Market Roundup
- China auto sales drop for 17th straight month in November
- China's consumer inflation at eight-year high
- Gold consolidates ahead of U.S. tariff deadline
- Oil prices ease on weaker demand concerns
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department will release labor costs report for the third quarter. The indicator is expected to nudge up 3.3 percent after posting a gain of 3.6 percent in the previous quarter.
- (0830 ET/1330 GMT) The U.S. Labor Department is likely to report that non-farm productivity edged lower 0.3 percent in the third quarter, from a decline of 0.1 percent in the previous quarter.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index eased as investors braced for a Federal Reserve policy decision and awaited clues on the U.S.-China trade talks. Markets are almost certain the Fed will hold rates steady when its two-day meeting concludes on Wednesday. The greenback against a basket of currencies traded 0.1 percent down at 97.55, having touched a low of 97.36 on Friday, its lowest since November 4.
EUR/USD: The euro rose, extending previous session gains after ZEW survey showed Eurozone economic sentiment improved in December. Investors now await Christine Lagarde's first meeting and news conference as ECB chief on Thursday. The European currency traded 0.1 percent up at 1.1075, having touched a low of 1.1039 on Friday, its lowest since December 2. Immediate resistance is located at 1.1084, a break above targets 1.1097. On the downside, support is seen at 1.1044 (21-DMA), a break below could drag it below 1.1025.
USD/JPY: The dollar surged, halting a 3-day losing streak, as investors eye a looming deadline for U.S. tariffs on China and upcoming Federal Reserve meeting. On Monday, a Chinese Commerce Ministry official stated that Beijing hopes to make a trade deal with Washington as soon as possible before new U.S. tariffs take effect this weekend. The major was trading 0.1 percent up at 108.53, having hit a low of 108.42 on Monday, its lowest since Nov 21. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unit labour cost data. Immediate resistance is located at 108.85 (21-DMA), a break above targets 108.99 (10-DMA). On the downside, support is seen at 108.34, a break below could take it near at 108.18.
GBP/USD: Sterling surged, hovering towards an 8-month peak hit in the previous session, as investors viewed a Conservative Party majority win as the most likely outcome of the general election on Thursday. The major traded 0.3 percent up at 1.3175, having hit a high of 1.3181 on Monday, it’s highest since May 6. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3196, a break above could take it near 1.3246. On the downside, support is seen at 1.3100, a break below targets 1.3067. Against the euro, the pound was trading 0.1 percent up at 84.04 pence, having hit a high of 83.92 on Monday, it’s highest since May 2017.
USD/CHF: The Swiss franc rallied to a 1-week peak as investors were wary of a looming deadline for U.S. tariffs on China. The major trades 0.2 percent down at 0.9860, having touched a low of 0.9859 earlier, it’s lowest since December 4. On the higher side, near-term resistance is around 0.9899 and any break above will take the pair to the next level till 0.9922 (21-DMA). The near-term support is around 0.9839, and any close below that level will drag it till 0.9813.
Equities Recap
European shares eased, extending previous session losses as investors refrained from taking big bets ahead of global political and economic events.
The pan-European STOXX 600 index slumped 1.1 percent at 402.10 points, while the FTSEurofirst 300 fell 1.2 percent to 1,568.90 points.
Britain's FTSE 100 trades 1.1 percent down at 7,157.98 points, while mid-cap FTSE 250 eased 0.7 to 20,782.24 points.
Germany's DAX declined 1.5 percent at 12,917.85 points; France's CAC 40 trades 0.9 percent lower at 5,781.29 points.
Commodities Recap
Crude oil prices eased, extending losses for a second straight session as a slowing global demand outlook outweighed OPEC’s agreement with associated producers at the end of last week to deepen crude output cuts in early 2020. International benchmark Brent crude was trading down at $64.05 per barrel by 0948 GMT, having hit a high of $64.86 on Friday, its highest since September 23. U.S. West Texas Intermediate was trading 0.2 percent down at $58.77 a barrel, after rising as high as $59.81 on Friday, its highest since September 17.
Gold prices surged as investors remained cautious ahead of a two-day rate-setting meeting by the U.S. central bank, with markets awaiting clarity on whether a next round of U.S. tariffs on Chinese goods will come into effect this weekend. Spot gold was trading 0.3 percent up at $1,464.79 per ounce by 0955 GMT, having touched a low of $1458.57 on Monday, its lowest since Dec. 2. U.S. gold futures rose 0.2 percent to $1,467.30.
Treasuries Recap
The U.S. two-year yield was at 1.6151 percent, down from its close of 1.627 percent on Monday, while the 10-year Treasury yield was at 1.8225 percent from a U.S. close of 1.831 percent on Monday.
The Eurozone government bond yields steadied, before this week’s European Central Bank and Federal Reserve meetings. Germany’s benchmark Bund yield was steady at -0.30 percent, below a recent high of -0.26 percent. Italian 10-year bond yields dipped 2.5 basis points to 1.36 percent .
The yields on 10-year Japanese government bonds as investors braced for a Federal Reserve policy decision and awaited clues on the U.S.-China trade talks. The 10-year JGB yield was unchanged at minus 0.010 percent, erasing earlier gains, while 10-year JGB futures fell 0.02 point to 152.24. The 20-year JGB yield was flat at 0.295 percent. The 30-year JGB yield was also flat at 0.440 percent. The five-year yield rose 1 basis point to minus 0.095 percent. At the short-end of the yield curve, the two-year JGB yield rose 1 basis point to minus 0.110 percent.
