappointing economic news. The kiwi sees strong support in improving consumer sentiment and strong migration data. Currently it trades at 0.6746 after having touched a daily high of 0.6752. Immediate resistance is located at 0.6758, while on the downside, supports lie at 0.6736 (4h 21 DMA) and then 0.6720 (session lows 21 Dec).
USD/CNY: China's yuan edged up against the dollar on Monday after PBoC set stronger guidance via its daily midpoint, snapping 10 weaker fixes in a row. The Central Bank set the yuan/dollar midpoint rate at 6.4753 per dollar prior to market open, 0.09 percent firmer than the previous fix 6.4814. The spot market opened at 6.4771 per dollar and was trading at 6.4807 at midday, 0.01 percent firmer than the previous close. The offshore yuan was trading 708 pips, or 1.08 percent weaker than the onshore spot at 6.5515 per dollar, hitting the weakest level since Aug. 12.
Equities Recap
Asian share markets advanced on Monday after a lacklustre start, defying a dive on Wall Street and the price of Brent crude threatened to plumb lows last seen in 2004 on renewed worries over a global oil glut.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.1 percent amid a general lack of investor interest in a holiday-heavy week. China's CSI300 jumped 1.7 percent and Hong Kong's Hang Seng rose 0.4 percent.
Australia's S&P/ASX 200 Index edged down 0.11 pct at 5,100.90 points, while Tokyo's Nikkei closed down 0.37 pct at 18,916.02 with Seoul Shares climb up 0.34 pct.
Commodities Recap
Gold steadied on Monday, retaining sharp gains from the previous trading session, as weakness in the dollar and equities helped the metal recoup some losses from a U.S. interest rate hike last week. Spot gold edged up 0.3 percent to $1,069 an ounce by 0339 GMT, but largely retained its 1.4-percent gain from the previous session.
Brent futures dropped as low as $36.32 per barrel, the weakest since 2008, before edging back to $36.49 per barrel by 0203 GMT as production around the world remained at or near record highs and new supplies looming from Iran and the United States. U.S. West Texas Intermediate futures were down 20 cents at $34.53 per barrel and close to last Friday's 2015 lows.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.209 percent versus previous close of 2.197 percent on Friday.
Australian government bond futures hovered near multi-week highs, with the 3-year bond contract steady at 97.930, having touched its highest since mid-November. The 10-year contract edged up half a tick to 97.1800, while the 20-year contract added 1.5 ticks to 96.6850.
New Zealand government bonds gained, sending yields 4 basis points lower at the long end and 3 basis points lower at the short end.
Canadian government bond prices were higher across the maturity curve, with the benchmark 10-year rising 29 Canadian cents to yield 1.398 percent and the 2-year price up 3.5 Canadian cents to yield 0.504 percent. The Canada-U.S. two-year bond spread narrowed by slightly less than 3 basis points to -45.5 basis points, while the 10-year spread was 0.6 of a basis point narrower at -79.9 basis points, trimming recent outperformance for Canadian government bonds.
