Market Roundup
- German Oct Industrial Orders 4.9 pct vs revised -0.3% previous, +0.6% expected
- Swiss Nov CPI -0.3% y/y vs -0.2% previous, -0.2% expected
- Eurozone revised Q3 GDP 1.7% y/y vs 1.6% previous, 1.6% expected
- UK Nov BRC LFL Retail Sales +0.6% y/y, Oct +1.7%
- China and Egypt concluded an 18 bln yuan ($2.62 bln 3-year bilateral currency swap
- EU’s Barnier says EU ready to receive UK withdrawal notification
- Monte Dei Paschi to hold talks with ECB in Frankfurt
- Australia at risk of GDP contraction after disappointing data
- Japan won't recognize China as WTO market economy – Nikkei
- Japan tax reform to ease up on overseas shell companies – Nikkei
- RBA leaves OCR as is at 1.5% as expected
- Rogue Chinese Renminbi rate raises eyebrows, apparently erroneous
- Renminbi quote on Google would have represented an 8% deval – FT
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Bureau of Economic Analysis and the Census Bureau to report trade deficit for October, which is expected to have risen to $41.8 billion in October, compared to a deficit of $36.4 billion in September.
- (0830 ET/1330 GMT) The unit cost of labor in U.S for third quarter is seen steady at 03 pct and nonfarm productivity likely rose 3.3 pct after gaining 3.1 pct in second quarter.
- (0830 ET/1330 GMT) The Statistics Canada's trade data for October to show how exports performed at the start of the fourth quarter. Better-than-expected figures could strengthen expectations that economic growth in the final quarter of the year will not slow by as much as had been expected.
- (1000 ET/1500 GMT) The U.S. Commerce Department is set to release factory orders data for October. New orders are likely to have risen 2.6 percent in October after adding 0.3 percent in September.
- (1000 ET/1500 GMT) The Canada's Ivey Purchasing Managers Index for November is due for release, it stood at 56.5 in October.
- (1630 ET/2130 GMT) API Crude Oil Stocks.
Key Events Ahead
- (1430 ET/1930 GMT) FedTrade operation 30-year Ginnie Mae (max $1.500 bn)
- Canada's Finance Minister Bill Morneau will answer Senate committee questions on the federal budget.
FX Beat
DXY: US dollar index up 0.15 percent on the day, trading around 100.30 at 1150 GMT. The dollar has been losing its strength from the last couple of days. We traced out Bearish Engulfing candle pattern on DXY daily charts at 100.110 levels. Bears have managed to break below support at 100.820 and also slide below DMAs. We could only see next strong support at 99.760 levels.
EUR/USD: EUR/USD staged a solid 40-pips rebound from session lows at 1.0736, but upside seems capped ahead of ECB decision due Thursday. Currently the major trades modestly flat at 1.0766, retreating form session highs reached at 1.0785. Major resistance is seen at 1.08200, break above to see further bullishness. Gains upto 1.0875/1.0900/1.1000, then likely. On the lower side, minor support lies around 1.06800 and any break below will drag the pair down till 1.06130 (61.8% retracement of 1.05047 and 1.07960)/1.0550/1.0500. Any close below 1.0500 confirms further weakness.
USD/JPY: USD/JPY trades a narrow range in a directionless price-action on Tuesday. The major hovers around 114 handle. FX market volatility following a 'NO' vote to Italian Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday keeps the Japanese yen supported. Next week's FOMC meeting and updated economic projections in focus for further impetus. Strong resistance can be seen at 115.00, a break above this level would take the pair towards next resistance level at 115.55. Immediate support can be seen at 114.07, a break below this level will open the door towards next level at 113.41.
GBP/USD: Cable retreats from fresh two-month highs at 1.2774 and is currently trading around 1.2750 region. Stronger-than-expected UK services PMI print added on to Friday's upbeat UK construction PMI boosting upside in the pair. Next week's FOMC meeting, which would provide fresh clues over possibilities, and timing of next Fed rate-hike action in 2017, and would eventually determine the next leg of directional move for the major. Immediate support is seen by 5-DMA at 1.2661, while resistance lies at 1.2793 (100-DMA).
USD/CHF: USD/CHF declined till 1.00495 and has since pared losses to currently trade at 1.0088 levels. The greenback has shown a massive selling pressure at higher levels. The pair has taken support near 23.6% fibo levels of 0.95432 and 1.0205 at 1.00485 and any further bearishness can be seen below that level. Any violation below 1.00485 will drag the pair down till 1.000/0.9950 level. The pair should break above temporary top at 1.0205 for further jump. Any violation above 1.0205 will take the pair till 1.02260/1.0260.
AUD/USD: RBA kept its Official Cash Rate (OCR) unchanged at a record low of 1.5%, as widely expected, at its policy meeting earlier today. Aussie shows muted reaction, remains largely unchanged on RBA’s status-quo. Technically the pair is struggling to break above 0.75 barrier. Price action has edged above 5-DMA. We see a possible "Bearish Bat" pattern on daily charts, scope for upside on break above 20-DMA at 0.7462. Stochs and MACD are biased for further gains. We see weakness only on break below 0.7325 (major trendline support). Major trendline support seen at 0.7325, while major resistance lies at 0.7528 (200-DMA).
NZD/USD: Broad-based US dollar weakness supports NZD/USD higher. Focus on NZ GDT price index ahead of tomorrow’s RBNZ Governor Wheeler’s speech for further impetus. NZD/USD edges higher from session lows at 0.7093, retakes 0.71 handle. The pair is holding break above 20-DMA, we see weakness only ob close below. We see scope for test of 100-DMA at 0.7193. Break above could see further upside.
Equities Recap
Wall Street's Dow Jones index hit record highs overnight lending support to Asian bourses. The European equity markets had a negative start to the day, but quickly recovered ground and turned positive amid a rally in banking sector stocks across Europe, particularly in the Italian banks.
MSCI's broadest index for the region bounced 0.7 percent, its biggest daily rise since Nov. 22, as Korea climbed 1.39 percent and Japan Nikkei closed up 0.47 pct at 18,360.54. China's CSI300 Index finished the day down 0.3 pct at 3,459.15 points, while Shanghai Composite Index lost 0.2 pct at 3,199.65 points.
UK's FTSE 100 index reverses earlier losses, trades modestly flat around 6,740. Meanwhile, the Euro Stoxx 50 climbed 0.48 pct, France's CAC 40 rose 0.26 pct, Italy's FTSEMIB gained 0.83 pct, and Germany's DAX inched higher 0.21 pct.
Commodities Recap
Oil prices edged lower as crude output increased in most major export regions despite plans by OPEC and Russia to cut production. International Brent crude oil futures were trading at $54.83 per barrel at 1127 GMT, down 11 cents from Monday's close. U.S. West Texas Intermediate crude was at $51.50 a barrel, down 29 cents.
Gold attempts modest recovery from 10 months lows hit overnight. Spot gold was up 0.11 percent at $1,171.31 an ounce at 1115 GMT. Spot silver was up 0.47 percent at $16.79 an ounce at 1115 GMT.
Treasuries Recap
The U.S. Treasuries were little changed as markets look ahead to a greater flow of data on Tuesday, highlighted by trade balance, non-farm productivity/unit labour costs and factory orders releases. The yield on the benchmark 10-year Treasury note remained steady at 2.38 percent, the yield on long-term 30-year Treasury hovered around 3.05 percent mark and the yield on short-term 2-year note stood flat at 1.12 percent.
The UK gilts traded modestly firmer as growth in retail sales slowed in November. The yield on the benchmark 10-year gilts fell 1-1/2 basis points to 1.39 percent, the super-long 30-year bond yield dipped 1 basis point to 2.01 percent and the yield on short-term 2-year slid 1 basis point to 0.09 percent.
The German bunds traded nearly flat as investors awaited the European Central Bank (ECB) monetary policy meeting, which is scheduled to be held on December 8. The yield on the benchmark 10-year bond hovered around 0.34 percent mark, the yield on long-term 30-year note remained steady 0.98 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.71 percent.
The Japanese government bonds slumped as investors moved away from safe-haven buying amid gains in crude oil prices and the recovery in the equities market. The benchmark 10-year bond yield, which moves inversely to its price, rose 2 basis point to 0.05 percent, the yield on long-term 40-year note jumped 4 basis points to 0.72 percent and the yield on short-term 3-year note bounced 1/2 basis point to -0.15 percent.
The New Zealand government bonds closed lower on expectations of stronger Global Dairy Trade (GDT) auction, thereby pushing prices in the dairy sector. Also, investors will remain to focus on the upcoming Governor Graeme Wheeler speech scheduled to be held on Tuesday at 22:00 GMT. The yield on the benchmark 10-year bond closed 3 basis points higher at 3.26 percent, the yield on 7-year note ended up 1-1/2 basis points to 2.84 percent and the yield on 5-year note rose 1 basis point to 2.56 percent.
The Australian bonds witnessed a mild sell-off as the Reserve Bank of Australia in its December monetary policy meeting kept its official cash rate unchanged at record low of 1.50 percent, as expected. The yield on the benchmark 10-year Treasury note rose more than 1 basis points to 2.82 percent, the yield on 15-year note climbed 1-1/2 basis points to 3.27 percent and the yield on short-term 2-year bounced 1/2 basis point to 1.86 percent.
