Market Roundup
- Japan Oct Industrial Output Revised stays flat at +1.4 % vs previous 1.4 %
- Japan Oct Capacity Util Index Chg MM decreases to +1.3 % vs previous 1.5 %
- India Nov WPI Mfg Inflation Increases to -1.42 % vs previous -1.67 %
- India Nov WPI Fuel YY Increases to -11.09 % vs previous -16.32 %
- India Nov WPI Inflation YY Increase to -1.99 % (Forecast -2.80 %) vs previous -3.81 %
- India Nov WPI Food YY Increases to 5.2 % vs previous 2.44 %
- China Nov industrial output +0.58% m/m, +6.2% y/y, +5.6% y/y forecast.
- China Nov retail sales +0.86% m/m, +11.2% y/y, +11.1% y/y forecast.
- China Jan-Nov fixed asset investment +10.2% y/y, +10.1% forecast, property +1.3%.
- United States Senate aide - Very likely crude oil export ban will be lifted - Reuters.
- New Zealand Nov PSI 59.8, Oct 56.5, all five sub-indices up.
- Investors flee EM, high yield and US equities, move into cash pre-Fed -BAML.
- IIF - China capital outflows top $500 bln in '15 - Reuters.
- CFTC IMM CTA data - Specs further trim USD bets in latest week but market still very long USD; bullish bets on US oil at record low but mkt still long.
- BoJ Tankan - Big mfg index +12, non-mfg +25, +11 and +23 forecast, +7 and +18 seen in March vs +11 and +21 forecast, FY '15/16 CAPEX +10.8%, +10.2% forecast, profits +3.3%, big mfg sees USD average at 119.40, Sept survey 117.39.
Economic Data Ahead
- (0200 ET/0700 GMT) Sweden Nov unemployment; last 7.8%.
- (0400 ET/0900 GMT) Italy Nov CPI - final, -0.4% m/m, +0.1% y/y forecast; prelim -0.4%, +0.1%.
- (0400 ET/0900 GMT) Italy Nov HICP - final, -0.5% m/m, +0.1% y/y forecast; prelim -0.5%, +0.1%.
- (0500 ET/1000 GMT) Eurozone Oct industrial output, +0.3% m/m, +1.3% y/y forecast; last -0.3%, +1.7%.
Key Events Ahead
- N/A Riksbank begins two-day meeting on monetary policy.
- N/A France E3.3-3.7/1.3-1.7/1.2-1.6 bln 3/6/12-month BTF auctions.
- (0630 ET/1130 GMT) BoE DepGov Shafik speaks at London Institute of Directors.
FX Beat
USD: The dollar index edged higher, about 0.2 percent to 97.795 in Asian trade on Monday with major currencies rangebound ahead of this week's U.S. Federal Reserve meeting on expectations of interest rate hike.
EUR/USD: Against the greenback, euro edged down about 0.1 percent to $1.0964 level after it gained more than 3 percent over the past two weeks as European Central Bank
fell short of delivering the aggressive easing measures. The US dollar is seen steady ahead of Fed, putting more pressure on Euro. Currently it trades at $1.0963 after having touched a high of $1.0982. It sees immediate support at 1.0962 below which it could retrace. On the flip side, it faces resistance at 1.1050 levels. Against the yen it was at 132.76, down about 0.2 percent.
USD/JPY: The pair gained about 0.1 percent, rising up to 121.09 and is currently trading at fresh session high of 121.10 levels after having touched a daily low of 120.639 levels. It has gained up significantly after traders are seen positive on imminent Fed interest rate hike heading into this week. Despite the Asian stocks continue to struggle, with Nikkei down by 1.80 pct, the yen is slipping down. Resistance is faced around 121.50 levels and support is seen around 120.56 levels.
AUD/USD: The Australian dollar opened about 20 pips higher rising to $0.7218, after it touched a 3-week low of $0.7160 in response to the upbeat China data released over the weekend. With ongoing weakness in oil prices and a broadly stronger US dollar on hopes of 25bps hike in the US interest rates, the recovery appears short-lived. Currently it is trading at $0.7199 as key support is seen around $0.7160, while $0.7240 is seen as a strong barrier. The Aussie dropped 0.5 percent to 86.56 yen, drifting away from a peak of 90.71 touched earlier this month. Immediate support is seen at 86.51 (Session low Dec 14) and further below at 86.35 (50% Fib of 81.97 to 90.72 rise).
NZD/USD: The New Zealand dollar is on a bearish cycle, trading at 0.6710 levels after having touched a daily low of 0.6691. With the USD trending higher in anticipation of the first rate hike in a decade and falling commodity prices, the pair looks weaker. Major support is seen around 0.6686 while resistance is located at 0.6749.
USD/CNY: Spot yuan hit its lowest level in nearly 4-1/2 years last week, as PBoC set its official midpoint rate at 6.4495 per dollar prior to the market open on Monday, its weakest level since July 2011 and 0.2 percent weaker than the previous fix of 6.4358. It depreciated further after China Foreign Exchange Trade System, a unit of the central bank, announced after the market close on Friday that it had launched a new trade-weighted yuan exchange rate index, tracking its currency against a basket. Spot yuan dropped to 6.4647 to the dollar, down about 0.2 percent from Friday's close.
Equities Recap
Asian stocks dropped on Monday as plunging oil prices added to investors' nervousness about riskier assets ahead of an expected U.S. rate rise by the Federal Reserve later in the week.
MSCI's broadest index of Asia-Pacific shares outside Japan hit a 2-1/2-month low and was last down 1.4 percent, while Shanghai stocks edged down 0.2 percent.
Australia's S&P/ASX 200 Index closed down 1.95 pct at 4,931.30 points, while Nikkei dropped 1.80 pct at 18,883.42 with Seoul Shares down by 1.20 pct.
Commodities Recap
Gold started off on the back foot on Monday, as the Federal Reserve is expected to raise U.S. interest rates for the first time in nearly a decade. Higher rates are expected to hurt demand for non-interest-paying bullion. Gold has already slid 9 percent for the year, its third straight annual decline, in anticipation of higher rates. Spot gold dropped 0.2 percent to $1,072.11 an ounce by 0042 GMT, after gaining 0.3 percent on Friday.
U.S. crude was edged down 0.8 percent at $35.32 a barrel after touching $35.16 on Friday, the lowest since February 2009. Brent crude dropped below $38 a barrel for the first time since December 2008 on Friday after the International Energy Agency said demand growth is slowing, while OPEC output remains high, pointing to a bigger glut in coming months.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.1585 percent up by 0.02 vs previous close of 2.139 percent on Friday.
Australian government bond futures increased, with the 3-year bond contract up 5 ticks at 98.875. The 10-year contract added 6.25 ticks to 97.1775, while the 20-year contract was 5.75 ticks higher to 96.6575.
New Zealand government bonds gained after a rally in the U.S. 10-year. The yields were 2 basis points lower at the front end and 3 lower at the back.
