Market Roundup
- BoJ Tankan – Big Mfg DI +10, non-Mfg +18, +10 and +19 forecast, March forecast at +8, +16, pre vest +9, +19, FY ‘16/17 CAPEX +5.5%, +6.1% forecast, small firm CAPEX -6.2%, big firm recurring profits -18.9%, USD/JPY to average 104.90, Sept survey 107.92, big Mfg sentiment up for first time in six quarters, highest since Dec ’15 R&D investment to be incorporated in survey from March ‘17.
- BoJ officials – BoJ bought more JGBs in wake of sharp yield rises, to steer yield curve towards what central bank deems appropriate – Reuters.
- EU leans toward nixing 80% of Japanese auto parts tariffs – Nikkei.
- Toyota on track to sell over 10 mln cars for the fourth year – Nikkei.
- China PBOC advisor Fan Gang – No cause for CNY to slide – China Sec Journal.
- PBOC fixes CNY at 6.9028 vs USD, weaker than 6.8934 yesterday.
- Australia Dec Westpac/MI consumer sentiment index 97.3, lowest since April and below 100, Nov 101.3.
- Australia Nov new motor vehicle sales -0.6% m/m.
- Thomson Reuters /INSEAD Q4 Asia business sentiment index 63, Q3 68, sluggish demand biggest risk, Australia businesses most optimistic, Singapore least, household-food-beverage sectors most positive, autos least.
Economic Data Ahead
- (0245 ET/0745 GMT) France Nov HICP – final, unch m/m, +0.7% y/y forecast; flash unch, +0.5%.
- (0315 ET/0815 GMT) Switzerland Nov producer/import pricea; last +0.1% m/m, -0.2% y/y.
- (0400 ET/0900 GMT) Italy Nov CPI - final, -0.1% m/m, +0.1% y/y forecast; flash -0.1%, +0.1%.
- (0400 ET/0900 GMT) Italy Nov HICP – final, -0.2% m/m, +0.1% y/y forecast; flash -0.2%, +0.1%.
- (0430 ET/0930 GMT) Great Britain Nov claimant count, 5.5k forecast; last 9.8k.
- (0430 ET/0930 GMT) Great Britain Oct ILO unemployment, 4.8% forecast; last 4.8%.
- (0430 ET/0930 GMT) Great Britain Oct average weekly earnings – 3-mo avge, +2.3% y/y forecast; last +2.3%.
- (0430 ET/0930 GMT) Great Britain Oct - ex-bonus, +2.5% y/y forecast; last +2.4%.
- (0500 ET/1000 GMT) Eurozone Oct industrial output, +0.2% m/m, +0.8% y/y forecast; last -0.8%, +1.2%.
- (0500 ET/1000 GMT) Switzerland Dec ZEW investor sentiment index; last 8.9.
- (0600 ET/1100 GMT) New Zealand Nov manufacturing PMI; last 55.2.
- (0830 ET/1330 GMT) United States Nov PPI final demand, +0.1% m/m, +0.9% y/y forecast; last unch, +0.8%.
- (0830 ET/1330 GMT) United States Nov – ex-food/energy, +0.2% m/m, +1.3% y/y forecast; last -0.2%, +1.2%.
- (0830 ET/1330 GMT) United States Nov retail sales, +0.3% m/m forecast; last +0.8%.
- (0830 ET/1330 GMT) United States Nov - ex-autos, +0.4% m/m forecast; last +0.8%.
- (0915 ET/1415 GMT) United States Nov industrial production, -0.2% m/m forecast; last unch.
- (0915 ET/1415 GMT) United States Nov capacity utilization, 75.1% forecast; last 75.3%.
- (1000 ET/1500 GMT) United States Oct business inventories, -0.1% m/m forecast; last +0.1%.
Key Events Ahead
- N/A ECB Governing Council meeting.
- (0200 ET/0700 GMT) Sweden TNS Sifo Prospera inflation expectations survey.
- (0300 ET/0800 GMT) Riksbank Executive Board meeting.
- (0500 ET/1000 GMT) Greece E1 bln 13-week treasury bill auction.
- (0530 ET/1030 GMT) UK DMO GBP800 mln 0.125% 2036 index-linked Gilt auction.
- (0715 ET/1215 GMT) BoE Gov Carney speaks in London.
- (0915 ET/1415 GMT) BoE DepGov Woods, others testify before Treasury Select Committee.
- (1400 ET/1900 GMT) EC Pres Juncker meeting with France PM Fillon in Brussels.
- (1400 ET/1900 GMT) FOMC policy announcement, 25 bp hike in Fed funds rate target forecast.
- (1430 ET/1930 GMT) FOMC Chair Yellen press conference.
FX Beat
DXY: The dollar traded within a narrow range versus its major peers, as investors refrained from taking big positions ahead of FOMC policy decision. The greenback against a basket of currencies traded 0.1 percent down at 100.97, hovering towards a low 100.75 hit in the previous session. FxWirePro's Hourly Dollar Strength Index stood at -77.97 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro edged higher, reversing most of its previous session losses, as the greenback took a breather ahead of the outcome of the U.S. Federal Reserve's policy meeting later in the day. The Fed is certain to raise its interest rate target by 0.25 percentage point to 0.50-0.75 percent, however, investors’ attention will also remain on clues on 2017 interest rates outlook. The European currency trades 0.1 percent up at 1.0635, hovering towards a high of 1.0666 hit on Tuesday. FxWirePro's Hourly Euro Strength Index stood at 5.16 (Neutral) by 0400 GMT. Traders now await Eurozone's industrial production report, the U.S. retail sales, and producer price index, ahead of highly influential FOMC policy decision. Immediate resistance is located at 1.0685 (Nov-28 High), a break above targets 1.0700. On the downside, support is seen at 1.0600, a break below could drag it till 1.0564.
USD/JPY: The dollar edged up, but traded within a thin range as investors cautiously awaited the FOMC decision. Markets have priced in a 25bps rate hike, however, the focus will remain on the Fed’s forward guidance for 2017. The major failed to extend gains above the 115.00 handle, as upbeat Japanese Tankan manufacturing surveys underpinned the yen. The Bank of Japan's Tankan quarterly survey showed manufacturers' sentiment improved for the first time in six quarters in the three months to December to touch a 1-year high, which strengthened market expectations that the BoJ will hold off on expanding stimulus measures in the near-term. The pair trades flat at 115.23, still within the sight of a 10-month high of 116.12 hit on Monday. FxWirePro's Hourly Yen Strength Index stood at -160.26 (Highly Bearish) by 0400 GMT. Investors are likely to ignore the US retail sales and PPI data release, as the focus remains on FOMC decision and Fed Chair Yellen's presser for further clues on the monetary policy outlook. Immediate resistance is located at 116.00, a break above targets 116.50. On the downside, support is seen at 114.43 (9-EMA), a break below could take it near114.00.
GBP/USD: Sterling consolidated within a narrow range, as investors shift to the sidelines and refrain from taking positions ahead of central bank policy decisions. On Tuesday, the major rose to a 1-week high of 1.2727 on the back of higher-than-expected inflation numbers, however, it eased to close lower at 1.2657, as investors turned cautious before the U.S. Federal Reserve policy outcome due later in the day and Bank of England policy statement scheduled tomorrow. Sterling was trading at 1.2652, after falling to an intra-day low of 1.2640. FxWirePro's Hourly Sterling Strength Index stood at 19.00 (Neutral) by 0400 GMT. Investors’ will closely watch the UK labor market report and BoE Governor Carney’s speech, ahead of the highly-influential FOMC interest rate decision. Immediate resistance is located at 1.2700, a break above could take it over 1.2744. On the downside, support is seen at 1.2624 (9-EMA), a break below targets 1.2548 (Dec- 8 Low). Against the euro, the pound trades 0.1 percent lower at 84.06 pence, pulling away from a 1-week high of 83.42 pence hit the day before.
AUD/USD: The Australian dollar declined below the 0.7500 handle, weighed down by concerns about the country's labor market, ahead of the U.S. Federal Reserve meeting. The selling pressure intensified after data showed Australia's new motor vehicle sales fell at an annualized rate of 1.1 percent in November, after rising 1.2 percent in October. The Aussie trades 0.1 percent lower at 0.7489, retreating from a high of 0.7523 hit in the previous session, it’s highest since Nov. 16. FxWirePro's Hourly Aussie Strength Index stood at 81.24 (Slightly Bullish) by 0500 GMT. Markets now await the FOMC interest rate decision, with a 25 bps rate hike widely expected. Immediate support is seen at 0.7468 (10-DMA), a break below could drag it near 0.7430/0.7400. On the upside, resistance is located at 0.7520, a break above targets 0.7570.
NZD/USD: The New Zealand dollar rose, extending gains for the third consecutive session, as prevalent risk-on sentiment and easing political uncertainty underpinned the bid tone around the major. However, the upside remains capped as investors attention remains on the Fed meeting later in the day, which is likely to hike interest rates for the first time this year. The Kiwi trades 0.5 percent up at 0.7206, hovering towards a high of 0.7232 hit in the previous session, its highest since Nov 10. FxWirePro's Hourly Kiwi Strength Index was at 82.78 (Slightly Bullish) by 0500 GMT. Investors will continue to track board based market sentiment, ahead of the Federal Reserve policy decision for next direction on the major. Immediate resistance is located at 0.7250, a break above could take it over 0.7289/ 0.7310. On the downside, support is seen at 0.7172 (7-EMA), a break below could drag it till 0.7146.
Equities Recap
Asia shares nudged higher as investors cautiously awaited the Federal Reserve policy decision, where it is expected to raise rates for the first time this year.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 percent.
Tokyo's Nikkei advanced 0.1 percent at 19,267.81 points, Australia's S&P/ASX 200 index rose 0.77 percent to 5,587.70 points and South Korea's KOSPI was trading 0.05 percent up at 2,036.81 points.
Shanghai composite index gained 0.4 percent to 3,167.59 points, while CSI300 index was trading 0.13 percent higher at 3,409.40 points.
Hong Kong’s Hang Seng was trading 0.6 percent up at 22,582.36 points. Taiwan shares shed 0.2 percent at 9,368.52 points.
Commodities Recap
Crude oil prices declined after an industry reported showed a rise in U.S. crude inventories and a forecast that OPEC may have produced more crude in November than previously expected, weighed on a planned output cut. International benchmark Brent crude was 0.4 percent lower at $55.05 per barrel by 0414 GMT, pulling away from a 17-month high of $57.50 hit on Monday. U.S. West Texas Intermediate crude fell 0.3 percent at $52.28 a barrel, after rising as high as $54.48 earlier in the week, its highest since July 2015.
Gold prices edged higher, regaining some of its previous session losses as the dollar eased, while markets waited for the U.S. Federal Reserve's policy meeting outcome later in the day. Spot gold was up 0.2 percent at $1,160.48 an ounce by 0418 GMT, after declining to a low of $1,151.24 an ounce on Monday, its lowest since Feb. 5. U.S. gold futures were 0.2-percent higher at $1,161.20 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4587 percent lower by 0.021 bps, while 5-year yield was down by 0.009 bps at 1.9025 percent.
The Australian government bonds rallied as crude oil prices fell more than a percent after U.S. stockpiles rose. The yield on the benchmark 10-year Treasury note fell 2 basis points to 2.81 percent, the yield on 15-year note dipped 4 basis points to 3.25 percent and the yield on short-term 2-year slid 2 basis points to 1.85 percent.
The New Zealand government bonds closed higher Wednesday after energy oil prices fell following a rise in U.S. crude inventories. The yield on the benchmark 10-year bond closed 1-1/2 basis points lower at 3.29 percent, the yield on 7-year note ended down 2 basis points to 2.85 percent and the yield on short-term 2-year note slid 2 basis points to 2.18 percent.
Canadian government bond prices slipped across the yield curve, with the 2-year down 3 Canadian cents to yield 0.777 percent and the benchmark 10-year slipping back 8 Canadian cents to yield 1.756 percent. It had earlier touched its highest intraday level since July 2015 at 1.781 percent.
