Market Roundup
- Facing opposition, UK's May will bring Brexit deal back to parliament
- UK economy set for slowest growth since 2009 as Brexit nears-BCC
- China's Xi calls for reform implementation, offers no new measures
- Japan cuts GDP, CPI forecasts on disasters and trade war
- Ex-BOJ dep gov blames Japan's low inflation on rising labour productivity
- 'Do more with less:' Mexico president defends budget cuts
- Australia's central bank sees risks from high debt as house prices fall
- Pace of Canada rate hikes could be interrupted -central bank chief
- China, Japan pare U.S. Treasury holdings in October -data
Economic Data Ahead
- (0500 ET/0900 GMT) Germany Dec Ifo Business Climate New, 101.8 f'cast, 102.0 prev
- (0500 ET/0900 GMT) Germany Dec Ifo Curr Conditions New, 104.9 f'cast, 105.4 prev
Key Events Ahead
- N/A U.S. Federal Reserve's Federal Open Market Committee starts its two-day meeting on interest rates in Washington D.C.
- (0315 ET/0815 GMT) ECB's Luis de Guindos participates in a panel discussion at an event organised by the Spanish Ministry of Economy in Madrid, Spain
- (0400 ET/0900 GMT) Bank of Finland Governor, ECB council member Olli Rehn will speak at a news conference as the BoF updates its forecasts for the Finnish economy in Helsinki
- (0700 ET/1200 GMT) ECB Governing Council Member Jozef Makuch holds news conference in Bratislava
FX Beat
DXY: The dollar index edged down amid speculation that President Donald Trump could force a partial shutdown of the U.S. government on Friday if Congress does not approve funding for his proposed U.S.-Mexico border wall. The greenback against a basket of currencies trades 0.05 percent down at 97.10, having touched a high of 97.71 on Friday, its highest since June 2017. FxWirePro's Hourly Dollar Strength Index stood at -12.77 (Neutral) by 0500 GMT.
EUR/USD: The euro eased after rebounding from recent lows in the previous session as the European Commission is still talking with the Italian government over the country's budget for next year. The European currency traded flat at 1.1343, having touched a low of 1.1270 on Friday, its lowest since Nov. 28. FxWirePro's Hourly Euro Strength Index stood at -62.04 (Bearish) by 0500 GMT. Investors’ attention will remain on German IFO business climate, expectations, and current assessment surveys, ahead of the U.S. building permits and housing starts. Immediate resistance is located at 1.1379 (December 3 High), a break above targets 1.1401 (November 29 High). On the downside, support is seen at 1.1267 (November 28 Low), a break below could drag it till 1.1215 (November 12 Low).
USD/JPY: The dollar slumped to a 1-week trough as investors cautiously awaited a crucial Federal Reserve meeting amid speculation it will soon pause its monetary tightening cycle in the face of rising risks to global growth. The major was trading 0.2 percent down at 112.56, having hit a high of 113.70 on Thursday, its highest since December 3. FxWirePro's Hourly Yen Strength Index stood at 113.38 (Highly Bullish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits and housing starts. Immediate resistance is located at 113.01 (November 23 High), a break above targets 113.72 (November 30 High. On the downside, support is seen at 112.66 (October 23 Low), a break below could take it lower 112.24 (December 10 Low).
GBP/USD: Sterling consolidated within narrow ranges, as British Prime Minister Theresa May rescheduled a delayed vote in parliament on her Brexit plan for mid-January. The major traded flat at 1.2619, having hit a low of 1.2476 on Wednesday; it’s lowest since mid-April 2017. FxWirePro's Hourly Sterling Strength Index stood at -9.33 (Neutral) 0500 GMT. Investors’ attention will remain on the U.S. fundamental drivers, amid a lack of economic data from the UK docket. Immediate resistance is located at 1.2670 (Dec. 13 High), a break above could take it near 1.2754. On the downside, support is seen at 1.2560, a break below targets 1.2515. Against the euro, the pound was trading 0.05 percent up at 89.87 pence, having hit a low of 90.87 last week, it’s lowest since August 29.
AUD/USD: The Australian dollar gained, as the greenback eased amid speculation the Federal Reserve at its policy meeting on Wednesday will signal that further hikes in rates will be conditional on the economic outlook. The Aussie trades 0.2 percent up at 0.7191, having hit a low of 0.7151 on Friday; it’s lowest since November 1. FxWirePro's Hourly Aussie Strength Index stood at -180.63 (Slightly Bearish) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7141 (September 17 Low), a break below targets 0.7100. On the upside, resistance is located at 0.7212 (November 1 High), a break above could take it near 0.7268 (November 22 High).
NZD/USD: The New Zealand dollar surged after an ANZ bank survey showed that the country's businesses were much less pessimistic in December than in the previous month, with more firms expecting an improved outlook for growth. The Kiwi trades 0.7 percent up at 0.6851, having touched a low of 0.6777 on Friday, its lowest level Nov 27. FxWirePro's Hourly Kiwi Strength Index was at 124.03 (Highly Bullish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6883 (November 16 High), a break above could take it near 0.6928 (December 5High). On the downside, support is seen at 0.6753 (November 27 Low)., a break below could drag it below 0.6727 (November 9 Low).
Equities Recap
Asian shares plunged as heightened concerns about a slowing global economy sent investors seeking safety in safe-haven assets.
MSCI's broadest index of Asia-Pacific shares outside Japan tumbled 0.3 percent.
Tokyo's Nikkei declined 1.7 percent to 21,134.02 points, Australia's S&P/ASX 200 index eased 1.2 percent to 5,589.50 points and South Korea's KOSPI plunged 0.6 percent to 2,058.79 points.
Shanghai composite index fell 0.9 percent to 2,572.25 points, while CSI300 index traded 1.1 percent down at 3,125.62 points.
Hong Kong’s Hang Seng traded 1.3 percent lower at 25,754.74 points. Taiwan shares shed 0.7 percent to 9,718.82 points.
Commodities Recap
Crude oil prices consolidated near a 2-week low, as reports of rising inventory and forecasts of record shale output in the United States triggered worries about oversupply. International benchmark Brent crude was trading 0.2 percent up at $58.81 per barrel by 0434 GMT, having hit a low of $58.65 on Monday, its lowest since December 6. U.S. West Texas Intermediate was trading 0.1 percent up at $49.19 a barrel, after falling as low as $49.05 on Monday, its lowest since early October 2017.
Gold prices surged as the greenback slipped into the red ahead of the U.S. Federal Reserve's two-day policy meeting. Spot gold was 0.3 percent up at $1,248.79 per ounce by 0545 GMT, having touched a high of $1,248.87 earlier, its highest level since Dec. 11. U.S. gold futures settled up 0.8 percent at $1,251.80 per ounce.
Treasuries Recap
The Japanese government bonds continued to gain on the second trading day of the week as investors wait to watch the country’s trade balance data for the month of November, scheduled to be released today by 23:50GMT. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 3 basis points to 0.030 percent, the yield on the long-term 30-year note suffered 1-1/2 basis points to 0.761 percent and the yield on short-term 2-year plunged 15 basis points to -0.153 percent.
The Australian 3-year bond futures rose 4 ticks at 98.105 after hitting its highest since November last year. The yields on the cash 10-year bond were near their lowest since June 2017 at 2.419 percent, having fallen over 40 basis points in the past month.
The New Zealand government bonds gained, sending yields 2.5 basis points lower along most of the curve.
The Canadian government bond prices were higher across the yield curve, with the 10-year rising 41 Canadian cents to yield 2.053 percent. The gap between Canada's 10-year yield and its U.S. equivalent widened by 1.4 basis points to a spread of 80.2 basis points, its widest since May 2017.
