Market Roundup
- USD/JPY -0.4%, EUR/USD -0.1%, GBP/USD -01.4%
- DXY +0.04%, DAX +0.08%, Brent -0.65%, Iron -7.2%, Gold +0.33%
- Germany Dec IFO Bus Climate 111.00 vs 110.4 previous, 110.7 expected
- Germany Dec IFO Current Conditions 116.6 vs 115.6 previous, 115.9 expected
- Germany Dec IFO Expectations 105.6 vs 105.5 previous, 10.6 expected
- Eurozone Q3 Labour Costs 1.5% y/y vs 1.0% previous
- Eurozone Q3 wages 1.6% vs 0.9% previous
- Sweden's SCA to acquire Germany's BSN medical for 2.7 bln euros - Reuters News
- S. Times-BAT preparing to add cash sweetener in attempt to secure $47bn Reynolds bid
- Paddy Power-2/5 Scotland votes for independence via next binding referendum
- Swiss Sight Deposit w/e Dec 16 Domestic and total rise
- Foreign appetite for Canadian securities shows no signs of fading
- BoJ sees weak-yen effect of yield curve control well worth the trouble
- As CNY weakens, Chinese rush to open foreign currency accounts
- Fitch – Australia budget forecasts consistent with AAA ratings
- New Zealand Nov BNZ/BNZ PSI +1.3 point to 57.9, strong despite earthquake
- New Zealand Q4 Westpac/MM consumer confidence 113.1, Q3 107.9, largest rise in four years
Economic Data Ahead
- (0830 ET/1330 GMT) The Conference Board releases Australia's Leading Indicator for the month of October. The indicator stood at 0.5 percent in the previous month.
- (0945 ET/1445 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of December. The index posted a final reading of 54.9 in the prior month.
- (0945 ET/1445 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 55.2 in December after printing a final reading of 54.6 in November.
- (1645 ET/2145 GMT) Statistics New Zealand will release food price index for the month of October. The indicator posted a fall of 0.8 percent in the prior month.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade Ops 30-yr Fannie Mae/Freddie Mac max $2.150 bln
- (1350 ET/1830 GMT) Federal Reserve Chair Janet Yellen speaks on "The State of the Job Market" before the University of Baltimore 2016 Midyear Commencement, in Baltimore, Maryland.
- (1430 ET/1930 GMT) FedTrade Ops 15-yr Fannie Mae/Freddie Mac max $825 mln
FX Beat
DXY: The dollar recovered some of some of its early session losses, as growing prospects of further Fed rate-hike in 2017 kept the bid tone intact. The greenback against a basket of currencies traded 0.1 percent down at 102.87, hovering just below a 14-year high of 103.56 hit on Thursday. FxWirePro's Hourly Dollar Strength Index stood at 151.10 (Highly Bullish) by 0500 GMT.
EUR/USD: The euro gained after data showed Eurozone's construction output rose at an annualized rate of 2.2 percent in October, versus previous print of 1.8 percent. On monthly basis, it rose 0.8 percent after declining 0.9 percent in the prior month. Separately, another report showed that labor cost increased 1.5 percent in the third quarter, surpassing previous quarter reading of 1 percent, which boosted the euro bulls sentiments. The European currency trades 0.08 percent up at 1.0460, having hit a low of 1.0366 last week, its lowest since Jan. 2003. FxWirePro's Hourly Euro Strength Index stood at -50.78 (Bullish) by 1000 GMT. The upside is capped by 5- day MA and trend line resistance (trend line joining 1.08700 and 1.06700) at 1.05350. Any break above will take the pair to next level till 1.0605 (10- day MA). On the lower side, strong support is seen at 1.03400 (127.2% retracement of 1.03665 and 1.04720) and any violation below will drag it till 1.02835 (161.8% retracement of 1.05047 and 1.0870).
USD/JPY: The dollar declined for the second consecutive session, as prevalent risk-off sentiment around global equity markets strengthened the bid tone around the safe-haven yen. However, it recovered some ground after falling to an intra-day low of 116.98, supported by growing expectations of further Fed rate-hike action. Bank of Japan is widely expected to stand pat at its policy meeting on Tuesday, however, the focus remains on BoJ governor Kuroda's presser which could provide further insights. The major trades 0.35 percent lower at 117.49, retreating from a high of 118.66 hit on Thursday, its strongest since early Feb. FxWirePro's Hourly Yen Strength Index stood at 55.84 (Bullish) by 1000 GMT. The major resistance is around 119 and break above targets 120. On the lower side, minor support is around 116 and any break below targets 115.40 (10- day MA)/115.
GBP/USD: Sterling slumped, giving back most of its previous session gains, as concerns over the start of formal negotiations on Britain's exit from the EU, due to begin in the first half of next year, continued to weigh on the British currency. Moreover, fresh selling in the GBP/JPY cross and resurgent demand for the U.S. dollar versus its major peers weakened the bid tone around the pound. Sterling trades 0.2 percent lower at 1.2456, having declined to a low of 1.2376 on Thursday, its lowest since Nov. 23. FxWirePro's Hourly Sterling Strength Index stood at -79.92 (Slightly Bearish) by 1000 GMT. The major support is at 1.23700 and any break below targets 1.2300. On the higher side, 1.2550 (5-+ day MA) will be acting as major resistance and any break above will take the pair to next level till 1.2597 (10- day MA)/1.2720. Against the euro, the pound trades 0.2 percent lower at 83.85 pence, pulling away from a 10-day high of 83.13 pence hit last week.
USD/CHF: The Swiss franc eased as the greenback attempted a minor recovery across the board on the back of hawkish Fed statement, which projected more interest-rate hikes in 2017. The major trades 0.02 percent up at 1.0264, having hit an intra-day low of 1.0240. FxWirePro's Hourly Swiss Franc Strength Index stood at 93.57 (Slightly Bullish) by 1000 GMT. Technically any break above major top 1.0328 confirms bullishness, a jump till 1.04000 is possible. On the lower side support, minor support stands at 1.0190 (7- day MA) and below that level targets 1.00150/1.0080. It should close below 1.0020 for further weakness.
AUD/USD: The Australian dollar slumped, extending losses for the fourth consecutive session, as a retreat in oil prices coupled with cautious sentiment around market weakened the bid tone around the major. The Aussie trades 0.26 percent lower at 0.7280, hovering towards a low of 0.7266 hit on Friday, it’s lowest since Jun. 3. FxWirePro's Hourly Aussie Strength Index stood at -90.94 (Slightly Bearish) by 1000 GMT. On the higher side, minor resistance is around 0.7380 and any break above will take the pair till 0.7435/0.7500. The major support is around 0.7250 and break below will drag it till 0.7145.
NZD/USD: The New Zealand dollar retreated from a 6-month low touched in the previous session on the back of upbeat ANZ Business Confidence index. However, the gains in the major remained capped amid board based U.S. dollar recovery. The Kiwi trades 0.2 percent higher at 0.6974, after declining to a low of 0.6930 in the previous session, it’s lowest since early June. FxWirePro's Hourly Kiwi Strength Index was at -129.87 (Highly Bearish) by 0500 GMT. Immediate resistance is located at 0.7000, a break above could take it near 0.7050 (7-EMA). On the downside, support is seen at 0.6930 (Previous Session Low), a break below could drag it till 0.6900.
Equities Recap
European shares declined in early trades, dragged down by weaker financial stocks, while easing dollar and U.S. bond yields triggered a fresh bout of risk-off market sentiment.
The pan-European STOXX 600 index decreased 0.27 percent at 359.06 points, while the FTSEurofirst 300 index shed 0.24 percent at 1,420.21 points.
Britain's FTSE 100 trades 0.08 percent down at 7,006.25 points, while mid-cap FTSE 250 tumbled 0.12 percent at 17,762.70 points.
Germany's DAX edged down 0.17 percent at 11,384.38 points; France's CAC 40 trades 0.4 percent lower at 4,814.67 points.
MSCI's broadest index of Asia-Pacific shares outside Japan declined for the third straight day, sliding 0.3 percent to a 4-week low.
Tokyo's Nikkei fell 0.05 percent to 19,391.60 points, Australia's S&P/ASX 200 index rose 0.61 percent to 5,566.70 points and South Korea's KOSPI added 0.27 percent at 2,042.24 points.
Shanghai composite index dropped 0.2 percent at 3,118.08 points, while CSI300 index declined 0.5 percent at 3,328.98 points. Hong Kong’s Hang Seng lost 0.9 percent at 21,832.68 points.
Commodities Recap
Crude oil prices advanced, extending gains for the third consecutive session, as markets expect a tighter crude supply next year following the decision by OPEC and other producers to cut output to restrain oil glut. International benchmark Brent crude was 0.2 percent higher at $55.41 per barrel by 0914 GMT, putting further distance between a 1-week low of $53.13 touched on Thursday. U.S. West Texas Intermediate crude climbed 0.3 percent at $52.14 a barrel, after falling as low as $49.93 last week, it’s lowest since Dec 8.
Gold prices rose, extending its recovery momentum from a 10-1/2-month low hit on Thursday, as the greenback declined from a 14-year peak on profit taking. Spot gold gained 0.5 percent to $1,139.52 an ounce by 0919 GMT, having touched a low of $1,122.64 last week, its weakest since Feb. 2. U.S. gold futures gained 0.6 percent to $1,143.60 per ounce.
Treasuries Recap
The U.S. Treasuries were pushed higher across much of the curve during a relatively quiet session as investors await the Federal Reserve Chair Janet Yellen’s speech. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.58 percent and the yield on short-term 2-year note dipped 1- 1/2 basis points to 1.24 percent.
The UK gilts traded nearly flat Monday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year gilts hovered around 1.44 percent, the super-long 40-year bond yield climbed 1 basis point to 1.90 percent and the yield on short-term 2-year remained steady at 0.13 percent.
The German bunds slumped after recent economic data showed that the country’s December business climate index hit highest since April 2014. The yield on the benchmark 10-year bond rose more than 1 basis point to 0.32 percent, the long-term 30-year bond yield also climbed 1 basis point to 1.06 percent and the yield on short-term 3-year bond bounced 1/2 basis point to -0.73 percent.
The Japanese government bonds traded narrowly mixed ahead of the Bank of Japan’s (BoJ) last monetary policy decision for 2016. The benchmark 10-year bond yield fell 1/2 basis point to 0.07 percent, the long-term 30-year bond yield rose nearly 1 basis point to 0.68 percent and the yield on short-term 2-year note dipped nearly 1 basis point to -0.18 percent.
The New Zealand government bonds closed lower after recent private survey data showed that the country’s business confidence grew in December. The yield on the benchmark 10-year bond closed 3 basis points higher at 3.46 percent, the yield on 7-year note ended 4 basis points to 3.01 percent and the yield on short-term 2-year note jumped 3-1/2 basis points at 2.30 percent.
The Australian government bonds slumped as investors moved away from safe-haven buying amid gains in riskier assets including crude oil and equities. The yield on the benchmark 10-year Treasury note rose 1 basis point to 2.86 percent, the yield on 15-year note jumped 1-1/2 basis points to 3.34 percent and the yield on short-term 2-year climbed 1 basis point to 1.93 percent.
