Market Roundup
- GBP/USD -0.25%, USD/JPY -0.1%, EUR/USD 0.08%.
- DXY 0.01%, DAX 0.1%, Brent -0.82%, Iron -1.79% Gold 0.28%.
- Berlin market attack suspect Anis Amri shot dead by police in Milan – Italian State Police.
- Putin says does not dispute US military most powerful in world.
- German Jan GfK Consumer Sentiment 9.9 vs 9.8 previous, 9.9 expected.
- Deutsche Bank agrees to $7.2bn mortgage settlement with US.
- Italy says Berlin market attack suspect killed in shootout in Italy.
- Italian govt rides to rescue of Monte dei Paschi.
- UK Q3 GDP QQ 0.6% vs 0.5 previous, 0.5 expected.
- UK Q3 GDP YY 2.2% vs 2.3 previous, 2.3 expected.
- UK Q3 Business Investments QQ 0.4% vs 0.9 previous, YY -2.2% vs -1.6 previous.
- UK Q3 Current Account GBP -25.494bln vs GBP -25.922 prev, -27.45 expected.
- Queen’s frustration with May over Brexit secretary - The Times.
Economic Data Ahead
- (0830 ET/1330 GMT) Canada's growth likely stalled in October, which will underpin forecasts that the economy slowed in the final three months of the year after a strong rebound in the third quarter.
- (1000 ET/1500 GMT) U.S. new home sales are expected to have gained 2.1 percent to a seasonally adjusted annual rate of 575,000 units in November, after having dropped 1.9 percent in October.
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count.
- (1430 ET/1930 GMT) CFTC releases weekly net positions of Gold, USD, Oil, GBP and JPY.
Key Events Ahead
- (1045 ET/1545 GMT) FedTrade Ops 30-yr Ginnie Mae (max $1.350bn).
- (1500 ET/2000 GMT) SIFMA recommends early bond market close
FX Beat
DXY: The dollar index, hovering near a 14-year high, was marginally lower at 103.03 but remained within striking distance of the week's 103.65 peak. The U.S dollar index has slightly recovered after declining till 102.59. The index has taken support near 10- day MA and is currently trading around 103.03. Strong resistance is seen around 103.60 and any break above targets 105. On the lower side, any break below 102.40 (10- day MA) will drag the index down till 101.65 (21- day MA)/100.60. Short term bullish invalidation only below 98.
GBP/USD: Cable faded upbeat UK economic data bullish spike and pared back towards the lower end of daily trading range. The pair has broken major support 1.2300 and declined till 1.2244 at the time of writing. The pair jumped till 1.2380 yesterday and started to decline from that level. It is currently trading around 1.22568. Short term trend is still weak as long as resistance 1.23750 holds. On the higher side, any violation above 1.2375 will take the pair to next level till 1.2440/1.2510 in the short term. Major support is around 1.22358 (61.8% retracement of 1.27750 and 1.19048) and any violation below will drag the pair down till 1.2150/1.2080.
USD/CHF: stalled its gradual descent and rebounded sharply to hit fresh daily tops near 5-DMA of 1.02771, in response to broad-based US dollar recovery. The pair made a temporary bottom around 1.0220 and slightly recovered from that level. It is currently trading around 1.02529. Short term trend is weak as long as resistance 1.0300 holds. On the lower side, any break below 1.0220 will drag the pair down till 1.01828 (61.8% retracement of 1.00834 and 1.03435)/1.0150/1.0080. The major resistance is around 1.03000 and any break above will take the pair till 1.03435/1.0400 level.
EUR/USD: The EUR/USD pair reversed majority of Friday's early gains and has now turned absolutely flat during early European session. The pair jumped till 1.04992 and it should close above 10- day MA for further bullishness. Any close above will take the pair to next level till 1.0572 (21- day MA)/1.0670. Short term bullishness only above 1.0670 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).
AUD/USD: Renewed sell-off in commodities’ prices, particularly iron-ore weighed on the Aussie. The pair maintained its offered tone for seventh trading session and is is on track to close in red for the third consecutive week. Close below 0.7200 needed for further weakness. It is currently trading around 0.7212. On the higher side minor resistance is around 0.7250 (5- day MA) 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.
USD/JPY: USD/JPY flatlined near 117.50 amid holiday-thinned trading. The pair is facing strong support at 7- day EMA and slight weakness can be seen only below that level. It is currently trading around 117.39. The pair’s major resistance is around 119 and break above targets 120. On the lower side minor support is around 117.15 (7-day EMA) and any break below targets 116.80 (10- day MA)/115 (21- day MA).
NZD/USD: NZD/USD hovers around 0.69 handle, extends range trade after holding strong support at 0.6880. Upbeat GDP data along with strong GDT price rise seen this week could see some upside for the kiwi. Overall momentum however, remains negative. The pair remains capped below 5-DMA currently at 0.6911. Break above will see upside. Hammer formation at lows, slight bullish divergence noted on RSI. Watchout for close above 5-DMA for further upside.
Equities Recap
Britain's FTSE 100 dropped 0.07 pct, France's CAC 40 rose 0.1 pct, Europe's stoxx 600 was flat in early deals, Italy’s FTSE MIB climbed 0.99. While Germany's DAX and Spain's IBEX both were up 0.2 pct.
Japan's Nikkei was closed on account of Christmas Eve, China's CSI300 Index edged down 0.8 pct at 3,307.60 points, lost 1.2 pct for the week. Shanghai Composite Index ended down 0.9 pct at 3,110.15 points, down 0.4 pct for the week. HK’s Hang Seng Index finished the day down 0.3 pct at 21,574.76 points, dropped 2 pct for the week.
European shares were up 0.1 percent with euro zone banks up 0.7 percent and comfortably outperforming broader markets. An index of Italian lenders was up 1.3 percent.
Commodities Recap
Oil was on the back foot in light trading. Brent crude slipped 34 cents at $54.71 a barrel as of 1057 GMT, after rising 1.1 percent on Thursday. It reached $57.89, the highest since July 2015, on Dec. 12. U.S. crude fell 37 cents to $52.58. U.S. West Texas Intermediate crude fell 28 cents, or 0.5 percent, to $52.67 a barrel after gaining 0.9 percent in the previous session.
Gold ticks higher, but still remains negative for seventh consecutive week, close to last week's 10-month low amid pre-Christmas lighter trading conditions. Some buyers tempted to take advantage of a near 10-month low in prices after six straight weeks of decline. Spot gold was up 0.2 percent at $1,130.85 an ounce at 1031 GMT, off last week's low of $1,122.35, while U.S. gold futures for February delivery were up $1.30 an ounce at $1,132.00.
Treasuries Recap
The benchmark U.S. 10-year Treasury yield stood at 2.5447 pct. The Japanese markets were closed for a holiday on Friday and many market players will be away next week for the year-end.
The Italian government bond yields dropped on Friday as Monte dei Paschi said it would request aid from a newly approved state fund to help struggling banks, after failing to win investor backing for a desperately needed capital increase. The 10-year yields slipped 3 bp to 1.82 percent in thin trading as trading centres were prepared to close for Christmas holidays. Spanish 10-year yields dropped 3 bps to 1.38 percent, while the German 10-year bund yields slipped 4 bps to 0.255 pct
UK Gilts climbed to a new high at 124.35. The break of 124.12 yesterday looks like a major development with an extension of the recent range a couple of big figures away. The 10-year cash yields have still been able to hold the 1.35% base and until this goes not entirely convinced that futures have decisively broken higher.
The Australian government bond futures dropped, with the 3-year bond contract down 3 ticks at 97.87. The 10-year contract was off 4.5 ticks to 97.0850. The New Zealand government bonds eased, sending yields about 4 bps higher on the short-end of the curve and 2 bps higher on the long-end.
