Market Roundup
- UK parliament prepares for vote on Brexit divorce
- Gold prices ease despite U.S.-Iran tensions
Economic Data Ahead
- (1000 ET/1500 GMT) US ISM Non-Manufacturing PMI December
- (1000 ET/1500 GMT) US Factory Orders (MoM) (Nov)
Key Events Ahead
- No significant events scheduled
FX Beat
DXY: The dollar index steadied as investors await data due later in the day on the U.S. trade balance, factory orders, and the services sector to measure the health of the economy. The greenback against a basket of currencies traded 0.1 percent up at 96.75, having touched a low of 96.36 on Tuesday, its lowest since July 1.
EUR/USD: The euro plunged, reversing most of its previous session gains amid concerns over the health of the economy. The European currency traded 0.2 percent down at 1.1173, having touched a high of 1.1239 on Wednesday, its highest since August 7. Immediate resistance is located at 1.1220, a break above targets 1.1249. On the downside, support is seen at 1.1146 (10-DMA), a break below could drag it below 1.1110.
USD/JPY: The dollar rose, extending previous session gains, as investors became less anxious about the chances of an all-out conflict between the United States and Iran. The major was trading 0.05 percent up at 108.40, having hit a low of 107.77 on Monday, its lowest since Oct. 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. factory orders and ISM non-manufacturing PMI. Immediate resistance is located at 108.63, a break above targets 108.99. On the downside, support is seen at 108.21, a break below could take it near at 107.84.
GBP/USD: Sterling declined as British lawmakers were set to return to parliament after the Christmas recess and prepare to vote this week on Prime Minister Boris Johnson's EU withdrawal deal. The major traded 0.1 percent down at 1.3156, having hit a low of 1.3053 on Friday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3229, a break above could take it near 1.3284. On the downside, support is seen at 1.3070, a break below targets 1.3000. Against the euro, the pound was trading 0.1 percent up at 84.95 pence, having hit a high of 84.53 on Wednesday, it’s highest since Dec. 17.
USD/CHF: The Swiss franc tumbled against the dollar as Middle East tensions eased. The major trades 0.3 percent up at 0.9709, having touched a low of 0.9646 on Wednesday, it’s lowest since end September. On the higher side, near-term resistance is around 0.9746 (10-DMA) and any break above will take the pair to the next level till 0.9810. The near-term support is around 0.9662, and any close below that level will drag it till 0.9646.
Equities Recap
European shares rebounded as concerns over a U.S.-Iran standoff eased.
The pan-European STOXX 600 index rallied 1.6 percent at 419.03 points, while the FTSEurofirst 300 surged 0.5 percent to 1,638.27 points.
Britain's FTSE 100 trades 0.2 percent up at 7,586.25 points, while mid-cap FTSE 250 gained 0.4 to 21,850.90 points.
Germany's DAX rose 1.1 percent at 13,268.29 points; France's CAC 40 trades 0.5 percent higher at 6,042.82 points.
Commodities Recap
Crude oil prices eased as investors reconsidered the likelihood of Middle East supply disruptions in the wake of the United States killing a top Iranian military commander. International benchmark Brent crude was trading lower at $68.40 per barrel by 1049 GMT, having hit a high of $70.73 on Monday, its highest since May 23. U.S. West Texas Intermediate was trading 0.05 percent down at $62.74 a barrel, after rising as high as $64.69 on Monday, its highest since April 30.
Gold prices rose, hovering towards a near 7-year high amid persisting Middle East tensions. Spot gold rose 0.1 percent to $1,565.55 per ounce by 1100 GMT, having touched a high of $1588.16 on Monday, its highest since April 2013. U.S. gold futures dipped 0.5 percent to $1,561.00.
Treasuries Recap
The U.S. Treasuries steadied during the afternoon session ahead of the country’s trade balance data for the month of November and the ISM non-manufacturing PMI for December, both scheduled to be released today by 13:30GMT and 15:00GMT for further direction in the debt market. The yield on the benchmark 10-year Treasury yield hovered around 1.806 percent, the super-long 30-year bond yield steadied at 2.284 percent and the yield on the short-term 2-year remained tad down at 1.542 percent.
The United Kingdom’s gilts slumped during European trading hours amid a muted trading session that witnessed data of little economic significance ahead of a host of 2-tier economic data due for release through this week. The yield on the benchmark 10-year gilts, jumped 3-1/2 basis points to 0.806 percent, the 30-year yield gained 1-1/2 basis points to 1.257 percent and the yield on the short-term 2-year gained nearly 2 basis points to 0.613 percent.
The German bunds remained flat during European session after the eurozone’s December flash estimate of consumer price inflation (CPI) edged higher, albeit meeting market expectations. Investors will now eye Germany’s trade balance data for the month of November, scheduled to be released by the end of this week will add further direction to the debt market. The German 10-year bond yield, which moves inversely to its price, remained flat at -0.288 percent, the yield on 30-year note slipped nearly 1 basis point to 0.246 percent and the yield on short-term 2-year hovered around -0.627 percent.
The Australian bonds gained slightly during Asian session of the second trading day of the week despite a fall in the United States’ Treasuries in the overnight session amid a slowdown in the Iranian tensions. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.216 percent, the yield on the long-term 30-year bond gained nearly 1-1/2 basis points to 1.845 percent and the yield on short-term 2-year suffered 1 basis point to 0.794 percent.
