Market Roundup
- Italy Dec 2018 producer prices yy decrease to 4.1 % vs previous 4.5 %
- Italy Dec 2018 producer prices mm increase to -0.5 % vs previous -0.7 %
- Spain Q4 2018 unemployment rate decrease to 14.45 % (forecast 14.5 %) vs previous 14.6 %
- France Jan 2019 consumer confidence increase to 91 balance (forecast 88 balance) vs previous 86 balance (revised from 87 balance)
- Switzerland Dec 2018 trade decrease to 1897 chf vs previous 4745 chf (revised from 4737 chf)
Economic Data Ahead
- (0900 ET/1400 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 5.0 percent in November, after posting similar gains in the previous month.
- (1000 ET/1500 GMT) The U.S. consumer confidence index is expected to have decreased to 124.9 in January from 128.1 recorded in December.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- N/A Federal Reserve's Federal Open Market Committee commences its two-day meeting on interest rates
- (1230 ET/1730 GMT) Bank of England's Andy Haldane speaks at Society of Professional Economists event – London
FX Beat
DXY: The dollar index held firm near a 2-week low amid growing concern over U.S. Federal Reserve decision and the trade conflict between the United States and China. The greenback against a basket of currencies trades flat at 95.76, having touched a low of 95.62 earlier, its lowest since Jan. 15. FxWirePro's Hourly Dollar Strength Index stood at -73.12 (Bearish) by 1000 GMT.
EUR/USD: The euro rallied to a fresh 2-week peak, as the greenback plunged on news that the U.S. economy was expected to lose $3 billion from the partial federal government shutdown over President Donald Trump's demand for border wall funding. The European currency traded 0.1 percent up at 1.1436, having touched a high of 1.1450, its highest since Jan. 15. FxWirePro's Hourly Euro Strength Index stood at 104.56 (Highly Bullish) by 1000 GMT. Immediate resistance is located at 1.1466 (December 31 High), a break above targets 1.1484 (December 4 High). On the downside, support is seen at 1.1370 (Jan. 17 Low), a break below could drag it till 1.1325 (Jan. 2 Low).
USD/JPY: The dollar rebounded from a 12-day low touched earlier in the session after U.S. Treasury Secretary Steven Mnuchin stated that the United States expects significant progress this week in trade talks with Chinese Vice Premier Liu He. The major was trading 0.1 percent up at 109.42, having hit a low of 109.13 earlier, its lowest since January 18. FxWirePro's Hourly Yen Strength Index stood at -73.12 (Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer confidence. Immediate resistance is located at 109.88 (Jan. 18 High), a break above targets 110.47 (Dec. 31 High). On the downside, support is seen at 108.70 (Jan. 2 Low), a break below could take it lower at 108.44 (Jan. 8 Low).
GBP/USD: Sterling consolidated within narrow ranges, as investors refrained from taking big positions ahead of crucial votes in the British parliament that would give lawmakers the option to back a key parliamentary amendment that would effectively take a no-deal Brexit off the table. The major traded flat at 1.3151, having hit a high of 1.3217 on Friday; it’s highest since October 16. FxWirePro's Hourly Sterling Strength Index stood at 62.93 (Bullish) 1000 GMT. Immediate resistance is located at 1.3257 (October 12 High), a break above could take it near 1.3298 (September 20 High). On the downside, support is seen at 1.3082 (October 15 Low), a break below targets 1.3021 (November 6 Low). Against the euro, the pound was trading 0.2 percent down at 86.96 pence, having hit a high of 86.16 on Friday, it’s highest since May 2017.
USD/CHF: The Swiss franc edged lower despite data showing Swiss exports rose to a record high in 2018. The economy's exports rose a nominal 5.7 percent, its strongest rate since 2010 and a real 1.2 percent to 233.1 billion Swiss francs ($235 billion). The major trades 0.2 percent up at 0.9931, having touched a low of 0.99105 on Monday; it’s lowest since December 17. FxWirePro's Hourly Swiss Franc Strength Index stood at -77.10 (Slightly Bearish) by 1000 GMT. On the higher side, near-term resistance is around 0.9963 (December 26 High) and any break above will take the pair to next level till 1.0008 (December 5 High). The near-term support is around 0.9889 (December 7 Low), and any close below that level will drag it till 0.9840 (December 27 Low).
Equities Recap
European shares rebounded on the back of gains in utilities and household goods, while sterling consolidated ahead of the vote in UK Parliament on Brexit.
The pan-European STOXX 600 index advanced 0.7 percent at 356.82 points, while the FTSEurofirst 300 index surged 0.7 percent to 1,400.81 points.
Britain's FTSE 100 trades 1.5 percent up at 6,845.13 points, while mid-cap FTSE 250 gained 0.9 to 18,696.35 points.
Germany's DAX rose 0.1 percent at 11,224.35 points; France's CAC 40 trades 0.6 percent higher at 4,918.74 points.
Commodities Recap
Crude oil prices rose after Washington imposed sanctions on Venezuelan state-owned oil firm in a move to curb the OPEC member's crude exports, however, ample global supply and signs of a slowing Asian economy limited gains. International benchmark Brent crude was trading 1.2 percent up at $60.70 per barrel by 1042 GMT, having hit a low of $59.47 on Monday, its lowest since January 15. U.S. West Texas Intermediate was trading 0.7 percent higher at $52.43 a barrel, after falling as low as $51.31 on Monday, its lowest since the January 17.
Gold prices rallied to an more than 8-month high as investors dumped riskier assets on worries over escalation in U.S.-China trade tensions after the U.S. Justice Department charged China's Huawei Technologies Co Ltd with fraud. Spot gold rose 0.4 percent at $1,308.26 per ounce by 1052 GMT, having touched a high of $1,309.17 earlier, its highest level since May 15. U.S. gold futures were up 0.1 percent at $1,304.70 per ounce.
Treasuries Recap
The United Kingdom’s gilts remained unnerved during the late afternoon session as investors patiently await the Brexit vote on Plan B in the House of Commons, scheduled for later in the day, to be presented by Prime Minister Theresa May, post-rejection of her Plan A and surviving a no-confidence vote in the Parliament off late. The yield on the benchmark 10-year gilts remained tad higher at 1.337 percent, the super-long 30-year bond yields hovered around 1.746 percent and the yield on the short-term 2-year remained 1 basis point higher at 0.785 percent.
The Japanese government bonds continued to trade in a steady mode on the second trading day of the week Tuesday amid a muted session that witnessed data of little economic significance. The yield on the benchmark 10-year JGB note, which moves inversely to its price, remained tad higher at 0.003 percent, the yield on the long-term 30-year note flat at 0.652 percent while the yield on short-term 2-year plunged 15-1/2 basis points to -0.155 percent.
The Australian government bonds slumped across the curve during Asian trading session as markets remain optimistic for a possible U.S.-China trade deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 3-1/2 basis points to 2.247 percent, the yield on the long-term 30-year bond also jumped 4 basis points to 2.763 percent and the yield on short-term 2-year also traded nearly 3 basis points higher at 1.851 percent.
