Market Roundup
- Oil eases on concerns U.S.-China trade deal
- Gold gains as U.S. says China tariffs in place till Phase 2 deal
Economic Data Ahead
- (0430 ET/0930 GMT) UK Consumer Price Index (MoM) (Dec)
- (0430 ET/0930 GMT) UK Retail Price Index (YoY) (Dec)
- (0430 ET/0930 GMT) UK Producer Price Index - Input (MoM) n.s.a (Dec)
- (0500 ET/1000 GMT) EZ Trade Balance n.s.a. (Nov)
- (0500 ET/1000 GMT) EZ Industrial Production s.a. (MoM) (Nov)
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index consolidated within narrow ranges, as data released yesterday showed U.S. consumer prices rose slightly in December, while monthly underlying inflation slowed, supporting the Federal Reserve’s view to keep interest rates unchanged at least through this year. The greenback against a basket of currencies traded 0.05 percent down at 97.34, having touched a high of 97.58 on Friday, its highest since Dec. 26.
EUR/USD: The euro steadied following European Central Bank board member Yves Mersch's comments, citing that economic growth and inflation in the euro zone are showing good signs of stabilization after a slowdown. The European currency traded 0.05 percent up at 1.1131, having touched a high of 1.1147 on Monday, its highest since January 8. Investors’ attention will remain on EZ trade balance and industrial production, ahead of the U.S. producer price index, Fed Harker's speech and US-China Phase I Trade Deal Signature. Immediate resistance is located at 1.1149 (10-DMA), a break above targets 1.1174. On the downside, support is seen at 1.1102, a break below could drag it below 1.1082.
USD/JPY: The dollar eased, retreating from a 7-1/2 month peak hit in the previous session as risk sentiment slightly weakened after U.S. Treasury Secretary Steven Mnuchin said on Tuesday the United States would keep in place tariffs on Chinese goods until the completion of a Phase 2 trade deal. The major was trading 0.1 percent down at 109.87, having hit a high of 110.21 on Tuesday, its highest since May 23. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index, Fed Harker's speech and US-China Phase I Trade Deal Signature. Immediate resistance is located at 110.31, a break above targets 110.62. On the downside, support is seen at 109.59 (5-DMA), a break below could take it near at 109.21 (21-DMA).
GBP/USD: Sterling rose, extending previous session gains as investors scaled back expectations for further monetary easing at the next Bank of England policy meeting on Jan. 30. On Tuesday, the British pound declined to a 3-week low amid concerns about the state of the economy and talk of a possible cut in interest rates this month. The major traded 0.1 percent up at 1.3028, having hit a low of 1.2954 on Tuesday, it’s lowest since Dec. 24. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3091 (21-DMA), a break above could take it near 1.3160. On the downside, support is seen at 1.2982, a break below targets 1.2935. Against the euro, the pound was trading flat at 85.44 pence, having hit a low of 85.95 on Tuesday, it’s lowest since Nov. 22.
AUD/USD: The Australian dollar consolidated below the 0.6900 handle as U.S. President Donald Trump is slated to sign the trade agreement with Chinese Vice Premier Liu He at the White House at 1630 GMT. Washington has agreed to suspend tariffs on $160 billion of some Chinese-made electronics, and to halve existing tariffs on $120 billion of other goods to 7.5 percent. The Aussie trades flat at 0.6898, having hit a high of 0.6919 on Monday, it’s highest since Jan. 7. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6868, a break below targets 0.6838. On the upside, resistance is located at 0.6936, a break above could take it near 0.6957.
NZD/USD: The New Zealand dollar held firm near recent lows, as investors cautiously awaited the signing of the U.S.-China trade deal. The Kiwi trades flat at 0.6612, having touched a low of 0.6600 on Thursday, its lowest level since Dec. 23. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6655 (10-DMA), a break above could take it near 0.6701. On the downside, support is seen at 0.6587, a break below could drag it below 0.6554.
Equities Recap
Asian shares declined as investors cautiously awaited the signing of an initial U.S.-China trade deal, following comments from the U.S. Treasury Secretary that tariffs would remain in place for now.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 percent.
Tokyo's Nikkei declined 0.6 percent to 23,877.60 points, Australia's S&P/ASX 200 index surged 0.4 percent to 6,987.90 points and South Korea's KOSPI tumbled 0.3 percent to 2,231.39 points.
Shanghai composite index eased 0.7 percent to 3,086.32 points, while CSI 300 index traded 0.8 percent down at 4,157.20 points.
Hong Kong’s Hang Seng traded 0.9 percent lower at 28,638.95 points. Taiwan shares shed 0.7 percent to 12,091.79 points.
Commodities Recap
Crude oil prices declined on concerns that the pending Phase 1 trade deal between the United States and China may not lead to more fuel demand. International benchmark Brent crude was trading 0.2 percent lower at $64.32 per barrel by 0412 GMT, having hit a low of $63.91 on Monday, its lowest since Dec. 12. U.S. West Texas Intermediate was trading 0.1 percent down at $58.07 a barrel, after falling as low as $57.94 on Monday, its lowest since Dec. 6.
Gold prices rebounded after a top U.S. official said tariffs on China would stay until a Phase 2 deal is completed, ahead of the signing of an interim trade deal between the two countries. Spot gold rose 0.4 percent to $1,552.49 per ounce by 0415 GMT, having touched a low of $1536.01 on Tuesday, its lowest since Jan. 3. U.S. gold futures rose 0.2 percent to $1,547.80.
Treasuries Recap
The U.S. Treasury yields ticked down on weaker-than-expected consumer prices and the expected signing of the interim trade deal. The benchmark 10-year note yield fell to 1.807 percent.
