Market Roundup
- USD/JPY +0.55%, EUR/USD -0.10%, GBP/USD +0.2%
- DXY +0.11%, DAX -0.06%, Brent +0.6%, Iron -2.6%
- BoE Inflation expectations rise to 2.8% for 2016 vs 2.2% in Aug
- S. Korea Parliament votes to impeach President park
- Switzerland Nov Jobless unadjusted vs 3.2% previous
- Switzerland Nov Jobless adjusted vs 3.3% previous, 3.3% expected
- Germany Oct Trade Balance EUR 20.5 bln vs 21.3 bln previous, 21.5 bln expected
- UK Oct Construction o/p vol +0.7% y/y vs 0.2% previous, -0.1% expected
- UK Oct Trade Balance –GBP9.711 bln. vs –13.83 bln previous, -11.8 bln expected
- Japan FinMin Aso – To compile third extra budget for current FY
- China SAFE – Cross-border capital flow stable – Xinhua
- China Nov CPI +0.1% m/m, +2.3% y/y, +0.1% and +2.2% eyed, y/y
Economic Data Ahead
- (1000 ET/1500 GMT) The University of Michigan is likely to report that U.S. preliminary consumer sentiment index rose to 94.5 in December, compared to a final reading of 93.8 in November.
- (1030 ET/1500 GMT) The U.S. Census Bureau is likely to report that wholesale inventories declined 0.4 percent in October after posting a similar drop in September.
- (1000 ET/1500 GMT) The U.S. Commerce Department is likely to show that sales at wholesalers rose by 0.5 percent in October from 0.2 percent in the prior month.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0645 ET/1145 GMT) FedTrade ops 30-year Ginnie Mae max $1.500 bln
FX Beat
DXY: The dollar advanced versus the Japanese yen on growing expectations of faster Federal Reserve rate-tightening cycle, beyond December meeting. The greenback against a basket of currencies traded 0.1 percent higher at 101.25, after declining as low as 99.43 on Thursday, its lowest since Nov. 14. FxWirePro's Hourly Dollar Strength Index stood at 48.26 (Neutral) by 1100 GMT.
EUR/USD: The euro steadied after declining to a 4-day low earlier in the session on ECB's decision to extend its asset-buying programme and reduced monthly purchases of bonds to €60 billion from €80 billion starting from April. Markets now shift their attention towards next week's Federal Reserve policy meeting, where it is expected to hike interest rate and provide hints of further monetary tightening in 2017. The European currency trades up at 1.0616, recovering from an early low of 1.0589. FxWirePro's Hourly Euro Strength Index stood at -94.26 (Slightly Bearish) by 1000GMT. Technically immediate resistance is around 1.0700 (5- day MA) and any break above will take the pair till 1.08500/1.08700. On the lower side, major intraday support is around 1.0580 and an indicative break below will drag it down till 1.0550/1.0500 level.
USD/JPY: The dollar rose, extending post-ECB gains, as investors expect the Federal Reserve to hike interest rates next week. The major also received support from persistent risk-on sentiment across the financial markets triggered by upbeat Chinese CPI figures, which eased concerns over China's slowdown. The pair trades 0.4 percent higher at 114.53, drifting towards a 10-month high of 114.82 touched last week. FxWirePro's Hourly Yen Strength Index stood at -26.56 (Neutral) by 1100 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 113.09 (daily Tenekn-Sen) and any break below targets 112.65/112.
GBP/USD: Sterling rose above the 1.2600 handle after data showed Britain's trade deficit narrowed more than expected in October. A separate survey showed inflation expectations over the next 12 months rose to 2.8 percent in November from 2.2 percent in the previous survey in August. Britons expect a rise in inflation over the coming years after a sharp fall in the value of sterling and on the likelihood of interest rates hike. Sterling trades 0.2 percent up at 1.2610, having hit an intra-day high of 1.2620 following the data release. FxWirePro's Hourly Sterling Strength Index stood at 23.17 (Neutral) by 1100 GMT. The temporary top formed at 1.27750 (Dec 7th high) will be acting as major trend reversal level. Any break above will take the pair till 1.2800/ 1.2845. On the lower side, any break below 1.2520 will drag it down till 1.2438/ 1.2380. Against the euro, the pound trades 0.3 percent up at 84.02 pence, hovering away from a low of 85.71 pence hit on Thursday, it’s weakest since Nov. 30.
USD/CHF: The Swiss franc edged down as the greenback gained across the board on growing expectations of U.S. interest rate hike next week. The major trades 0.08 percent up at 1.0166, hovering towards a 9-month high of 1.0204 hit on Nov. 30. FxWirePro's Hourly Swiss Franc Strength Index stood at -72.76 (Bearish) by 1100 GMT. Data released earlier showed Switzerland's unemployment rate seasonally adjusted stood unchanged at 3.3 percent in November. Trend continuation is expected to happen only if the pair breaks above 1.0205 and any break above that level will take it till 1.02600/1.03027. On the lower side, the pair should break below 1.0150 for further selling and any violation below will take it till 1.010/1.0050. The further downside can be seen below 1.0020 will drag the pair till 0.99 (161.8% projection).
AUD/USD: The Australian dollar gained, reversing almost all of its previous session losses, boosted by prevalent risk-on market sentiment. The Aussie trades 0.3 percent up at 0.7487, pulling away from an intra-day low of 0.7442 and now attempts to regain the 0.7500 handle. FxWirePro's Hourly Aussie Strength Index stood at 127.94 (Highly Bullish) by 1100 GMT. On the higher side, major resistance is around 0.7504 (34- 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. The short-term weakness is below 0.7300.
NZD/USD: The New Zealand dollar consolidated within a narrow range, as investors refrained from placing big bets ahead of Federal Reserve Policy meeting next week. On Thursday, the major rose to a near 1-month high, after RBNZ Governor Graeme Wheeler offered less dovish economic outlook and reduced prospects of any additional monetary easing in the near future. The Kiwi trades flat at 0.7175, hovering just below the 0.7200 handle. FxWirePro's Hourly Kiwi Strength Index was at -22.78 (Neutral) by 1100 GMT. Immediate resistance is located at 0.7200, a break above could take it near 0.7248 (Oct 19- High). On the downside, support is seen at 0.7128 (10-DMA), a break below could drag it till 0.7100.
Equities Recap
World shares stood firm near 16-month high, while the European stocks hit 11-month high following the European Central Bank’s policy decision to extend its stimulus programme.
The MSCI World index was up 0.1 percent and on track for a gain of 2.7 percent for the week. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent but was set for a weekly gain of 2 percent.
The pan-European STOXX 600 index increased 0.14 percent at 352.46 points, while the FTSEurofirst 300 index added 0.15 percent at 1,392.75 points.
Britain's FTSE 100 trades 0.10 percent up at 6,938.88 points, while mid-cap FTSE 250 dropped 0.05 percent at 17,673.55 points.
Germany's DAX declined 0.15 percent at 11,164.02 points; France's CAC 40 trades 0.17 percent higher at 4,743.41 points.
Tokyo's Nikkei rallied 1.23 percent to 18,996.37 points, Australia's S&P/ASX 200 index gained 0.28 percent to 5,559.40 points and South Korea's KOSPI fell 0.31 percent at 2,024.69 points.
Shanghai composite index rose 0.5 percent at 3,232.88 points, while CSI300 index advanced 0.7 percent at 3,493.70 points. Hong Kong’s Hang Seng shed 0.4 percent at 22,760.98 points.
Commodities Recap
Crude oil prices rose, extending gains for a second straight session, as investors expect the non-OPEC producers would agree to cut output after a cartel agreement to restrain production levels. Global benchmark Brent crude was 0.4 percent up at $54.15 per barrel by 0932 GMT, recovering from an 8-day low of $52.79 hit the day before. U.S. West Texas Intermediate crude rose 0.37 percent at $51.12 a barrel, having touched a low of $49.64 on Thursday, its lowest since Dec. 1. Both contracts have lost nearly 1 percent so far this week.
Gold prices were struck within a narrow range and on track for a fifth straight weekly decline, as a stronger U.S. dollar and expectations of a Federal Reserve rate hike next week, dampened the metal's safe-haven appeal. Spot gold was little changed at $1,170.92 an ounce by 0940 GMT and was down about 0.6 percent for the week. U.S. gold futures shed 0.1 percent to $1,171.50 per ounce.
Treasuries Recap
The U.S. Treasuries saw selling across the curve following the ECB's decision to taper monthly bond purchases. Markets will remain focused on the Federal Reserve last monetary policy decision for 2016, which is scheduled to be released next week. The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.42 percent, the yield on long-term 30-year Treasury climbed 4-1/2 basis points to 3.13 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 1.12 percent.
The UK gilts witnessed a heavy sell-off as the Bank of England (BoE) in its latest inflation survey raised its expectations for inflation and interest rates. The yield on the benchmark 10-year gilts rose 6 basis points to 1.44 percent, the super-long 40-year bond yield climbed 5-1/2 basis points to 1.90 percent and the yield on short-term 2-year bounced 4 basis points to 0.14 percent.
The German bunds traded modestly firmer after recent economic data showed that the country’s trade surplus narrowed in October. Also, the European Central Bank announced yesterday that it will reduce the pace of monthly bond buying to 60 billion Euros from previous 80 billion, limited the fall in bond yields. The yield on the benchmark 10-year bond fell 1-1/2 basis points to 0.36 percent and the yield on short-term 2-year bond dipped 1 basis point to -0.74 percent.
The Japanese government bonds were pushed lower across the curve 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 0.058 percent, the yield on long-term 30-year note jumped 14 basis points to 0.70 percent and the yield on short-term 3-year note climbed 1/2 basis point to -0.18 percent.
The New Zealand government bonds closed mixed as investors await next week’s third-quarter gross domestic product (GDP) data. The yield on the benchmark 10-year bond closed 1 basis point lower at 3.29 percent, the yield on 7-year note ended down nearly 1 basis point to 2.86 percent and the yield on short-term 2-year note jumped 5 basis points to 2.20 percent.
The Australian government bonds witnessed a heavy sell-off on last day of the week as investors await the Federal Reserve’s next week monetary policy decision. The yield on the benchmark 10-year Treasury note rose 8-1/2 basis points to 2.83 percent, the yield on 15-year note jumped 9 basis points to 3.29 percent and the yield on short-term 2-year bounced 3-1/2 basis points to 1.86 percent.
