Market Roundup
- USD/JPY+0.39%, EUR/USD +0.5%, GBP/USD +0.17%
- DXY -0.35%, DAX -0.3%, Brent +4.15%, Iron +3.4%, Gold -0.25%
- UK. Opponents to Britain leaving EU will launch a fresh legal action this week-Sunday Times
- EU’s Moscovici – Italy does not have and will not have a banking crisis
- Italy seeking market solution for Banca Monte De Paschi Di Siena
- Swiss w/e Dec 9 Domestic/Total Sight Deposit fall
- Non-OPEC producers agree to cut oil output - Financial Times
- Trump to name G.Sachs vet Gary Cohn to head Nat’l Econ Council – WP
- Trump says China, others devalue ccys as US economy improves
- Trump says the US not necessarily bound by “one China” policy
- ECB/Buba Weidmann – Can’t exclude state joining Italy bank rescues
Economic Data Ahead
- (0900 ET/1400 GMT) Mexico will release its industrial output data for the month of October. The economy's industrial production fell 1.3 percent year-over-year in September, recording its biggest decline in over three years.
- (0930 ET/1430 GMT) The Conference Board releases Britain's Leading Economic Index for the month of November. The index edged up 0.1 percent in the prior month.
- (1400 ET/1900 GMT) The U.S. government reports its monthly budget statement for the month of November. The economy posted a budget deficit of $44 billion for the month of October.
- (1645 ET/2145 GMT) Statistics New Zealand will release its manufacturing sales for the third quarter. The indicator rose 2.8 percent in the previous quarter.
Key Events Ahead
- (1145 ET/1645 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.500 bln
FX Beat
DXY: The dollar hit fresh 10-month high versus the yen, supported by Federal Reserve monetary policy outcome expectations and persistent risk-on market profile. The greenback against a basket of currencies traded 0.3 percent down at 101.28, having touched an intra-day high 101.78, its strongest since Nov. 30. FxWirePro's Hourly Dollar Strength Index stood at -2.47 (Neutral) by 1000 GMT.
EUR/USD: The euro retreated after declining to a 1-week low amid broad-based U.S. dollar correction and weak sentiment around the European stocks. However, the gains remained capped as markets continued to absorb dovish ECB policy outcome. The European currency trades 0.4 percent up at 1.0601, recovering from an early low of 1.0525, its lowest since Dec. 5. FxWirePro's Hourly Euro Strength Index stood at 11.55 (Neutral) by 1000 GMT. Immediate resistance is around 1.0607 (23.6% retracement of 1.0873 and 1.0525) and any break above will take the pair till 1.0650/1.0680 (5- day MA). On the lower side, major intraday support is around 1.0580 and break below will drag it down till 1.0550/1.0500 level.
USD/JPY: The dollar rallied to a fresh 10-month high above the 116.00 handle, boosted by prevalent risk-on market sentiment spurred by oil output deal between OPEC cartel and non-OPEC producers. Markets seem to have ignored upbeat Japanese Core Machinery Orders, as investors await U.S. Federal Reserve meeting, where it is expected to deliver an interest rate hike and update economic and interest rate projections. The major trades 0.6 percent up at 115.89, having touched a high of 116.12, its strongest since early Feb. FxWirePro's Hourly Yen Strength Index stood at -96.21 (Slightly Bearish) by 1000 GMT. The major resistance is around 116 and break above targets 118/120. On the lower side minor support is around 114.10 (5- day MA) and any break below targets 112.65/112.
GBP/USD: Sterling gained, recovering most of its previous session losses, as investors braced for series of the UK economic data releases and the Bank of England policy meeting due in the week. The economy's November inflation figures are likely to show a slight rise to 1.1 percent on Tuesday, followed by unemployment, wage growth and retail sales reports, and the BoE's monetary policy decision on Thursday. The central bank is likely to refrain from altering rates or its quantitative easing bond-buying programme, however, markets will scrutinize comments from governor Mark Carney on the near-term outlook. Sterling trades 0.1 percent up at 1.2581, after rising to an intra-day high of 1.2611 handle. FxWirePro's Hourly Sterling Strength Index stood at -41.97 (Neutral) by 1000 GMT. The temporary top formed at 1.2705 will be acting as next immediate resistance and any break above will take the pair till 1.27750/1.2800. The minor resistance is at 1.2640/1.2680. On the lower side, any break below 1.2520 will drag it down till 1.24380/1.2380. Against the euro, the pound trades 0.4 percent lower at 84.25 pence, having touched a 1-week high of 83.62 pence earlier in the session.
USD/CHF: The Swiss franc edged up against the dollar, as the greenback eased from multi-month peaks, ahead of the Federal Reserve monetary policy meeting. The major trades 0.2 percent down at 1.0149, retreating from a 9-month high of 1.0204 hit on Nov. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at -83.26 (Slightly Bearish) by 1000 GMT. Trend continuation is expected to happen only if the pair closes above 1.0205 and any break above that level will take the pair till 1.0260/1.03027. On the lower side, it should break below 1.0150 for further selling and any violation below 1.0150 will take it till 1.010/1.0050.
AUD/USD: The Australian dollar rallied above the 0.7450 level, regaining almost all of its previous two session losses, as a deal between OPEC and non-OPEC member spurred a fresh wave of risk-on sentiment across global financial markets. However, growing expectations that the Fed would certainly hike interest rates this week and speculations of fast rate-tightening cycle next year restricted any sharp upward movements. The Aussie trades 0.4 percent higher at 0.7475, recovering from an intra-day low of 0.7430. FxWirePro's Hourly Aussie Strength Index stood at 104.48 (Highly Bullish) by 1000 GMT. On the higher side, major resistance is around 0.7526 (55- day EMA) and any break above will take it till 0.7580/0.7635. The major support is around 0.7380 and break below will drag the pair till 0.7350/0.7300.
NZD/USD: The New Zealand dollar gained after Bill English was sworn in as New-Zealand's new Prime Minister, which eased fears of political uncertainty following John Key surprise resignation as PM last week. Moreover, an upbeat report on the New Zealand government by the US-based rating agency and weekend oil output deal between OPEC and non-OPEC producers boosted investor sentiment around the major. The Kiwi trades 0.5 percent up at 0.7166, hovering away from an intra-day low of 0.7115, it’s lowest since Dec 7. FxWirePro's Hourly Kiwi Strength Index was at 33.60 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7180, a break above could take it over 0.7200. On the downside, support is seen at 0.7100, a break below could drag it till 0.7069/ 0.7032.
Equities Recap
European shares declined, weighed down by weaker pharma stocks, while the U.S. dollar extended gains ahead of a Federal Reserve meeting this week, where it is expected to raise the interest rate.
The pan-European STOXX 600 index decreased 0.36 percent at 354.10 points, while the FTSEurofirst 300 index shed 0.31 percent at 1,399.63 points.
Britain's FTSE 100 trades 0.15 percent down at 6,943.68 points, while mid-cap FTSE 250 edged up 0.1 percent at 17,749.75 points.
Germany's DAX declined 0.45 percent at 11,153.38 points; France's CAC 40 trades 0.11 percent lower at 4,758.93 points.
Tokyo's Nikkei rallied 0.84 percent to 19,155.03 points, Australia's S&P/ASX 200 index gained 0.12 percent to 5,567.50 points and South Korea's KOSPI rose 0.13 percent at 2,027.24 points.
Shanghai composite index declined 2.5 percent at 3,152.97 points, while CSI300 index slumped 2.4 percent at 3,409.18 points. Hong Kong’s Hang Seng shed 1.4 percent at 22,433.02 points.
Commodities Recap
Crude oil prices rose by more than 5 percent to their highest levels since mid-2015 after OPEC and other producers reached a deal to jointly reduce output in order to restrain oversupply and balance markets. International benchmark Brent crude was 4.7 percent higher at $56.85 per barrel by 0933 GMT, having touched a 1-1/2 year high of $57.50 earlier in the day. U.S. West Texas Intermediate crude rose 5.0 percent at $54.02 a barrel, after rising as high as $54.48 earlier, the highest since July 2015.
Gold prices declined to their lowest in over 10 months, as increasing expectations of a possible U.S. rate hike this week dampened the appeal of the safe-haven metal. Spot gold was trading 0.4 percent down at $1154.92 an ounce by 0941 GMT, after slumping to a low of $1,151.24 an ounce, its lowest since Feb. 5. U.S. gold futures also touched a 10-month low, easing 0.2 percent to $1,159.70 per ounce.
Treasuries Recap
The U.S. Treasuries saw heavy selling across the curve post first OPEC and non-OPEC landmark deal in 15 years. Also, investors await the Federal Reserve’s last monetary policy decision for 2016, which is scheduled to be released on Wednesday by 19:00 GMT. The yield on the benchmark 10-year Treasury note rose 5 basis points to 2.51 percent, the yield on long-term 30-year Treasury also climbed 5 basis points to 3.20 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 1.14 percent.
The UK gilts witnessed a heavy sell-off following a landmark deal by non-OPEC producers to lower production for the first time in 15 years. The yield on the benchmark 10-year gilts rose 3 basis points to 1.50 percent (highest since May this year), the super-long 40-year bond yield also climbed 2-1/2 basis points to 2.13 percent and the yield on short-term 2-year bounced 4 basis points to 0.20 percent.
The German 10-year bund yields hit highest since January as investors moved away from safe-haven buying amid rising crude oil prices that lifted inflation expectations. The yield on the benchmark 10-year bond rose 4-1/2 basis points to 0.40 percent, the long-term 30-year bond yield climbed 8 basis points to 1.23 percent and the yield on short-term 2-year bond bounced 1-1/2 basis points to -0.74 percent.
The Japanese government bonds plunged as investors moved away from safe-haven buying amid gains in riskier assets including crude oil and equities. The benchmark 10-year bond yield rose 1-1/2 basis points to 0.07 percent, the yield on long-term 30-year note jumped 7-1/2 basis points to 0.77 percent and the yield on short-term 3-year note climbed 1/2 basis point to -0.14 percent.
The New Zealand government bonds closed modestly higher after witnessing a heavy sell-off in the early trading session on Monday, following a rally in crude oil prices. The yield on the benchmark 10-year bond closed 1 basis point lower at 3.33 percent, the yield on 7-year note ended down 1 basis point to 2.89 percent and the yield on short-term 2-year note slid 1/2 basis point to 2.22 percent.
The Australian government bonds witnessed a heavy sell-off as investors moved away from safe-haven buying amid rising crude oil prices that lifted inflation expectations. The yield on the benchmark 10-year Treasury note rose nearly 3 basis points to 2.86 percent, the yield on 15-year note jumped 3-1/2 basis points to 3.32 percent and the yield on short-term 2-year bounced nearly 2 basis points to 1.88 percent.
