Market Roundup
- GBP/USD 0.18%, USD/JPY 0.34%, EUR/USD -0.2%
- DXY 0.19%, DAX 0.79%, Brent 0.66%, Iron 1.73% Gold -0.37%
- CNY firms as state banks sell retreating USD, PBOC fix 6.8934
- China Stats Bureau: Able to keep CNY basically stable, FX reserves ample, economy stable
- Asahi says to buy AB InBev's eastern European beer brands for euro 7.3bn
- Japan’s Asahi to buy five AB InBev eastern European beer brands for E7.3bn
- Euro Zone Q3 Employment y/y 1.2% vs 1.4 previous
- Hansson: Risk that euro zone inflation may top ECB forecasts
- EU governments ready Brexit negotiating text-diplomats
- German Nov CPI Final y/y 0.8% vs 0.8 previous, 0.8 expected
- German Nov Wholesale Price Index y/y 0.8% vs 0.5 previous
- German Dec ZEW Economic Sentiment 13.8 vs 13.8 previous, 14 expected
- German Dec ZEW Current Conditions 63.5 vs 58.8 previous, 59.1 expected
- Italy’s largest bank UniCredit to launch E13bn cash call in Q1
- French EU exit would be tricky for a President Le Pen
- New Italy PM Gentiloni says ready to intervene to support banks
- House of Lords report: UK must set out plans for transitional deal with EU
- UK Nov CPI y/y 1.2% vs 0.9 previous, 1.1 expected
- UK Nov Core CPI y/y 1.4% vs 1.2 previous, 1.3 expected
- UK Nov RPI y/y 2.2% vs 2 previous, 2.1 expected
- UK Nov PPI Core Output y/y NSA 2.2% vs 1.9 previous, 2.3 expected
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department publishes import and export prices index for the month of November. The import prices are likely to have slumped 0.4 percent after rising 0.5 percent in October, while exports are expected to have declined 0.2 percent after gaining 0.2 percent in the prior month.
- (1600 ET/2100 GMT) Chile's central bank will meet to set its benchmark interest rate, where is widely expected to hold it at 3.5 percent.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- (1830 ET/2330 GMT) The Faculty of Economics and Commerce Melbourne Institute will release Australia's Westpac consumer confidence for the month of December. The index fell 1.1 percent in November.
- (1850 ET/2350 GMT) Bank of Japan is likely to report that the Tankan Large All Industry Capital Expenditure increased 6.1 percent in the third quarter after rising 6.3 percent in the prior quarter.
- (1850 ET/2350 GMT) Bank of Japan's Tankan Non-Manufacturing Index is expected to edge up to 19 in the third-quarter from 18 in the earlier quarter.
- (1850 ET/2350 GMT) Bank of Japan releases its Tankan large manufacturing Index for the third quarter. The index is expected to rise to 10 after it stood at 6 in the previous quarter.
Key Events Ahead
- N/A The Federal Open Market Committee commences its two-day meeting on interest rate policy.
FX Beat
DXY: The dollar gained versus the euro and the yen, as the market await the outcome of the Federal Reserve's policy meeting starting later in the day. The greenback against a basket of currencies traded 0.2 percent up at 101.14, pulling away from an early low 100.84. FxWirePro's Hourly Dollar Strength Index stood at -20.18 (Neutral) by 1100 GMT.
EUR/USD: The euro declined, reversing some of its previous session gains after Eurozone's employment change for the third quarter came in at 0.2 percent, missing forecast of 0.3 percent and previous 0.4 percent. However, better-than-expected Zew Survey, which showed Eurozone's economic sentiment rose to 18.1, beating estimates of 16.5 and previous 15.8 capped further downside. The European currency trades 0.2 percent down at 1.0612, retreating from an intra-day high of 1.0650. FxWirePro's Hourly Euro Strength Index stood at -113.29 (Highly Bearish) by 1000 GMT. Immediate resistance is around 1.0605 and any break above will take the pair till 1.06925/1.0745. On the lower side, major intraday support is around 1.0580 and any break below will drag it down till 1.0550/1.0500 level.
USD/JPY: The dollar rose, regaining most of its previous session losses, as the greenback strength against a basket of currencies amid better risk tone prevalent in the markets. Moreover, investors await the outcome of the Federal Reserve's policy meeting starting later in the day. According to the CME Group, Fed fund futures show a 97 percent probability that the Fed will hike interest rates by 25bps. The pair trades 0.3 percent up at 115.37, hovering towards a high of 116.12, its strongest since early Feb. FxWirePro's Hourly Yen Strength Index stood at -59.24 (Bearish) by 1000 GMT. The major resistance is around 116 and break above targets 118/120. On the lower side, minor support is around 114.35 (5- day MA) and any break below targets 112.65/112.
GBP/USD: Sterling rose to a 1-week high above the 1.2700 handle after data showed British inflation hit a more than 2-year high in November, as pounds big fall after Brexit shock vote pushed up the cost of imports. The economy's consumer prices rose 1.2 percent compared with a year ago, surpassing expectations of a 1.1 percent annual rise, while on monthly basis it stood at 0.2 percent in line with estimates. Sterling trades 0.25 percent up at 1.2702, after rising to a high of 1.2723, its strongest since Dec.6. FxWirePro's Hourly Sterling Strength Index stood at 143.87 (Highly Bullish) by 1000 GMT. The temporary top formed at 1.2774 will be acting as next immediate resistance and any break above will take the pair till 1.2800/1.2808. On the lower side, a break below 1.2520 will drag it down till 1.24380/ 1.2380. Against the euro, the pound trades 0.3 percent higher at 83.51 pence, having touched a 1-week high of 83.45 pence earlier in the day.
USD/CHF: The Swiss franc edged down as the greenback gained on increasing prospects of U.S. Federal Reserve interest rate hike at this week’s policy meeting. The major trades up at 1.0132, having hit an intra-day high of 1.0146. FxWirePro's Hourly Swiss Franc Strength Index stood at -41.16 (Neutral) by 1000 GMT. Trend continuation is expected to happen only if the pair closes above 1.02050 and any break above that level will take the pair till 1.02600/1.03027. On the lower side, it should break below 1.0120 for further selling and any violation below will take it till 1.0078/1.0050.
AUD/USD: The Australian dollar declined after rising to a 4-week high above the 0.7500 handle earlier in the day, as downbeat house prices report weakened the investor sentiment. Markets seem to have shrugged off better-than-expected Chinese retail sales and industrial production data, as focus remained on domestic fundamentals, which showed business conditions deteriorated in the month of November. The Aussie trades 0.1 percent lower at 0.7484, retreating from a peak of 0.7514, it’s highest since Nov. 16. FxWirePro's Hourly Aussie Strength Index stood at 62.31 (Bullish) by 1100 GMT. On the higher side, major resistance is around 0.7524 (55- day EMA) and any break above will take the pair 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 rose, extending gains above the 0.7200 handle, supported by higher oil prices amid risk-on market sentiment. Additionally, upbeat Q3 manufacturing sales report and easing political uncertainty underpinned the bid tone around the major. The Kiwi trades 0.1 percent up at 0.7191, hovering further away from a low of 0.7115 hit in the previous session, its lowest since Dec 7. FxWirePro's Hourly Kiwi Strength Index was at 35.38 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7222 (Dec 8-High), a break above could take it over 0.7265/ 0.7300. On the downside, support is seen at 0.7141 (10-DMA), a break below could drag it till 0.7100/ 0.7069.
Equities Recap
European shares advanced in early trades, supported by gains in banks after Italy's largest lender revealed a 13 billion euro share issue, while the dollar stood firm ahead of Federal Reserve policy meeting.
The pan-European STOXX 600 index increased 0.7 percent at 356.23 points, while the FTSEurofirst 300 index added 0.7 percent at 1,408.29 points.
Britain's FTSE 100 trades 0.24 percent up at 6,906.31 points, while mid-cap FTSE 250 edged up 0.23 percent at 17,680.62 points.
Germany's DAX advanced 0.58 percent at 11,254.70 points; France's CAC 40 trades 0.58 percent higher at 4,788.42 points.
Tokyo's Nikkei rallied 0.5 percent to 19,250.52 points, Australia's S&P/ASX 200 index lost 0.27 percent to 5,547.70 points and South Korea's KOSPI rose 0.43 percent at 2,035.43 points.
Shanghai composite index gained 0.1 percent at 3,155.04 points, while CSI300 index slumped 0.1 percent at 3,405.04 points. Hong Kong’s Hang Seng added 0.1 percent at 22,446.70 points.
Commodities Recap
Crude oil prices advanced by more than 1 percent, extending gains from the previous session, as a supply cut by Abu Dhabi as part of production curbs and a robust demand in Asia supported market sentiment. Global benchmark Brent crude was 1.0 percent higher at $55.98 per barrel by 0941 GMT, after rising as high as $57.50 in the previous session, its highest since July 2015. U.S. West Texas Intermediate crude gained 1.03 percent at $52.94 a barrel, having hit a 17-month high of $54.48 on Monday.
Gold prices declined, hovering closer to an over 10-month low touched in the previous session, ahead of the U.S Federal Reserve monetary policy meeting that begins later in the day. Spot gold trading 0.3 percent down at $1,158.91 an ounce at 0947 GMT, drifting towards a low of $1,151.24 an ounce, its lowest since Feb. 5. U.S. gold futures were down 0.2 percent at $1,163.60.
Treasuries Recap
The U.S. Treasuries were pushed higher as investors remained cautious ahead of the Federal Reserve’s last monetary policy decision for 2016, which is scheduled to be released on Wednesday by 19:00 GMT. The yield on the benchmark 10-year Treasury note fell 2 basis points to 2.45 percent, the yield on long-term 30-year Treasury also dipped 2 basis points to 3.13 percent and the yield on short-term 3-year note slid 1 basis point to 1.42 percent.
The UK gilts traded higher despite November consumer inflation accelerated at its fastest pace since October 2014. The yield on the benchmark 10-year gilts fell 3 basis points to 1.43 percent, the super-long 40-year bond yield also dipped 3 basis points to 1.90 percent and the yield on short-term 3-year slid 2 basis points to 0.22 percent.
The German bunds gained as recent economic data showed that the country’s inflation remains muted despite ECB’s efforts to boost prices. The yield on the benchmark 10-year bond fell 3 basis points to 0.37 percent, the long-term 30-year bond yield dipped 5 basis points to 1.16 percent and the yield on short-term 3-year bond slid 1/2 basis point to -0.68 percent.
The Japanese government bonds traded lower as investors moved away from safe-haven buying amid gains in riskier assets including crude oil and equities. The benchmark 10-year bond yield rose 1 basis point to 0.08 percent (highest since February) and the yield on short-term 3-year note also climbed 1 basis point to -0.13 percent.
The New Zealand government bonds little changed as investors remain sidelined in any big deal ahead of the Federal Reserve’s last monetary policy decision for 2016 scheduled to be released on Wednesday. The yield on the benchmark 10-year bond closed flat at 3.31 percent, the yield on 7-year note ended steady at 2.87 percent and the yield on short-term 2-year note remained unchanged at 2.20 percent.
The Australian government bonds gained after recent data showed that the country’s business conditions fell to the lowest level in 18 months in November, fuelling the Reserve Bank ofAustralia’s (RBA) rate cut expectations for 2017. The yield on the benchmark 10-year Treasury note fell 4 basis points to 2.83 percent, the yield on 15-year note dipped 4 basis points to 3.29 percent and the yield on short-term 2-year slid 1 basis point to 1.87 percent.
