Market Roundup
- USD/JPY -0.2%, EUR/USD +0.35%, GBP/USD +0.25%
- DXY -0.3%, DAX -0.5%, Brent +1.0%, Iron +5.1%, Gold -0.5%
- Oil extends Wednesday rally: Brent hits 52.73 high before relaxing
- UK Nov Nationwide house price index +4.4% y/y vs 4.6% previous, 4.6% expected
- Switzerland Oct Retail Sales -0.5% y/y vs -2.3% previous
- Italy Nov Manufacturing PMI 52.2 vs 50.9 previous,51.8 expected
- Germany Nov Manufacturing PMI 54.3 vs 54.4 previous,54.4 expected
- EZ Nov Manufacturing PMI 53.7 vs 53.7 previous,53.7 expected
- UK Nov Manufacturing PMI 53.4 vs revised 54.2 previous,54.5 expected
- Riksbank DepGov Skingsley – Will intervene in SEK if necessary
- Japan Nov Manufacturing PMI – final 51.3, flash 51.1, Oct final 51.4
- China Nov Caixin Manufacturing PMI 50.9, 50.8 eyed, Oct 51.2, output-input up
- China Nov official Manufacturing PMI 51.7, best in two years, 51.0 eyed, Oct 51.2
- BoI - Italy’s top three banks systemically important, need buffer
Economic Data Ahead
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 2,000 to a seasonally adjusted 253,000 for the week ended Nov. 25 while continuing claims for the week ended Nov. 18 is expected to decline to 2.040 m from 2.043 m.
- (0930 ET/1430 GMT) The RBC will release Canada's Manufacturing PMI for the Month of November. The indicator stood at 51.1 in the prior month.
- (0945 ET/1445 GMT) The Markit Economics releases its final U.S. Manufacturing Purchasing Managers Index (PMI) for the month of November. The index came in at 53.9 in October.
- (1000 ET/1500 GMT) The Institute for Supply Management is likely to report that U.S. manufacturing PMI rose to 52.2 in November from a reading of 51.9 the month before.
- (1000 ET/1500 GMT) The Commerce Department is likely to report that U.S. construction spending in October increased 0.5 percent after slipping by 0.4 percent in the previous month.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 25.
- (1330 ET/1830 GMT) Autodata Corp releases U.S. auto sales figures for November, which are likely to have dropped to 17.70 million units, compared to an increase from October's 18.02 million units.
- N/A The Statistics New Zealand releases building permits seasonally adjusted data for the month of October. The index posted a rise of 0.2 percent in September.
Key Events Ahead
- N/A Treasury Secretary Jack Lew, IMF Managing Director Christine Lagarde, World Bank Chief Economist Paul Romer as well as Gayle Smith, administrator, U.S. Agency for International Development (USAID) participate in the Financial Inclusion Forum being hosted by the Treasury Department and USAID in Washington.
- (0830 ET/1330 GMT) Federal Reserve Bank of Cleveland President Loretta Mester and Treasury Department Office of Financial Research Director Richard Berner give welcome remarks at the "Innovation, Market Structure, and Financial Stability" conference hosted by the Treasury Department Office of Financial Research and the Cleveland Fed in Washington D.C.
- (0900 ET/1400 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated Q&A at the St. Mary's University Forum on Entrepreneurship Breakfast Series in San Antonio, Texas.
- (0945 ET/1445 GMT) FedTrade ops 30-yr Fannie Mae/Freddie Mac max $2.500 bln
FX Beat
DXY: The dollar traded within the sight of a 9-1/2-month high against the yen, as a jump in the U.S. bond yields and expectations of U.S interest rate hike in December by the Federal Reserve boosted investor sentiment. The greenback against a basket of currencies trades 0.3 percent down at 101.20, drifting away from a high of 101.83 hit on Wednesday. FxWirePro's Hourly Dollar Strength Index stood at 32.49 (Neutral) by 1100 GMT.
EUR/USD: The euro rose above the 1.0600 handle, hovering away from a 5-day low hit in the previous session, following the release of better-than-expected Eurozone's unemployment report and upbeat manufacturing PMI figures. The economy’s Markit final manufacturing Purchasing Managers' Index for October rose to 53.7, in line estimates and its highest reading since January 2014, while the unemployment rate fell to 9.8 percent in October from a revised 9.9 percent in September. The positive reports will cheer policymakers at the European Central Bank, who are likely to announce an extension to their asset purchase programme at next week's meet. The European currency trades 0.34 percent up at 1.0623, pulling away from a low of 1.0552 hit on Wednesday, its lowest since Nov. 25. FxWirePro's Hourly Euro Strength Index stood at 82.82 (Slightly Bullish) by 1000 GMT. The intraday trend is slightly bullish as long as 1.0560 holds. On the higher side, the major resistance is around 1.0685 and any violation above will take the pair to next level till 1.0755/1.08150.
USD/JPY: The dollar recovered after declining below the 114.00 handle on profit-taking, as a rise in the U.S. bond yields and growing expectations of imminent U.S. interest rate hike by the Federal Reserve boosted sentiment around the greenback. The major initially rose to a 9-1/2 month high as a rally in crude oil prices and upbeat Chinese manufacturing data triggered a fresh bout of risk-on sentiment. The major trades 0.1 percent down at 114.29, after rising to an early high of 114.82, its highest since mid-Feb. FxWirePro's Hourly Yen Strength Index stood at -70.72 (Bearish) by 1000 GMT. The major resistance is around 115 and a break above targets 115.52 (161.8% retracement of 113.89 and 112.05)/116. On the lower side, minor support is around 113.80 (resistance turned into support) and any break below targets 112.65 (61.8% retracement of 111.35 and 114.82)/112.
GBP/USD: Sterling rose to more than 2-week high above the 1.2600 handle, as investors reduced short positions on the British currency. Investors seem to have ignored downbeat Markit's Manufacturing Purchasing Managers' Index figures, which came in at 53.4, missing estimates of 54.5, which indicated that Britain's factory output weakened slightly in the month of November. Sterling trades 0.9 percent up at 1.2621, having touched an early high of 1.2627, its highest since Nov. 11. FxWirePro's Hourly Sterling Strength Index stood at 187.09 (Highly Bullish) by 1100 GMT. The temporary top formed at 1.2675 (Nov 11th high) will be acting as major trend reversal level and any break above will take the pair till 1.2745/1.2800. On the lower side, any break below 1.2380 will drag the pair down till 1.2350/1.2300. Against the euro, the pound trades 0.6 percent up at 84.10 pence, having hit a high of 84.04 pence earlier in the day, its strongest since Sep. 7.
USD/CHF: The Swiss franc edged up, after hitting a 9-month low in the previous session, as rising U.S treasury yields and upbeat U.S. economic data boosted the greenback across the board. The dollar trades 0.37 percent lower at 1.0126, having touched a high of 1.0204 on Wednesday, its strongest since early Feb. FxWirePro's Hourly Swiss Franc Strength Index stood at -25.06 (Neutral) by 1100 GMT. The Swiss currency was provided some support after data showed that Switzerland's October retail sales stood at -0.5 percent, beating expectations of -2.0 percent, while Manufacturing Purchasing Managers Index rose to 54.5 in November from 53.3 in the prior month. On the lower side, any break below 1.0110 will drag the pair down till 1.0074/1.00385 (23.6% retracement of 0.95432 and 1.01915)/0.9990. The major immediate resistance is around 1.02260 and any violation above will take it to 1.0300/1.0350.
AUD/USD: The Australian dollar trimmed stronger-than-expected Chinese manufacturing PMI-led recovery gains, as growing expectations of Fed rate-hike actions at its December meeting and beyond, continued to underpin the greenback. The major was also supported by higher oil prices and upbeat domestic manufacturing activity report, which helped it to rise to an intra-day high of 0.7419. The Aussie trades flat at 0.7386, having hit a low of 0.7374 in the previous session, it’s weakest since Nov. 25. FxWirePro's Hourly Aussie Strength Index stood at -110.33 (Highly Bearish) by 1100 GMT. On the higher side minor resistance is around 0.7435 (5- day MA) and any break above will take the pair till 0.7500/0.7530 (21- day MA). The major support is around 0.7435 (trend line joining 0.7300 and 0.7362) and a break below will drag it till 0.7380/0.73500.
NZD/USD: The New Zealand dollar weakened as increasing expectations of U.S. interest rate hike in December and rising U.S. Treasury yields strengthened the bid tone around the greenback. However, higher oil prices and better-than-expected China's manufacturing PMI limited losses. The Kiwi trades flat at 0.7082, having hit a 3-week high of 0.7169 in the previous session, its highest since Nov. 11 FxWirePro's Hourly Kiwi Strength Index was at -102.87 (Highly Bearish) by 1100 GMT. Immediate resistance is located at 0.7136 (21-DMA), a break above could take it near 0.7200. On the downside, support is seen at 0.7030, a break below could drag it near 0.7000.
Equities Recap
European shares declined as renewed concerns over the Italian referendum on Sunday and its implications on the banking sector weighed on market sentiment.
The pan-European STOXX 600 index decreased 0.55 percent at 340.13 points, while the FTSEurofirst 300 index shed 0.67 percent at 1,341.84 points.
Britain's FTSE 100 trades 0.48 percent down at 6,750.92 points, while mid-cap FTSE 250 dropped 0.27 percent at 17,497.68 points.
Germany's DAX fell 0.65 percent at 10,571.10 points; France's CAC 40 trades 0.5 percent lower at 4,556.27 points.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, boosted by better-than-expected Chinese manufacturing data.
Tokyo's Nikkei rallied 1.12 percent to 18,513.12 points, Australia's S&P/ASX 200 index rose 0.95 percent to 5,492.00 points and South Korea's KOSPI edged up 0.01 percent at 1,983.75 points.
Shanghai composite index gained 0.7 percent at 3,273.31 points, while CSI300 index advanced 0.8 percent at 3,565.04 points. Hong Kong’s Hang Seng added 0.39 percent at 22,878.23 points.
Commodities Recap
Crude oil prices held gains near the $50 a barrel mark after OPEC and Russia agreed to restrain production, although analysts warned of other producers were unlikely to restrict supply. International benchmark Brent crude was 1.1 percent up at $51.94 per barrel by 0946 GMT, after rising to hit a 6-week high of $52.70 earlier in the session. U.S. West Texas Intermediate crude rose 1.06 at $49.48 a barrel, having touched an early high of $50.21, its highest since Oct. 25.
Gold prices slumped, having touched a near 10-month low in early trade as the dollar index strengthened on growing expectations of an imminent U.S. interest rate hike. Spot gold was down 0.3 percent at $1,169.17 an ounce by 0956 GMT, having hit its lowest since Feb. 5 at $1,162.04 earlier in the session. U.S. gold futures rose about 0.3 percent to $1,173.80 per ounce.
Treasuries Recap
The United States’ 10-year Treasury yields climbed 4-1/2 basis points to 2.41 percent post-OPEC agreement, hitting highest since July 2015. Markets now await a flurry of data on Thursday, highlighted by jobless claims, construction spending, ISM manufacturing and vehicle sales releases, though likely looking ahead to the November employment report on Friday.
The UK 10-year gilt yields drew nearer to 1.50 pct mark, a level last observed in May this year. We continue to foresee that the 10-year gilt yields will increase towards 1.50 percent multi-day and then 1.60 percent. The yield on the benchmark 10-year gilts rose 3 basis points to 1.45 percent, the super-long 40-year bond yield climbed 4 basis points to 1.88 percent and the yield on short-term 2-year bounced 1/2 basis point to 0.13 percent.
The German bunds slumped following current rout in U.S. Treasuries as OPEC agreed to lower production at the ministerial gathering held in Vienna. The yield on the benchmark 10-year bond rose 2-1/2 basis points to 0.30 percent, the yield on long-term 30-year note jumped 3-1/2 basis points to 0.98 percent and the yield on short-term 3-year bond inched 1/2 basis point to -0.73 percent.
The Japanese government bonds slumped as investors moved away from the safe-haven buying amid rising crude oil prices that lifted inflation expectations. The benchmark 10-year bond yield rose 2 basis points to 0.03 percent, the yield on long-term 30-year note also climbed 2 basis points to 0.59 percent and the yield on short-term 2-year note bounced 1/2 basis point to -0.15 percent.
The New Zealand government bonds closed slightly higher as investors covered previous short positions at the end of the trading session. The yield on the benchmark 10-year bond closed 1/2 basis point lower at 3.22 percent, the yield on 7-year note dipped nearly 1 basis point to 2.82 percent and the yield on 5-year note also slid nearly 1 basis point to 2.21 percent.
The Australian 10-year bond yields hit highest since December last year after OPEC nations agreed to their first production cut in eight years at Vienna. The yield on the benchmark 10-year Treasury note rose 7 basis points to 2.81 percent, the yield on the 15-year note climbed 7-1/2 basis points to 3.22 percent and the yield on short-term 2-year inched 3 basis points to 1.87 percent.
