Market Roundup
- GBP/USD -0.02%, USD/JPY -0.01%, EUR/USD 0.44%.
- DXY -0.24%, DAX -0.07%, Brent -0.55%, Iron -4.41% Gold -0.01%.
- Japan Inc rushing to reap gains from weak yen – Nikkei.
- Japan plans record Y97.45tn ($830bn) spending in fiscal year ‘17/18.
- Japan tax revenues estimated at 26-year high.
- Japan bond financing to fall, 9-year low, debt servicing cost to fall.
- Japan public works/defense spending up.
- Bailout of Italy’s Monte dei Paschi could take months – Il Sole 24 Ore.
- UK Dec GfK consumer confidence index -7, -8 expected, Nov -8.
- British MPs plan to scrutinize BoE policy.
- Major by-election test for UK opposition Labour party under Corbyn in pipeline, Copeland.
- CNB Meeting: Expected to reiterate that it will probably ditch EUR/CZK floor mid-2017.
- Poland says EU’s concerns over rule of law are groundless - RTRS
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Commerce Department is likely to report that durable goods orders fell 4.7 percent in November after rising 4.6 percent in October. Non-defense capital goods excluding aircraft are expected to have risen 0.3 percent after gaining 0.2 percent in October. The department is also expected to confirm that third-quarter gross domestic product increased at a 3.3 percent annualized rate.
- (0830 ET/1330 GMT) The U.S. Labor Department reports initial claims for state unemployment benefits likely rose 2,000 to a seasonally adjusted 256,000 for the week ended Dec. 17. The continuing jobless claims for the week ending December 9 is expected to have fallen slightly to 2.015M from 2.018M.
- (0830 ET/1330 GMT) The Canada is set to release its November inflation report with three new measures of core inflation introduced by the Bank of Canada. With total annual inflation forecast to slip to 1.4 percent the measures will be parsed to see if underlying inflation is more robust than the all-items figure suggests. Retail sales were likely cooled to 0.3 percent in November from the previous month's 0.6 percent, in line with expectations that broader economic growth slowed in the fourth quarter.
- (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of October, the index rose 0.6 pct in the previous month.
- (1000 ET/1500 GMT) The consumer spending in U.S. likely rose 0.3 percent in November after a similar rise in October, while personal income is expected to have risen 0.3 pct.
- (1000 ET/1500 GMT) The Conference Board is set to release its leading indicators for the month of November.
- (1030 ET/1530 GMT) EIA Natural Gas Storage Change (December 16).
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade Ops 30-yr Fannie Mae/Freddie Mac max $2.150bn.
FX Beat
DXY: The U.S dollar index has retreated after jumping till 103.65 and is currently trading around 102.90. The index is facing resistance around 103.60 and any break above targets 105. On the lower side, any break below 102.60 (7- day EMA) will drag the index down till 102.20 (10- day MA)/100.60. Short term bullish invalidation only below 98.
USD/JPY: USD/JPY has taken support near 7-day EMA and jumped sharply till 117.86 from that level. It is currently trading around 117.64. The pair’s major resistance is around 119 and break above targets 120. On the lower side minor support is around 117 (7-day EMA) and any break below targets 116.49 (10- day MA)/114.85 (21- day MA).
USD/CHF: USD/CHF took support near 1.0220 and slightly recovered from that level. It is currently trading around 1.02455. Short term trend is weak as long as resistance 1.03450 holds. On the lower side, any break below 1.02200 will drag the pair down till 1.01828 (61.8% retracement of 1.00834 and 1.03435)/1.0150. The temporary top formed at 1.03435 will be acting as major resistance and any break above will take the pair till 1.0400 level.
GBP/USD: Cable has made a low of 1.2324 on Dec 21st 2016 and slightly recovered from that level. The pair jumped till 1.23903 and started to decline from that level. It is currently trading around 1.23338. Short term trend is still weak as long as resistance 1.24000 holds. On the higher side, any violation above 1.2400 will take the pair to next level till 1.2440/1.2510 in the short term. Short term bottom is around 1.2300 and any violation below will drag the pair down till 1.22358 (61.8% retracement of 1.27750 and 1.19048)/1.2150/1.2080.
AUDUSD: Aussie has broken low of 0.7220 and declined till 0.71974 for that level. It confirms minor weakness, a decline till 0.7150 is possible. It is currently trading around 0.72720. On the higher side minor resistance is around 0.7315 and any break above will take the pair till 0.7380/0.7435/0.7500. The pair’s major support is around 0.7200 and break below will drag the pair till 0.7145/0.70690.
EURUSD: EUR/USD has recovered sharply from the low of 1.03522 made on 20th Dec 2016. It is currently trading around 1.0465. The pair jumped till 1.04705 and it should break above 10- day MA for further bullishness. Any break above will take the pair to next level till 1.0573 (21- day MA)/1.0670. Short term bullishness only above 1.06700 level. On the lower side EUR/USD is facing strong support at 1.03400 (127.2% retracement of 1.03665 and 1.04720) and any violation below will drag the pair till 1.02835 (161.8% retracement of 1.05047 and 1.08700).
Equities Recap
Europe's Stoxx 600 was down 0.1 pct, Britain's FTSE 100 fell 0.2 pct, France's CAC 40 and Italy's FTSEMIB both dropped 0.1 pct in early deals. Germany's DAX inched lower 0.3 pct, while Spain's IBEX was trading down 0.4 pct.
Tokyo's Nikkei closed down 0.09 pct at 19,427.67, Seoul shares ended down 0.11 pct. China's CSI300 Index finished the day lower 0.1 pct at 3,335.67 points, while Shanghai Composite Index edged up 0.1 pct at 3,139.56 points. HK’s Hang Seng Index fell 0.8 pct at 21,636.20 points.
Despite Italy's climb, the pan-European STOXX 600 was down 0.2 percent, falling for a second straight session after hitting its highest level since Jan. 4 on Tuesday.
Commodities Recap
The spot gold was little changed at $1,131.17 an ounce by 1101 GMT, as the dollar dropped and markets wait for U.S. economic data due later in the day. While U.S. gold futures fell 0.1 percent at $1,132.40 an ounce.
Oil prices slipped in tepid Asian trading on Thursday, dragged down by an unexpected rise in U.S. crude inventories last week and moves by Libya to boost output over the next few months. U.S. West Texas Intermediate crude was down 0.51 pct trading at 52.23 at around 1215 GMT.
Treasuries Recap
The U.S. 10-year Treasuries yield stood at 2.5460 percent vs U.S. close of 2.544 percent on Wednesday. While the UK 10-year government bond yield was at 1.387 pct.
The Japanese government bond prices were unchanged on Thursday but superlong bonds dropped slightly in late trade on unwinding of recent buys after the Bank of Japan's move to support those maturities last week. The benchmark 10-year JGB yield was flat at 0.055 percent, while 10-year JGB futures were 0.07 higher at 149.88. The 20-year yield rose 1.5 basis points to 0.570 percent while the 30-year yield gained 2.5 basis points to 0.680 percent. The yield on longer dated bonds climbed on profit-taking in holiday-thinned trade. Japanese markets will be closed for a holiday on Friday and many market players will be away next week for the year-end.
The benchmark 10-year Italian and Spanish yields rose 1-2 basis points (bps) to 1.84 pct and 1.34 pct respectively on reports of state bailout for Italy's Monte Dei Pasch. While the German 10-year bund yield was higher at 0.27 pct, the Greek 2-year yields recorded the biggest rise with familiar concerns about its debts now returning.
The Australian government bond futures ticked lower, with the 3-year bond contract and the 10-year contract down 1 tick each at 97.90 and 97.13 respectively. The New Zealand government bonds were mostly unchanged.
