Market Roundup
- USD/JPY -0.5%, EUR/USD +0.0%, GBP/USD -0.1%
- DXY -0.18%, DAX -0.20%, Brent -0.05%, Iron +2.13%, Gold +0.9%
- German economists call for ECB rate rise after euro zone CPI rise
- Marine Le Pen wants to reintroduce a national currency in France alongside the euro
- Switzerland Dec CPI 0.0% y/y vs -0.3% previous, 0.0% expected
- UK Dec Service PMI 56.2 vs 55.2 previous, 54.7 expected
- EZ Nov Prod Prices 0.1% y/y vs -0.4% previous, -0.1% expected
- China Caixin Dec comp index (Manufacturing/Services) rises to 53.5, near 4-year high
- China Caixin Dec service PMI 53.4 vs Nov 53.1, high since July 2015
- China to invest $360 bln in renewable power in 2016-2020
Economic Data Ahead
- (0815 ET/1315 GMT) Payrolls processor ADP releases U.S. employment report for the month of December. The report is expected to show that 170,000 jobs were added as compared with 216,000 jobs in November.
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have decreased by 5,000 to a seasonally adjusted 260,000 for the week ended Dec. 31 while continuing claims for the week ended Dec. 16 stood at 2.102 m.
- (0830 ET/1330 GMT) The Statistics Canada releases its Raw Material Price Index for the month of November. The index posted a rise of 3.3 percent in October.
- (0830 ET/1330 GMT) The Statistics Canada will report its industrial producer prices for the month of November. The indicator rose 0.7 percent in the prior month.
- (0945 ET/1445 GMT) Financial firm Markit releases final U.S. composite PMI for the month of December. The index printed a final reading of 53.7 in the previous month.
- (0945 ET/1445 GMT) Markit Economics reports final U.S. services PMI for the month of December. The index posted a final reading of 53.4 in November.
- (1000 ET/1500 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. non-manufacturing Purchasing Managers' index slipped to a reading of 56.6 in December from 57.2 in November.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending December 30.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending December 30.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending December 23.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending December 23.
Key Events Ahead
- (0830 ET/1330 GMT) Bank of England MPC Member Andrew G Haldane's Speech
- (0945 ET/1445 GMT) FedTrade ops 15-yr Fannie Mae/Freddie Mac max $850 mln
- (1145 ET/1645 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.450 bln
FX Beat
DXY: The dollar attempted a major recovery across the board as investors attention shifted towards U.S. ADP report on private sector employment, weekly unemployment claims, and ISM non-manufacturing PMI. The greenback against a basket of currencies traded 0.15 percent lower at 102.38, having touched an early low of 101.71, its lowest since Dec. 14. FxWirePro's Hourly Dollar Strength Index stood at -20.78 (Neutral) by 1100 GMT.
EUR/USD: The euro trimmed gains after rising above the 1.0500 handle, as the bid tone around the dollar picked up pace across the board. Investors seem to have ignored better-than-expected Eurozone's producer price index, which rose at an annualized rate of 0.1 percent in November, beating estimates of -0.1 percent and previous -0.4 percent. The European currency traded 0.2 percent higher at 1.0510, having hit an intra-day high of 1.0574. FxWirePro's Hourly Euro Strength Index stood at -45.83 (Neutral) by 1000 GMT. The pair should break above 1.0600 for further jump till 1.06700. Minor trend reversal is only above 1.06700. On the lower side, any break below 1.04800 will drag it till 1.04300/1.03800/1.03400.
USD/JPY: The dollar slumped to 3-week low below the 116.00 handle, after minutes from the Federal Reserve's latest monetary policy meeting indicated the central bank might change the course of currently expected monetary policy path. However, the major attempted a remarkable recovery to trade near the 116.50 level. Moreover, declining U.S Treasury bond yields and prevalent cautious sentiment around equity markets will continue to weigh on the pair. The Japanese yen trades 0.6 percent higher at 116.46, having hit a high of 115.58 earlier in the day, its highest since Dec. 14. FxWirePro's Hourly Yen Strength Index stood at 3.26 (Neutral) by 1000 GMT. The major resistance is around 119 and break above targets 120. On the lower side, minor support is around 115.35 (daily Kijun-Sen) and any break below targets 114.98/113.
GBP/USD: Sterling rallied to a near 1-week high against the dollar after data showed Britain's service sector activity grew at a faster pace in the month of December. The services Purchasing Managers' Index came in at 56.2, beating forecasts of 54.7, and previous 55.2. However, the major eased and turned negative as concerns over Brexit-negotiations and worries over likely economic impact continued to weigh on the British currency. Sterling trades 0.2 percent lower at 1.2299, pulling further away from an early high of 1.2362, its highest since Dec. 30. FxWirePro's Hourly Sterling Strength Index stood at -5.26 (Neutral) by 1000 GMT. Any close above 1.2365 will take the pair to next level till 1.2510/1.2550 (61.8% retracement of 1.27747 and 1.22005).The short term trend reversal is only above 1.2800. On the lower side, short term support stands at 1.2200 and any break below will drag it down till 1.2150/1.2080 level. Against the euro, the pound trades 0.3 percent down at 85.32 pence, having hit a near 1-week low of 85.81 earlier in the day.
USD/CHF: The Swiss franc advanced, touching a near 1-week high of 1.0151 earlier in the session, as the greenback eased across the board following a decline in the U.S. Treasury yields. However, the pair attempted a major recovery to trade above the 1.02000 handle as investors focus shifted towards U.S. employment data due later in the day. The dollar trades 0.07 percent up at 1.0215, attempting to sustain gains above the 1.0200 level. Any break below 1.000 will drag the pair down till 1/0.9909/0.9830 (200- day MA). On the higher side, a break above 1.0335 will take it till 1.04180 (161.8% retracement of 1.03435 and 1.02179) in the short term. The minor resistance is around 1.02500.
AUD/USD: The Australian dollar rose, extending profits for the third consecutive session as a fresh bout of profit-taking curbed the demand for the U.S. dollar. The major initially rallied above the 0.7300 handle to hit a more than 2-week, however, it trimmed gains to trade 0.1 percent up at 0.7287 for the day. FxWirePro's Hourly Aussie Strength Index stood at 108.76 (Highly Bullish) by 1000 GMT. On the higher side, any break above 0.7343 (50% retracement of 0.75233 and 0.71600) will take the pair to next level till 0.7396 (55- day EMA)/0.7450. The major support is around 0.7150 and break below will drag it till 0.70690/0.7000.
NZD/USD: The New Zealand dollar failed to sustain better-than-expected Chinese services PMI led-gains, as the U.S. dollar attempted a major recovery across the board. Earlier in the day, the pair rose above the 0.7000 handle to hit a near 3-week high of 0.7027, however, it trimmed gains to trade flat at 0.6965. FxWirePro's Hourly Kiwi Strength Index was at 58.33 (Bullish) by 0500 GMT. Immediate resistance is located at 0.7050 (Dec 16 High), a break above could take it till 0.7100. On the downside, support is seen at 0.6924 (10-DMA), a break below could drag it near 0.6900.
Equities Recap
European shares stood firm near recent highs, while world stocks hit their highest level since mid-2015 after upbeat Chinese data boosted optimism about global growth and inflation.
The MSCI world equity index, which tracks shares in 46 countries, was up 0.4 percent, while MSCI's broadest index of Asia-Pacific stocks outside Japan rose for the eighth straight day.
The pan-European STOXX 600 index increased 0.01 percent at 365.30 points, while the FTSEurofirst 300 index was trading flat at 1,443.82 points.
Britain's FTSE 100 trades 0.09 percent up at 7,196.45 points, while mid-cap FTSE 250 advanced 0.8 percent at 18,299.66 points.
Germany's DAX edged down 0.04 percent at 11,579.62 points; France's CAC 40 trades 0.1 percent lower at 4,893.97 points.
Tokyo's Nikkei fell 0.37 percent to 19,520.69 points, Australia's S&P/ASX 200 index rose 0.32 percent to 5,755.00 points and South Korea's KOSPI lost 0.18 percent at 2,041.95 points.
Shanghai composite index gained 0.2 percent at 3,165.41 points, while CSI300 index ended flat at 3,367.79 points. Hong Kong’s Hang Seng shed 1.5 percent at 22,456.69 points.
Commodities Recap
Crude oil prices tumbled, as doubts that producers would cut output as planned to reduce global oversupply weighed on market sentiment. International benchmark Brent crude was trading 0.5 percent lower at $56.18 per barrel by 0941 GMT, after rising as high as $58.35 on Tuesday, it’s strongest since July 2015. U.S. West Texas Intermediate crude fell 0.45 percent at $53.10 a barrel, having hit a high of $55.21 earlier in the week, its highest since July 2015.
Gold prices rose to its highest level in 4-weeks as the greenback eased further away from a 14-year peak touched earlier this week. Spot gold was up 0.7 percent at $1,171.40 an ounce by 0945 GMT, having hit a high of $1,179.23, its strongest since Dec. 7. U.S. gold futures advanced 1.2 percent to $1,178.50 per ounce.
Treasuries Recap
The U.S. Treasuries saw modest buying following the release of minutes from the December FOMC meeting, marked by increased uncertainty regarding the impact of future fiscal and economic policy. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.43 percent, the super-long 30-year bond yield dipped 1-1/2 basis points to 3.03 percent and the yield on short-term 2-year note slid 1 basis point to 1.22 percent.
The UK gilts plunged as recent economic data showed that the country’s services PMI rose unexpectedly in December. The yield on the benchmark 10-year gilts rose 1-1/2 basis points to 1.33 percent, the super-long 40-year bond yield climbed 3 basis points to 1.83 percent and the yield on short-term 2-year bounced 1-1/2 basis points to 0.16 percent
The German bunds slumped after recent data showed that the Eurozone consumer inflation jumped to 3-year high, raising market expectations for the European Central Bank (ECB) to hike interest rate in 2017. The yield on the benchmark 10-year bond rose 1 basis points to 0.28 percent, the long-term 30-year bond yields also climbed 2 basis points to 1.05 percent and the yield on short-term 2-year bond bounced 2 basis points to -0.76 percent.
The Japanese government bonds traded narrowly mixed despite an auction of 10-year JGBs that attracted solid bids. Also, upbeat December services PMI limited fall in bond yields. The benchmark 10-year bond yield fell 1/2 basis point to 0.06 percent, the long-term 30-year bond yields climbed 1 basis point to 0.75 percent and the yield on short-term 3-year note slid 1 basis point to -0.15 percent.
The New Zealand government bonds rallied following a revival in the global debt market post-FOMC December meeting minutes. Also, investors poured into safe-haven assets as dairy prices posted their largest fall over ten months at the first dairy auction of 2017. In intraday trading, the yield on the benchmark 10-year bond fell 8 basis points to 3.25 percent, the yield on 7-year note dipped nearly 7 basis points to 2.87 percent and the yield on short-term 2-year note slid 4-1/2 basis points to 2.21 percent.
The Australian government bonds rebounded as investors poured into safe-haven instruments amid firmness in the U.S. Treasuries. The yield on the benchmark 10-year Treasury note fell 4-1/2 basis points to 2.75 percent, the yield on 15-year note dipped nearly 5 basis points to 3.22 percent and the yield on short-term 2-year slid 3-1/2 basis points to 1.90 percent.
