Market Roundup
- Japan govt forecasts - FY '15/16 overall CPI +0.4%, FY'16/17 +1.2%, nominal GDP +3.1%, real GDP +1.7%, fiscal stimulus package to add @0.6% to GDP over three years.
- UK Dec GfK consumer confidence index +1, +1 forecast, Nov +1.
- Australia sees '16 iron ore price avge $40.40/tone, $50/tone Sept forecast.
- Japan to cut interest rate estimate for FY '16 budget, first cut in four years, to 1.6% - Nikkei.
- Japan fund managers keep stock allocations steady in December - Reuters poll.
- China should step up policy loosening to aid economy - China Sec Journal.
- Fed proposes higher big bank capital thresholds when credit risk up -Reuters.
- EconMin Amari - CPI doesn't have to rise exactly to 2% when assessing BoJ success-failure, more than 1.5% close enough, GDP deflator and output gap also important, economy has to be strong enough to up sales tax - Reuters.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Jan GfK consumer sentiment index, 9.3 forecast; last 9.3.
- (0200 ET/0700 GMT) Switzerland Nov trade balance; last bln surplus.
- (0330 ET/0830 GMT) Sweden Nov retail sales, +0.4% m/m forecast; last +0.3% m/m, +5.0% y/y.
- (0330 ET/0830 GMT) Sweden Nov PPI; last -0.3% m/m, -1.8% y/y.
- (0400 ET/0900 GMT) Italy Nov trade balance - non-EU - flash; last bln surplus.
- (0430 ET/0930 GMT) Great Britain Nov PSNB, GBP11.0 bln forecast; last bln, PSNCR -GBP4.0 bln.
- (0430 ET/0930 GMT) Great Britain Nov - ex-banks, GBP11.8 bln forecast; last bln.
- (0830 ET/1330 GMT) United States Q3 GDP - final, +1.9% AR forecast; prelim +2.1%.
- (0830 ET/1330 GMT) United States Q3 PCE prices/core - final, both +1.3% AR forecast; prelim both +1.3%.
- (0830 ET/1330 GMT) United States Q3 GDP deflator - final, +1.3% AR forecast; prelim +1.3%.
- (0830 ET/1330 GMT) United States Q3 corporate profits - revised, +1.3% AR forecast; last +1.3%.
- (0900 ET/1400 GMT) Belgium Dec leading indicator, -4.0 forecast; last -3.9.
- (0900 ET/1400 GMT) United States Oct FHFA home price index; last +0.8% m/m, +6.1% y/y, 226.5.
- (1000 ET/1500 GMT) United States Nov exist home sales, unch m/m, 5.35 mln AR forecast; last 5.36, -3.4%.
- (1000 ET/1500 GMT) United States Dec Rich Fed comp/services/mfg shipments indices; last -3, -1, -2.
- (0430 ET/0930 GMT) ECB 7-day refi at fixed 0.05%, E70 bln allotment forecast, last E68.6 bln.
USD: The dollar steadied against the euro on Tuesday after dipping against the common currency on an inconclusive Spanish election result. The dollar index edged up about 0.1 percent to 98.437, but remained below a 2-week high of 99.294 marked on Thursday.
EUR/USD: The euro consolidating around $1.0910, having risen about 0.4 percent overnight on short covering after Sunday's national election in Spain. The gains were limited as no party won a clear mandate to govern, raising concerns about economic reforms in the euro zone's fourth largest economy. The pair currently trades at 1.0916 levels, 0.02% up, after having touched a daily low of 1.0905 levels. It sees support at 1.0894 levels (50 -DMA), while on the upside, resistance is located at 1.0930 levels (10- DMA).
USD/JPY: The pair trades at 121.25 levels, 0.08% up, after having touched a daily high of 121.30 levels and a low of 121.08 levels. The approaching holiday season will shut much of the world's key financial markets keeping trading activity limited and currencies bound in tight ranges. Resistance is located at 121.47 (10 - DMA), while on the downside, immediate support is seen at 120.84 (Previous day low).
AUD/USD: The Aussie currently trades at 0.7221 levels, after making a daily high of 0.7226 levels, putting further distance between a 1-month low of $0.7097 hit last week after the Fed's rate hike shored up the greenback. Yet, it is still down 12 percent for the year, largely due to a diverging interest rate outlook between the United States and Australia. Strong resistance area at 0.7240 levels, 20-day MA comes in at 0.7239 while 50% of 0.7386/0.7097 at 0.7241, break above 0.7240 could see the pair at 0.7275 (61.8% Fib of 0.7385-0.7096 fall). On the downside, support is seen at 0.7176 (Dec 16 Low).
NZD/USD: The New Zealand dollar edged up on Tuesday in trading thinned by a holiday-heavy week. The pair is trading higher after having bounced-off channel support at 0.6680 on Friday's trade. The kiwi has touched a daily high of 0.6825 as U.S economic data disappointed and it currently trades at 0.6805 levels. Immediate resistance is seen at 0.6834 (Dec 16 High), while on the downside, support is located at 0.6755 levels (5 - DMA).
USD/CNY: China's yuan was firm on Tuesday, in line with PBoC's slightly stronger midpoint after Beijing pledged more policies and reforms in 2016 to support a slowing economy. The central bank set the yuan/dollar midpoint rate at 6.4746 per dollar prior to market open, only 0.01 percent firmer than the previous fix 6.4753. The spot market opened at 6.4792 per dollar and was trading at 6.4782 at midday, 0.04 percent firmer than the previous close. The offshore yuan was trading 1.01 percent weaker than the onshore spot at 6.544 per dollar.
Equities Recap
Asian shares edged higher on Tuesday, taking solace from Wall Street gains and some stability in recently weak crude oil prices, though gains were capped by caution ahead of this week's holidays.
MSCI's broadest index of Asia-Pacific shares outside Japan inched 0.1 percent higher, after Wall Street logged solid gains overnight following a losing week, while Taiwan stocks edged up 0.1 pct at 8,292.74 points.
Australia's S&P/ASX 200 Index edged up 0.11 pct at 5,114.60 points, while Nikkei closed down 0.16 pct at 18,886.70 with Seoul Shares climbed up 0.53 pct.
Commodities Recap
Gold retained gains from a 2-day rally on Tuesday, supported by a slide in the dollar. Spot gold was changed at $1,077.80 an ounce by 0335 GMT, after gaining 2.5 percent in the last two sessions. The metal strengthened on Monday as the dollar fell after data from the Chicago Federal Reserve suggested the U.S. economy grew at a below average pace in November.
Oil prices edged away from multi-year lows on Tuesday as the northern hemisphere moved into the peak-demand winter season, but mild weather and ballooning supplies mean that prices are expected to remain generally low well into 2016. The global crude benchmark Brent was at $36.46 per barrel at 0213 GMT, over $2 above the 11-year low hit on Monday. U.S. West Texas Intermediate crude futures were at 36.04 per barrel, up from 2009 lows of $33.98 during the previous session.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.1969 percent.
Australian government bond futures were a firmer, with the 3-year bond contract up 1 tick at 97.940. The 10-year contract added 1.5 tick to 97.1900, while the 20-year contract was 1 tick higher at 96.6900.
New Zealand government bonds gained, sending yields 3 basis points lower across the curve.
Canadian government bond prices were higher across the maturity curve, with the benchmark 10-year rising 15 Canadian cents to yield 1.383 percent, while 2-year price up 2 Canadian cents to yield 0.491 percent. The Canada-U.S. 2-year bond spread was -46.1 basis points while the 10-year spread was -81.4 basis points.
