Market Roundup
- EUR/USD -0.02%, USD/JPY +0.7%, GBP/USD -0.15%
- DXY -0.45%, DAX +1.5%, Brent +1.3%, Iron +4.2%, Gold -1.0%
- ECB’s Nowotny sees no risk of Italy leaving EZ
- Switzerland sight deposits little changed latest week
- Germany Nov Final Service PMI 55.1 vs 55.00 previous, 55.00 expected
- EZ Nov Final Service PMI 53.8 vs 54.1 previous, 54.1 expected
- EZ Dec Sentix 10.0 vs 13.1 previous, 13.1 expected
- EZ Oct Retail Sales 2.4% y/y vs 1.1% previous, 1.7% expected
- UK Nov Service PMI 55.2 vs 54.5 previous, 54.00 expected
- Italy PM Renzi loses constitutional reform referendum, clear “no” win
- John Key to resign as New Zealand Prime Minister
- New Zealand Deputy PM English considering leadership
- Fitch - Japan insurers to seek more M&A, bond purchases abroad
- Japan Nov PMI services up to 51.8, highest since January, Oct 50.5
- China Nov Caixin PMI services 53.1, highest since July ’15, Oct 52.4
- PBOC Fan – To boost equity funding with national investment standard
- US President Trump talks to Taiwan president by phone, China lodges protest
Economic Data Ahead
- (0830 ET/1330 GMT) The United States releases trade balance figures for the month of October. The economy's trade deficit is expected to have expanded to $41.6 billion from 36.4 billion in September.
- (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of November. The index printed a final reading of 54.9 in the prior month.
- (0945 ET/1445 GMT) Markit Economics is expected to report that final U.S. service PMI for November increased to 54.9 from a final reading of 54.7 in October.
- (0900 ET/1400 GMT) Mexico releases gross fixed investment for the month of September.
- (1000 ET/1500 GMT) The Fed releases its labor market conditions index (LMCI) for the month of November. The indicator posted a rise of 0.7 in the previous month.
- (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index added 0.5 percentage points to a reading 55.3 in November from 54.8 in October.
- N/A The Statistics New Zealand releases building permits seasonally adjusted data for the month of October. The index posted a rise of 0.2 percent in September.
Key Events Ahead
- (0830 ET/1330 GMT) Federal Reserve Bank of New York President William Dudley speaks on the macroeconomic outlook before the Association for a Better New York.
- (0925 ET/1425 GMT) Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy before the Chicago Executives Club.
- (1145 ET/1645 GMT) FedTrade operation 15-yr Fannie Mae/Freddie Mac max $925 mln
- (1405 ET/1905 GMT) Federal Reserve Bank of St. Louis President James Bullard gives a presentation on the U.S. economy and monetary policy before the 53rd Annual Economic Forecast Luncheon hosted by Arizona State University's W.P. Carey School of Business.
- (1430 ET/1930 GMT) FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.500 bln
FX Beat
DXY: The dollar rose gained against the Japanese yen on the back of increasing expectations of an imminent U.S. interest rate hike. The greenback against a basket of currencies trades 0.07 percent down at 100.60, having touched a low of 100.41 earlier in the session, its lowest since Nov. 11. FxWirePro's Hourly Dollar Strength Index stood at 5.40 (Neutral) by 1100 GMT.
EUR/USD: The euro retreated from 21-month lows, recovering most of the ground it had lost overnight after Italian PM Matteo Renzi conceded defeat in a referendum on plans to reform the country's constitution. In the Asian trade, the major slumped as much as 1.4 percent to hit a low of 1.0504, its weakest since March 2015, as investors worried about growing political uncertainty in the Eurozone. However, the offered tone around the euro remains intact, as markets continue to assess the impact of the Italian referendum on constitutional reform. The European currency trades 0.2 percent higher at 1.0675, attempting to regain the 1.0700 level. FxWirePro's Hourly Euro Strength Index stood at 38.75 (Neutral) by 1000 GMT. The short term bullishness can be seen only above 1.07015 (23.6% retracement of 1.12994 and 1.05180) and any break above will take the pair till 1.0755/1.08167. On the lower side, any break below 1.0500 will drag it down till 1.0456 (Mar 2015 lows)/1.0400.
USD/JPY: The dollar rose above the 114.00 handle, reversing early session losses, as comments from Japan's PM Shinzo Abe erased Italian referendum-led risk-off slide. The Japanese PM stated that he expects that Bank of Japan would take appropriate steps to achieve 2 percent inflation target, triggering renewed speculation of further monetary easing by the central bank. The pair trades 0.72 percent up at 114.30, hovering towards a 9 1/2-month high of 114.82 hit last week. FxWirePro's Hourly Yen Strength Index stood at -94.13 (Slightly Bearish) by 1000 GMT. The major resistance is around 115 and a break above targets 115.52 (161.8% retracement of 113.89 and 112.05)/116. On the lower side, minor support is around 113.50 (38.2% retracement of 114.82 and 111.35) and any break below targets 112.65 (61.8% retracement of 111.35 and 114.82)/ 112.
GBP/USD: Sterling rose to a 2-month high against the dollar, extending gains for the fourth consecutive session, following better-than-expected services PMI print. The Markit/CIPS services purchasing managers' index surprisingly rose to 55.2 in November from 54.5 in October, beating forecasts of 54.2, which indicated that the broader economy maintained momentum despite Brexit shock vote. Sterling trades 0.1 percent down at 1.2702, after rising to an early high of 1.2743, its highest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 139.23 (Highly Bullish) by 1100 GMT. The temporary top formed at 1.26957 (Dec 2nd high) will act as major trend reversal level and any break above will take the pair till 1.2745/1.2800. On the lower side, any break below 1.2600 will drag the pair down till 1.2550/1.2500. The minor trend reversal is only below 1.2300. Against the euro, the pound trades 0.35 percent down at 84.0 pence, having hit a high of 83.05 pence earlier in the session, it’s strongest since Jul. 22.
USD/CHF: The Swiss franc declined, as the greenback strengthened on the back of increasing expectations of an imminent interest rate hike by the Federal Reserve after data released on Friday showed U.S. nonfarm payroll report added 178,000 jobs in November, as compared to an increase of 142,000 jobs in October. The dollar trades 0.1 percent higher at 1.0121, having touched a near 2-week low of 1.0070 on Friday, its weakest since Nov. 22. FxWirePro's Hourly Swiss Franc Strength Index stood at -2.77 (Neutral) by 1100 GMT. The temporary top formed the previous week at 1.0245 will act as major resistance. The pair should break above temporary top at 1.0205 for further jump and any violation above will take it till 1.0226/1.0260. The pair should break below 1.0600 (Nov 18th low) for further selling and any break below will drag the pair till 1.0020/1.000.
AUD/USD: The Australian dollar declined, reversing most of its previous session gain, as Italian PM Renzi conceded defeat in Sunday’s election triggered massive risk-aversion. However, the major is seen making recovery as a solid rebound in the commodities and renewed selling interest behind the treasury yields boosted the bid tone around the Aussie. The pair trades 0.3 percent down at 0.7431, having hit an intra-day low of 0.7412. FxWirePro's Hourly Aussie Strength Index stood at -101.01 (Highly Bearish) by 1100 GMT. On the higher side, major resistance is around 0.7500 (21- day MA) and any break above will take it till 0.7580/0.7635. The major support is around 0.7380 and break below will drag it till 0.73500/0.7300.
NZD/USD: The New Zealand dollar slumped below the 0.7100 handle after Prime Minister John Key unexpectedly announced his resignation; however, higher oil prices capped the downside. The Kiwi trades 0.8 percent down at 0.7079, having declined to an intra-day low of 0.7069. FxWirePro's Hourly Kiwi Strength Index was at -128.51 (Highly Bearish) by 1100 GMT. Immediate resistance is located at 0.7150, a break above could take it near 0.7200. On the downside, support is seen at 0.7032 (Nov 28-Low), a break below could drag it lower 0.7000.
Equities Recap
European shares gained, led higher by Italian shares as investors speculated against an immediate snap election in Italy following Prime Minister Matteo Renzi's resignation.
The pan-European STOXX 600 index increased 1.28 percent at 343.71 points, while the FTSEurofirst 300 index added 1.32 percent at 1,356.86 points.
Britain's FTSE 100 trades 0.52 percent up at 6,766.33 points, while mid-cap FTSE 250 edged up 0.04 percent at 17,441.13 points.
Germany's DAX rose 1.71 percent at 10,692.76 points; France's CAC 40 trades 1.41 percent higher at 4,592.31 points.
Tokyo's Nikkei declined 0.82 percent to 18,274.99 points, Australia's S&P/ASX 200 index lost 0.71 percent to 5,405.60 points and South Korea's KOSPI fell 0.37 percent at 1,963.36 points.
Shanghai composite index slumped 1.21 percent at 3,204.71 points, while CSI300 index tumbled 1.69 percent at 3,469.41 points. Hong Kong’s Hang Seng shed 0.26 percent at 22,505.55 points.
Commodities Recap
Crude oil prices rose more than 1 percent on optimism about the likelihood of a tightening market after OPEC members agreed to a record deal to cut production last week. Global benchmark Brent crude was 1.2 percent up at $55.03 per barrel by 0959 GMT, hitting a fresh 16-month high of $55.80 earlier in the session. U.S. West Texas Intermediate crude rose 1.10 percent at $52.22 a barrel, after rising as high as $52.30 last week, its highest since Oct. 15.
Gold slumped more than 1 percent as the euro fell against the dollar after Italian Prime Minister Matteo Renzi announced his resignation following defeat in a referendum over his plan to reform the country's constitution. Spot gold was down 1.0 percent at $1,164.96 an ounce by 1011 GMT, after climbing to a high of $1187.82 earlier in the day. U.S. gold futures shed 1.1 percent to $1,164.70 per ounce.
Treasuries Recap
The U.S. Treasuries were pushed modestly lower across the curve as November employment report come in around market expectations with respect to non-farm payrolls, coupled with a push lower in the headline unemployment rate to 4.6 percent. The yield on the benchmark 10-year Treasury note rose 2 basis points to 2.40 percent, the yield on long-term 30-year Treasury climbed 1-1/2 basis points to 3.07 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 1.12 percent.
The UK gilts plunged after recent data showed that the country’s service PMI rose higher than expected in November. Also, rallying energy prices drove out investors from safe-haven buying. The yield on the benchmark 10-year gilts rose 6 basis points to 1.43 percent, the super-long 30-year bond yield jumped 5 basis points to 2.06 percent and the yield on short-term 2-year bounced 3-1/2 basis points to 0.14 percent.
The German bunds slumped as investors moved away from the safe-haven buying amid rising crude oil prices that lifted inflation expectations. Also, the market now looks ahead to the ECB monetary policy meeting, which is scheduled to take place on December 8. The yield on the benchmark 10-year bond rose 2 basis points to 0.30 percent, the yield on long-term 30-year note jumped 2-1/2 basis points to 0.97 percent and the yield on short-term 2-year bond inched 1/2 basis point to -0.73 percent.
The Japanese government bonds strengthened as investors sought refuge in safe-haven assets after Italians voted against a constitutional reform during Sunday’s referendum, resulting in the resignation of Prime Minister Matteo Renzi. The benchmark 10-year bond yield fell 1 basis point to 0.03 percent, the yield on long-term 30-year note also dipped 1 basis point to 0.59 percent and the yield on short-term 2-year note slid 1/2 basis point to -0.17 percent.
The New Zealand government bonds closed higher after Prime Minister John Key unexpectedly announced his resignation after being eight years in power. Also, investors moved towards safe-haven buying after the Italians voted against a constitutional reform during Sunday’s referendum, resulting in the resignation of Prime Minister Matteo Renzi. The yield on the benchmark 10-year bond closed 5 basis points lower at 3.23 percent, the yield on 7-year note also ended nearly 4 basis points lower to 2.82 percent and the yield on short-term 2-year note slid 3-1/2 basis points to 2.18 percent.
The Australian government bonds gained as investors moved to safe-haven buying after the Italians voted against a constitutional reform during Sunday’s referendum, resulting in the resignation of Prime Minister Matteo Renzi. The yield on the benchmark 10-year Treasury note fell 6 basis points to 2.80 percent, the yield on 15-year note dipped 1-1/2 basis points to 3.26 percent and the yield on short-term 2-year slid 3-1/2 basis points to 1.86 percent.
