Market Roundup
- China banks seen selling USD to brake CNY slide.
- Fears over long-term RMB devaluation groundless – Securities Times.
- PBOC fixes CNY at 6.9085 vs USD, CNY weakest since June ’08, spot (CNH=D3) as high as 6.9650,
- SoKorea TradeMin - Will monitor exports to Japan, China on volatile FX
- Japan MoF Asakawa – Trump presidency won’t change Japan FX policy – Nikkei.
- BoJ DepGov Nakaso (in Diet testimony) – Sufficient means to exit easy policy, still inappropriate to talk exit now.
- Japan government bond floats to hit 8-year low – Nikkei.
- Japan Nov flash manufacturing PMI 51.1, Oct final 51.4, new orders down.
Economic Data Ahead
- (0245 ET/0745 GMT) France Nov business climate index, 102.0 forecast; last 102.0.
- (0300 ET/0800 GMT) Spain Q3 GDP, +0.7% q/q, +3.2% y/y forecast; flash +0.7%, +3.2%.
- (0300 ET/0800 GMT) Sweden Nov consumer confidence index, 104.0 forecast; last 105.1.
- (0300 ET/0800 GMT) Sweden Nov manufacturing confidence index; last 105.8.
- (0330 ET/0830 GMT) Sweden Oct PPI; last -0.1% m/m, -0.1% y/y.
- (0400 ET/0900 GMT) Germany Nov Ifo business climate index, 110.5 forecast; last 110.5.
- (0400 ET/0900 GMT) Germany Nov Ifo current conditions index, 115.0 forecast; last 115.0.
- (0400 ET/0900 GMT) Germany Nov Ifo expectations index, 106.0 forecast; last 106.1.
- (0400 ET/0900 GMT) Italy Oct trade balance – non-EU – flash; last E2.88 bln surplus.
- (0430 ET/0930 GMT) Great Britain Oct BBA mortgage approvals; last 38.25k.
- (0500 ET/1000 GMT) Italy Oct wage inflation; last unch m/m, +0.6% y/y.
- (0700 ET/1200 GMT) Germany Dec GfK consumer sentiment index, 9.7 forecast; last 9.7.
- (0900 ET/1400 GMT) Belgium Nov leading indicator index, -1.6 forecast; last -1.8.
Key Events Ahead
- (0400 ET/0900 GMT) Sweden max SEK1.5 bln 5.0% and 3.5% 2020 and 2022 govt bond auctions.
- (0445 ET/0945 GMT) Riksbank DepGov Floden speaks in Stockholm.
- (1110 ET/1610 GMT) ECB ChiefEcon Praet, ESM Regling speak at Austria CB event.
- (1215 ET/1715 GMT) SNB Zurbruegg speaks in Bern.
FX Beat
DXY: The dollar rallied across the board, as upbeat U.S. fundamentals increased the chances of the Federal Reserve tightening monetary policy. The greenback against a basket of currencies trades up at 101.74, having touched a near 14 year high of 101.91 on Wednesday. FxWirePro's Hourly Dollar Strength Index stood at 39.91 (Bias Neutral) by 0500 GMT.
EUR/USD: The euro tumbled to a near 1-year low, as the dollar strengthened on growing expectations of a Federal Reserve rate hike in December following the release of positive U.S. economic data. The U.S. durable goods orders data showed that corporate spending increased in the month of October, while FOMC minutes boosted market expectations of December rate hike. Moreover, the ECB-Fed policy divergence and heightened political uncertainty across the Eurozone will continue to weigh on the major. The European currency traded 0.1 percent down at 1.0540, having touched a low of 1.0526 in the previous session, its lowest since early Dec. FxWirePro's Hourly Euro Strength Index stood at 2.01 (Neutral) by 0400 GMT. Markets will closely watch German gross domestic product figures and consumer confidence data for further momentum, amid thin liquidity due to the U.S. Thanksgiving holiday. Immediate resistance is located at 1.0585 (10-DMA), a break above targets 1.0600/ 1.0620 (7-EMA). On the downside, support is seen at 1.0526 (Previous Session Low), a break below could drag it lower 1.0500.
USD/JPY: The dollar gained, after rising to an 8-month high hit in the previous session on reports that showed the U.S. economic growth pickup early in the fourth quarter, which further increased the prospects of the Federal Reserve tightening monetary policy. Data released on Wednesday showed new orders for U.S. manufactured capital goods bounced back in October on growing demand for machinery and equipment, while consumer sentiment rose in this month on the views that Donald Trump's administration could boost fiscal stimulus. The major trades 0.2 percent higher at 112.73, hovering towards a high of 112.97 hit on Wednesday, its strongest since late March. FxWirePro's Hourly Yen Strength Index stood at -103.97 (Highly Bearish) by 0400 GMT. Investors will continue to track overall markets sentiment, in absence of macro-fundamental drivers as U.S. markets will be closed for the Thanksgiving holiday. Immediate resistance is located at 113.00, a break above targets 113.30/113.70. On the downside, support is seen at 111.59 (10-DMA), a break below could take it near 111.01 (7-EMA).
GBP/USD: Sterling edged up, extending previous session gains after a UK budget delivered more-than-expected to bolster growth in the years to come. On Wednesday, the major initially declined below the 1.2400 handle to a low of 1.2360, however, it gained nearly 1 percent to close at 1.2435 following the Budget statement release. Moreover, the upside remains capped as upbeat US economic data boosted markets expectations of a Dec Fed rate hike, eventually strengthening the sentiment around the greenback. Sterling trades flat at 1.2437, attempting to sustain gains from the prior day. FxWirePro's Hourly Sterling Strength Index stood at 100.92 (Highly Bullish) by 0500 GMT. The pair will be driven by overall market sentiment, in absence of significant economic releases from the UK docket, amid holiday-thinned trades. Immediate resistance is located at 1.2468 (Previous Session High), a break above could take it near 1.2500. On the downside, support is seen at 1.2398 (20-DMA), a break below targets 1.2350. Against the euro, the pound was little changed at 84.76 pence, having hit a high of 84.64 pence the day before, it’s highest since Sept.
AUD/USD: The Australian dollar slumped, extending previous session losses, as the greenback rallied across the board on speculation that inflation and interest rates will rise in the United States, both in December and over 2017. The major is seen making a minor recovery as gains in iron and copper prices provided some support. However, the recovery seems to be fragile as the greenback continues to rise on the back of upbeat U.S. fundamentals and hawkish FOMC minutes. The Aussie trades 0.1 percent lower at 0.7375, hovering towards a 5-month trough of 0.7311 touched on Monday. FxWirePro's Hourly Aussie Strength Index stood at -16.22 (Bias Neutral) by 0500 GMT. Investors will continue to track price action across the commodities and around the U.S. dollar, amid holiday-thinned trading. Immediate support is seen at 0.7350, a break below could drag it lower 0.7311 (5-Month Low). On the upside, resistance is located at 0.7431 (9-EMA), a break above targets 0.7500.
NZD/USD: The New Zealand dollar declined to a 5-month low below the 0.7000 handle, as the greenback gained against its major peers after upbeat U.S. data reinforced expectations of an interest rate hike by the Federal Reserve. However, the downside remained capped as stabilizing oil prices and Iraq’s commitment to cut production levels supported the Kiwi bulls. The major trades down at 0.6990, after declining to an early low of 0.6971, it’s lowest since Jul. 25. FxWirePro's Hourly Kiwi Strength Index was at 28.36 (Neutral) by 0500 GMT. Markets attention will remain on New Zealand’s trade balance data, as the U.S. markets remain closed in observance of Thanksgiving Holiday. 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
Asia shares edged down as U.S. bond yields hovered near multi-year highs, while the dollar continued to rally on the back of growing prospect of a U.S. interest rates in December.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5 percent, pulling away from a 12-day high hit in the previous day.
Tokyo's Nikkei rose 1.06 percent at 18,355.05 points, Australia's S&P/ASX 200 index ended flat at 5,484.60 points and South Korea's KOSPI was trading 0.7 percent lower at 1,974.49 points.
Shanghai composite index rose 0.41 percent to 3,254.36 points, while CSI300 index was trading 0.82 percent higher at 3,503.18 points.
Hong Kong’s Hang Seng was trading 0.22 percent up at 22,626.68 points. Taiwan shares shed 0.3 percent at 9,152.11 points.
Commodities Recap
Crude oil prices edged up, however, traded between narrow ranges as markets were uncertain about the outcome of an OPEC's ministerial meeting at the end of this month. International benchmark Brent crude was trading 0.14 percent higher at $48.97 per barrel by 0411 GMT, having hit a high of $49.93 on Tuesday, its highest since late Oct. U.S. West Texas Intermediate crude rose 0.17 percent at $48.00 a barrel, after rising to a 3-week high of $49.17 earlier in the week.
Gold prices declined, extending losses for the third consecutive session, as the dollar strengthened on increasing expectations of a Federal Reserve rate hike in December after the release of positive U.S. economic data. Spot gold was down at $1,185.68 an ounce by 0415 GMT, after dropping 2 percent on Wednesday to hit its lowest in 9-1/2 months at $1,181.62. U.S. gold futures eased 0.4 percent to $1,184.60 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3552 percent , while 5-year yield was at 1.8371 percent.
The Australian government bonds plunged as investors moved away from the safe-haven buying amid weakness in the U.S. Treasuries after the Federal Reserve November meeting minutes reflected support for a December rate hike. The yield on the benchmark 10-year Treasury note rose more than 6 basis points to 2.78 percent (highest since January this year), the yield on 15-year note jumped 4-1/2 basis points to 3.17 percent and the yield on short-term 2-year bounced 3 basis points to 1.86 percent.
The New Zealand government bonds closed modestly firmer after witnessing a heavy intraday sell-off as the Federal Reserve November meeting minutes indicated that majority of the FOMC members are in favour of a December rate hike. The yield on the benchmark 10-year bond closed 1 basis point lower at 3.220 percent (rose nearly 10 basis points intraday), the yield on 7-year note also ended nearly 1 basis point lower to 2.83 percent and the yield on short-term 2-year note bounced 6 basis points to 2.19 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year down 3 Canadian cents to yield 0.672 percent and the benchmark 10-year falling 9 Canadian cents to yield 1.55 percent. The 10-year yield touched its highest intraday since December at 1.614 percent.
