Market Roundup
- Japan MoF flow data week ended Nov 19 – Japanese buy net Y672.4 bln foreign stocks, sell Y260.6 bln bonds, Y9.9 bln bills; foreign investors buy net Y461.7 bln Japan stocks, sell Y1.1068 trillion bonds, buy Y1.4217 trillion bills.
- Japan Oct nationwide core CPI -0.4% y/y, Tokyo Nov core -0.4%, both as forecast, Oct core-core CPI (excluding food, energy) +0.2%.
- Japan Oct corporate service price index +0.5% y/y to 103.2, highest in 14 months.
- Japan to end preferential tariffs for China, four others - Nikkei.
- Moody's - Japan's high level of government debt remains affordable.
- China yuan fall sign of new central bank tack – South China Morning Post.
- PBOC fixes CNY at 6.9168, spot (CNH=D3) below 6.9650 high yesterday.
- South Korea CB Jang – Won’t sit still and just watch bond market deteriorate.
- SNB ViceChair Zurgruegg – Low-interest rate risks manageable, NIRP playing a decisive role in checking CHF strength – Reuters.
- Foreigners pile back into Australia property, reignite bubble fears –Reuters.
- Australia’s Macquarie, ANZ to pay fines over Malaysia currency cartel.
- New Zealand Oct trade deficit NZ$846 mln, yr-to-date NZ$3.3 bln deficit, Oct imports NZ$4.74 bln, exports NZ$3.9 bln.
Economic Data Ahead
- (0330 ET/0830 GMT) Sweden Oct household lending, +7.4% y/y forecast; last +7.5% y/y.
- (0400 ET/0900 GMT) Italy Sep industrial orders; last +10.2% m/m, +15.9% y/y.
- (0400 ET/0900 GMT) Italy Sep industrial sales; last +4.1% m/m, +6.8% y/y.
- (0430 ET/0930 GMT) Great Britain Q3 GDP - 2nd release, +0.5% q/q, +2.3% y/y forecast; prelim +0.5%, +2.3%.
- (0500 ET/1000 GMT) Italy Sep retail sales; last -0.1% m/m, -0.2% y/y.
- (0800 ET/1300 GMT) United States Oct wholesale inventories +0.4% m/m forecast; last +0.1%
- (0945 ET/1445 GMT) United States Nov Markit PMI services – flash, 54.8 forecast; last 54.8.
- (0945 ET/1445 GMT) United States Nov Markit PMI composite – flash; last 54.9.
Key Events Ahead
- (0500 ET/1000 GMT) Italy E3-3.5 bln 2018 CTZ, 0.75-1.25 bln 0.1/2.55% 2022/41 BTPi auctions.
- (0600 ET/1100 GMT) Riksbank DepGov Skingsley speaks in Stockholm.
- (0600 ET/1100 GMT) UK DMO GBP0.5/1.0/2.0 bln 1/3/6-month treasury bill auctions.
FX Beat
DXY: The dollar stood firm versus its major rivals, as the U.S. Treasury yields resumed to rise after Thanksgiving Day holiday. The greenback against a basket of currencies edged down 0.1 percent at 101.59 but was still within the sight of a near 14 year high of 102.05 hit on Thursday. FxWirePro's Hourly Dollar Strength Index stood at 53.97 (Bullish) by 0500 GMT.
EUR/USD: The euro edged up, retreating from a near 1-year low hit in the previous session on increasing expectations of a Federal Reserve rate hike in December and more tightening next year. Divergent policy between the ECB and Fed, heightened political uncertainty across the Eurozone and a Trump victory heavily weighs on the major. Moreover, the prospects of the ECB to expand its QE program in December have eased to some extent on growing concerns of bond market liquidity. The European currency traded 0.2 percent up at 1.0571, recovering from a low of 1.0518 hit on Thursday, it’s lowest since early Dec and was poised for a 0.3 percent weekly loss. FxWirePro's Hourly Euro Strength Index stood at 2.76 (Neutral) by 0400 GMT. In absence of major fundamental drivers from the Euorozne, markets will continue to track price-action in the treasury yields, ahead of U.S. preliminary Markit Service PMI. Immediate resistance is located at 1.0609 (7-EMA), a break above targets 1.0657. On the downside, support is seen at 1.0518 (Previous Session Low), a break below could drag it lower 1.0500.
USD/JPY: The dollar rallied to a fresh 8-month high in early Asian trade, as the U.S. bond yields resumed to rise after the Thanksgiving holiday shut markets in the United States. The major continues to rise on the back of better-than-expected U.S. durable goods data and hawkish FOMC minutes, which cemented the prospects of U.S. interest rate hike in December. The pair trades 0.2 percent higher at 113.53, having hit an early high of 113.89, it’s strongest since late March and was on track to rise 2.5 percent on the week. FxWirePro's Hourly Yen Strength Index stood at -27.13 (Neutral) by 0400 GMT. Investors will continue to track sentiment around the treasury yields, ahead of U.S. economic data including the U.S. goods trade balance and flash services PMI. Immediate resistance is located at 114.00, a break above targets 114.44. On the downside, support is seen at 112.23 (5-DMA), a break below could take it near 111.16 (9-EMA).
GBP/USD: Sterling nudged up, extending gains for the third consecutive session, and was headed for its strongest monthly performance in eight years on the trade-weighted basis and against the euro. The major has gained this month as investors’ unwound heavy positions against the pound and growing political risk in Europe shifted the focus off Brexit. Sterling trades flat at 1.2450, after rising to a high of 1.2494 the prior day and headed for a 0.7 percent gain on the week. FxWirePro's Hourly Sterling Strength Index stood at 83.83 (Slightly Bullish) by 0400 GMT. Investors now await the U.K. second estimate GDP report for further insights on the strength of the economy. Immediate resistance is located at 1.2494 (Previous Session High), a break above could take it over 1.2500. On the downside, support is seen at 1.2412 (20-DMA), a break below targets 1.2350. Against the euro, the pound trades 0.2 percent lower at 84.86 pence, having hit a high of 84.59 pence the day before, its highest since Sept.
AUD/USD: The Australian dollar rose above the 0.7400 handle, extending previous session gains, despite losses in gold and copper prices. The major strengthened as Aussie bond yields neared 11-month highs, tracking U.S. Treasuries, while a surge in prices of iron ore also provided some support. The Aussie trades 0.3 percent higher at 0.7428, hovering towards a peak of 0.7444 touched on Wednesday and has gained more than 1 percent on the week. FxWirePro's Hourly Aussie Strength Index stood at 125.95 (Highly Bullish) by 0500 GMT. Markets will continue to track price action in the U.S. dollar, ahead of U.S. economic data due later in the day. Immediate support is seen at 0.7372, a break below could drag it near 0.7311 (5-Month Low). On the upside, resistance is located at 0.7450, a break above targets 0.7480/ 0.7500.
NZD/USD: The New Zealand dollar gained, retreating from a 4-month low hit in the previous session, amid broad-based U.S. dollar strength. On Thursday, the major slumped as low as 0.6971, its lowest since Jul. 25, as markets continued to speculate that Trump's administration will increase fiscal spending and spur higher growth and inflation, which underpinned the greenback. Additionally, above estimate New Zealand's trade figures released overnight triggered upbeat momentum around the pair. The Kiwi trades 0.2 percent up at 0.7015, attempting to extend gains above the 0.7000 handle. FxWirePro's Hourly Kiwi Strength Index was at -30.67 (Neutral) by 0500 GMT. Markets will continue to digest New Zealand’s trade balance data, ahead of the U.S. economic releases. Immediate resistance is located at 0.7025 (5-DMA), a break above could take it near 0.7058 (9-EMA). On the downside, support is seen at 0.6951 (July-21 Low), a break below could drag it near 0.6900.
Equities Recap
Asian shares advanced, but gains were limited as the U.S. dollar and Treasury yields resuming their climb which pulled out the capital of most emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent and was set to end the week 1.4 percent higher, its strongest weekly gain in two months.
Tokyo's Nikkei declined 0.23 percent at 18,292.07 points, Australia's S&P/ASX 200 index rose 0.38 percent to 5,505.70 points and South Korea's KOSPI was trading 0.05 percent higher at 1,972.05 points.
Shanghai composite index declined 0.13 percent to 3,237.42 points, while CSI300 index was trading 0.15 percent higher at 3,493.84 points.
Hong Kong’s Hang Seng was trading 0.34 percent up at 22,685.53 points. Taiwan shares added 0.1 percent at 9,159.07 points.
Commodities Recap
Crude oil continued to trade between a narrow range, as markets were reluctant to take big new positions ahead of a planned OPEC-led crude production cut meeting next week. International benchmark Brent crude was trading flat at $48.84 per barrel by 0358 GMT, having hit a peak of $49.93 on Tuesday, its highest since late Oct. U.S. West Texas Intermediate crude declined 0.2 percent at $48.75 a barrel, after rising to a 3-week high of $49.17 earlier in the week.
Gold prices hit their lowest level in 9-1/2 months in early Asian trade and were on course to post a third straight weekly decline, as the dollar extended its rally against the yen on the back of rising bond yields. Spot gold was down 0.5 percent at $1,177.10 an ounce by 0402 GMT, having dropped to its lowest level since Feb. 8 at $1,170.67 per ounce earlier in the session. U.S. gold futures fell 1.4 percent to $1,172.6 per ounce, after skidding to its lowest since Feb. 5 at $1,170.30 per ounce earlier.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3951 percent higher by 0.04 bps, while 5-year yield was 0.045 bps up at 1.8799 percent.
The Australian government bonds traded nearly flat as markets were mostly quiet with little in the way of market-moving news, and with no important data scheduled for release in Asia today. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.77 percent, the yield on 15-year note remained steady at 3.16 percent and the yield on short-term 2-year stood flat at 1.86 percent.
The New Zealand government bonds closed modestly firmer, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year bond, which moves inversely to its price, closed 1/2 basis point lower at 3.210 percent and the yield on short-term 2-year note fell 1 basis point to 2.17 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year down 4 Canadian cents to yield 0.686 percent and the benchmark 10-year fell 45 Canadian cents to yield 1.588 percent. On Wednesday, the 10-year yield touched its highest intraday since December at 1.614 percent.
