Market Roundup
- USD/JPY +0.7%, EUR/USD -0.13%, GBP/USD -0.4%
- DXY +0.2%, DAX -0.01%, Brent +0.65%, Iron -1.9%
- Switzerland Nov Trade Balance CHF3.636 bln vs revised 2.657 bln
- Germany Nov Producer prices 0.1% y/y vs -0.4% previous, -0.2% expected
- EZ Oct C/A NSA E32.8 bln vs revised 32.2 bln
- EZ Oct C/A SA E28.4 bln vs revised 24.7 bln previous
- EZ Oct Net Investment Flow E65.1 bln vs revised 79.9 bln
- UK Dec CBI Distributive Trades +35 vs 26 previous high since Sept 2015
- Sweden Dec Manufacturing confidence jumps to 121.1 vs revised 110.1 previous
- Turkey CB leaves all 3 key rates unchanged after policy meet
- USD/TRY spikes to 3.5440 then relaxes
- German FinMin, on Greece, if we don’t stick to rules EZ will fall apart - DZ
- BoJ Policy Board leaves policy unchanged, to stick with YCC-NIRP-QQE
- Italy government seeks approval to use up to E20 bln to save banks
- RBA December meeting minutes – Steady policy right for growth-inflation/economy
Economic Data Ahead
- (0830 ET/1330 GMT) Statistics Canada will release its wholesale trade figures for the month of October. The indicator is expected to have increased by 0.6 percent, after unexpectedly slumping 1.2 percent in September.
- (0900 ET/1400 GMT) The Conference Board releases China's Leading Economic Index for the month of November. The index stood at 0.8 percent in the previous month.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- (1645 ET/2145 GMT) The Statistics New Zealand will release visitor arrivals report for the month of December. The indicator posted an annualized gain of 2.2 percent in the prior month.
- (1645 ET/2145 GMT) The Statistics New Zealand releases its trade balance data for the month of November. The economy posted an annual trade deficit of $3.3 billion in October.
- (1830 ET/2330 GMT) The Melbourne Institute will release Australia's Westpac Leading Index for the month of November. The index edged up 0.1 percent in the previous month.
Key Events Ahead
- (0945 ET/1445 GMT) FedTrade Ops 30-yr Fannie Mae/Freddie Mac max $2.475 bln
- (1145 ET/1645 GMT) FedTrade Ops 30-yr Ginnie Mae max $1.350 bln
FX Beat
DXY: The dollar rallied versus its major competitors on the back of optimistic comments from Fed Yellen on the U.S. labor market. The greenback against a basket of currencies traded 0.25 percent up at 103.40, drifting towards a 14-year high of 103.56 hit last week. FxWirePro's Hourly Dollar Strength Index stood at 105.61 (Highly Bullish) by 1100 GMT.
EUR/USD: The euro declined below the 1.0400 handle to hit a 5-day low, as upbeat comments from Federal Reserve Chair Janet Yellen on the U.S. jobs market boosted the dollar across the board. The major failed to benefit from better-than-expected Eurozone's Current Account seasonally adjusted figures, as hawkish Fed outlook for 2017 continued to support the bullish sentiment around the greenback. The European currency trades 0.2 percent lower at 1.0383, hovering towards a low of 1.0366 hit last week, it’s lowest since Jan. 2003. FxWirePro's Hourly Euro Strength Index stood at -26.63 (Neutral) by 0900 GMT. The upside is capped by 5- day MA and trend line resistance (trend line joining 1.08700 and 1.06700) at 1.0485 any break above will take the pair to next level till 1.0569(10- day MA). On the lower side, strong support is at 1.03400 (127.2% retracement of 1.03665 and 1.04720) and any violation below will drag it till 1.02835 (161.8% retracement of 1.05047 and 1.08700).
USD/JPY: The dollar rose above the 118.00 handle, extending post-BoJ rally as persistent risk-on sentiment weakened the bid tone around the safe-haven Japanese yen. Moreover, Fed Chairwoman Yellen’s comments on the stronger jobs market and renewed strength seen in the U.S. Treasury yields across the curve underpinned the demand for the greenback. The major trades 0.8 percent higher at 118.08, drifting towards a 10-month high of 118.66 hit last week. FxWirePro's Hourly Yen Strength Index stood at 77.35 (Slightly Bullish) by 1000 GMT. The major resistance is around 119 and break above targets 120. On the lower side, minor support is around 116.90 (7-day EMA) and any break below targets 116.12 (10- day MA).
GBP/USD: Sterling declined to a 1-month low against the dollar, weighed down by uncertainty over the process by which Britain will leave the European Union. However, the major recovered some losses after CBI retail survey reported a 35 percent increase in sales volumes in December, surpassing previous reading of 26 percent and estimates of 20 percent. Sterling trades 0.2 percent lower at 1.2364, having declined to an early low of 1.2333, its lowest since Nov. 21. FxWirePro's Hourly Sterling Strength Index stood at -122.21 (Highly Bearish) by 1000 GMT. The major support is around 1.2300 and any break below confirms a minor trend reversal. Any close below 1.2300 will drag the pair till 1.2240 (61.8% retracement of 1.19048 and 1.27747). On the higher side, 1.25100 will be acting as major resistance and any close above will take it till 1.2575 (55- day EMA)/1.2650. Against the euro, the pound trades 0.1 percent down at 83.97 pence, having hit a 10-day low of 84.49 pence on Monday.
USD/CHF: The Swiss franc declined, extending losses for the second straight day, as the greenback gained across the board following positive comments from Fed Chair Yellen on the U.S. labor market. The major trades 0.26 percent up at 1.0296, pulling away from a low of 1.0221 hit in the previous session. FxWirePro's Hourly Swiss Franc Strength Index stood at 52.40 (Bullish) by 1000 GMT. Any break above major top 1.03284 confirms bullishness, a jump till 1.04000 is possible. On the lower side, minor support stands at 1.0200 (7- day EMA) and break below targets 1.00150/1.0080. It should close below 1.0020 for further weakness.
AUD/USD: The Australian dollar tumbled to a fresh 6-month low after Fitch rating agency published a report on the Australian budget deficit forecasts. Fitch expects the economic outlook to weaken and public debt ratios to rise at a higher level, loftier than government estimates, although expects the government to decrease its deficit at a slower pace than official projections. The Aussie trades 0.16 percent lower at 0.7232, having hit a low of 0.7227 earlier in the session, its lowest since Jun. 3. FxWirePro's Hourly Aussie Strength Index stood at -88.96 (Slightly Bearish) by 1100 GMT. On the higher side, minor resistance is around 0.7380 and any break above will take the pair till 0.7435/0.7500. The major support is around 0.7200 and break below will drag it till 0.7145/0.70690.
NZD/USD: The New Zealand dollar slumped to a 6-month low below the 0.6900 handle, as increasing expectations of faster Fed rate-hike action in 2017 weighed on the major. Moreover, lower oil prices, board based greenback strength and divergent monetary policy outlooks between the Fed and RBNZ continued to dampen Kiwi bulls’ sentiment. The pair trades 0.4 percent lower at 0.6898, having touched a low of 0.6879, it’s lowest since early June. FxWirePro's Hourly Kiwi Strength Index was at -127.62 (Highly Bearish) by 1100 GMT. Immediate resistance is located at 0.6950, a break above could take it near 0.6988 (5-DMA). On the downside, support is seen at 0.6881 (Mar 31 Low), a break below could drag it lower 0.6850.
Equities Recap
European shares steadied after attacks in Germany and Turkey, while the dollar rallied against the yen after the Bank of Japan left monetary policy unchanged.
The pan-European STOXX 600 index increased 0.32 percent at 360.74 points, while the FTSEurofirst 300 index added 0.28 percent at 1,426.64 points.
Britain's FTSE 100 trades 0.12 percent down at 7,009.07 points, while mid-cap FTSE 250 advanced 0.15 percent at 17,808.37 points.
Germany's DAX edged up 0.10 percent at 11,437.94 points; France's CAC 40 trades 0.3 percent higher at 4,838.25 points.
Tokyo's Nikkei gained 0.53 percent to 19,494.53 points, Australia's S&P/ASX 200 index rose 0.50 percent to 5,590.10 points and South Korea's KOSPI added 0.17 percent at 2,041.94 points.
Shanghai composite index dropped 0.5 percent at 3,102.88 points, while CSI300 index declined 0.6 percent at 3,309.06 points. Hong Kong’s Hang Seng lost 0.5 percent at 21,729.06 points.
Commodities Recap
Crude oil prices dropped, as investors began to unwind positions ahead of the year-end holidays. International benchmark Brent crude was lower at $54.94 per barrel by 0902 GMT, having hit a 1-week low of $53.13 hit last week. U.S. West Texas Intermediate crude gained 1.86 percent at $53.05 a barrel, hovering towards a high of $54.48 hit in the previous week, it's highest since July 2015.
Gold prices fell, reversing most of its previous session gains as comments by Federal Reserve Chair Janet Yellen on the U.S. labor market strengthened the possibility of further rate hikes next year. Spot gold dropped 0.4 percent to $1,133.66 an ounce by 0912 GMT, after rising in the two previous sessions. U.S. gold futures dropped 0.7 percent to $1,135.20 per ounce.
Treasuries Recap
The United States benchmark 10-year Treasury witnessed a heavy sell-off, pushing yields by 4-1/2 basis points to 2.58 percent post hawkish comments from the Federal Reserve Chair Janet Yellen. Markets now look ahead to a relatively quiet session on Tuesday, likely to see light trading continue as markets look ahead to the long Christmas-holiday weekend.
The UK gilts witnessed a heavy sell-off across the curve on hawkish comments from the Federal Reserve Chair Janet Yellen at the University of Baltimore. The yield on the benchmark 10-year gilts rose 4-1/2 basis points to 1.44 percent, the super-long 40-year bond yield climbed 4 basis points to 1.91 percent and the yield on short-term 2-year bounced 4 basis points to 0.13 percent.
The German bunds slumped following weakness in the United States Treasuries. Also, rebound in the country’s producer prices drove out investors from safe-haven buying. The yield on the benchmark 10-year bond rose more than 2 basis points to 0.27 percent, the long-term 30-year bond yield climbed 3-1/2 basis points to 1.00 percent and the yield on short-term 3-year bond bounced 1-1/2 basis points to -0.78 percent.
The Japanese government bonds traded modestly firmer after the Bank of Japan left its interest rate unchanged at -0.10 percent, while targeting 10-year bond yields at zero percent. The benchmark 10-year bond yield fell 1/2 basis point to 0.07 percent, the long-term 30-year bond yield also dipped nearly 1 basis point to 0.68 percent and the yield on short-term 2-year note dipped nearly 1 basis point to -0.18 percent.
The New Zealand government bonds closed mixed as markets awaited the Global Dairy Trade (GDT) auction and delayed third-quarter gross domestic product (GDP), which was postponed because of powerful earthquakes last month. The yield on the benchmark 10-year bond closed 1-1/2 basis points lower at 3.45 percent, the yield on 7-year note ended up 1 basis point to 3.02 percent and the yield on short-term 2-year note slid 1/2 basis point to 2.30 percent.
The Australian government bonds traded modestly firmer on the Reserve bank of Australia’s (RBA) slightly dovish tilt in the December meeting minutes. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.85 percent, the yield on 15-year note dipped 1 basis point to 3.33 percent and the yield on short-term 2-year slid 1/2 basis point to 1.95 percent.
