Market Roundup
- Eurozone business growth remains weak in December: flash PMIs
- Gold steadies as traders await trade deal details
- Oil prices near 3-month highs
Economic Data Ahead
- (0830 ET/1330 GMT) Statistics Canada will report foreign portfolio investment in domestic stocks for the month of October.
- (0830 ET/1330 GMT) Statistics Canada will release investment in foreign securities figures for the month of October.
- (0945 ET/1445 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of December. The index is likely edged up to 52.6 after posting similar gains in the previous month.
- (0945 ET/1445 GMT) Markit Economics will release preliminary U.S. composite PMI for the month of December. The index posted a final reading of 52 in the prior month.
- (0945 ET/1445 GMT) Financial firm Markit Economics is likely to report that preliminary U.S. service PMI business activity index rose to 52.0 in December after printing a final reading of 51.6 in November.
- (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that the U.S. Housing Market Index rose to 70 in December after posting a similar increase in November.
Key Events Ahead
- (0800 ET/1300 GMT) European Central Bank Vice-president Luis De Guindos
FX Beat
DXY: The dollar index declined as investors raised doubts over the health of the U.S. economy after last week's data showed retail sales increased less than expected in November. The greenback against a basket of currencies traded 0.2 percent down at 97.03, having touched a low of 96.59 on Thursday, its lowest since July 1.
EUR/USD: The euro gained after IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index remained at 50.6 in December, just below forecast of 50.7. The European currency traded 0.2 percent up at 1.1138, having touched a high of 1.1199 on Friday, its highest since August 13. Immediate resistance is located at 1.1160, a break above targets 1.1190. On the downside, support is seen at 1.1106, a break below could drag it below 1.1083.
USD/JPY: The dollar rallied on the back of a preliminary trade deal agreed between the United States and China. The phase one agreement suspended a threatened round of U.S. tariffs on a $160 billion list of Chinese imports that were scheduled to take effect on Sunday. The U.S. also agreed to halve the tariff rate, to 7.5 percent, on $120 billion worth of Chinese goods. The major was trading 0.1 percent up at 109.43, having hit a high of 109.70 on Friday, its highest since Dec. 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Markit PMI's and NAHB housing market index. Immediate resistance is located at 109.60, a break above targets 109.92. On the downside, support is seen at 109.07, a break below could take it near at 108.82 (10-DMA)..
GBP/USD: Sterling surged, supported by last week’s general election victory for Prime Minister Boris Johnson’s Conservative party. PM Johnson intends to re-submit the Withdrawal Agreement Bill to parliament for ratification before Christmas. The major traded 0.3 percent up at 1.3366, having hit a high of 1.3514 on Friday, it’s highest since May 2018. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3446, a break above could take it near 1.3472. On the downside, support is seen at 1.3195, a break below targets 1.3132. Against the euro, the pound was trading 0.05 percent up at 83.34 pence, having hit a high of 82.75 on Friday, it’s highest since July 2016.
USD/CHF: The Swiss franc consolidated within narrow ranges as investors sought more clarity on the phase one trade deal between the United States and China. The major trades flat at 0.9837, having touched a low of 0.9805 on Friday, it’s lowest since September 5. On the higher side, near-term resistance is around 0.9866 (10-DMA) and any break above will take the pair to the next level till 0.9908 (21-DMA). The near-term support is around 0.9791, and any close below that level will drag it till 0.9775.
Equities Recap
European shares rallied to an all-time high as risk sentiment improved after the United States and China announced on Friday a phase one agreement.
The pan-European STOXX 600 index surged 0.9 percent at 416.00 points, while the FTSEurofirst 300 rallied 0.9 percent to 1,622.92 points.
Britain's FTSE 100 trades 2.02 percent up at 7,501.75 points, while mid-cap FTSE 250 gained 1.1 to 21,736.77 points.
Germany's DAX surged 0.6 percent at 13,357.20 points; France's CAC 40 trades 0.8 percent higher at 5,967.84 points.
Commodities Recap
Crude oil prices held near three-month highs, supported by last week’s announcement that an initial trade deal had been reached between the United States and China. International benchmark Brent crude was trading 0.4 percent up at $65.15 per barrel by 1055 GMT, having hit a high of $65.77 on Friday, its highest since September 17. U.S. West Texas Intermediate was trading 0.3 percent up at $59.96 a barrel, after rising as high as $60.45 on Friday, its highest since September 17.
Gold prices steadied as the dollar weakened and investors sought more clarity on the phase one trade deal between the United States and China. Spot gold rose 0.1 percent to at $1,477.18 per ounce by 1058 GMT, having touched a high of $1486.62 on Thursday, its highest since November 7. U.S. gold futures fell 0.1 percent to $1,480.10.
Treasuries Recap
The U.S. Treasuries slumped during afternoon session amid a relatively quiet day that witnessed data of little economic significance. However, a host of 2-tier and 3-tier economic data is due throughout this week, which shall add further insight into the bond market. The yield on the benchmark 10-year Treasury yield jumped nearly 2-1/2 basis points to 1.843 percent, the super-long 30-year bond yield surged nearly 2 basis points to 2.268 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 1.628 percent.
The United Kingdom’s gilts surged during European trading hours following a lower-than-expected fall in the country’s manufacturing PMI for the month of December, while investors still eye Britain’s employment report for the month of November, scheduled to be released on December 17 by 09:30GMT for further direction into the debt market. The yield on the benchmark 10-year gilts, lost nearly 1-1/2 basis points to 0.779 percent, the 30-year yield slumped nearly 2 basis points to 1.265 percent while the yield on the short-term 2-year gained 2 basis points to 0.560 percent.
The German bunds gained during European session after the country’s manufacturing PMI for the month of December missed market expectations, albeit still remaining in the contraction zone, below the 50-point threshold mark that separates expansion from contraction. The German 10-year bond yield, which moves inversely to its price, slipped 1/2 basis point to -0.300 percent, the yield on 30-year note slumped nearly 3 basis points to 0.212 percent while the yield on short-term 2-year traded flat at -0.628 percent.
The Australian bonds remained flat during Asian session of the first trading day of the week despite an improvement in investors’ risk sentiments after the United States and China announced to reach a "historic" phase one trade deal. However, investors will now eye the Reserve Bank of Australia’s (RBA) December monetary policy meeting minutes, scheduled to be released on December 17 by 00:30GMT. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, remained flat at 1.152 percent, the yield on the long-term 30-year bond hovered around 1.756 percent and the yield on short-term 2-year barely slipped 1/2 basis point to 0.764 percent.
