Market Roundup
- USD/JPY -0.12%, EUR/USD +0.01%, GBP/USD -0.35%
- DXY +0.11%, DAX -0.5%, Brent +0.33%, Iron +8.9%, Gold +0.05%
- Bund 10-year yield jumps 6bps to 0.273
- ECB seeks to lend out more bonds to avert market freeze
- ECB considers reducing fail charges, accepts new types of collateral
- ECB considers extending duration of loans
- ECB decision on bond lending will depend on what other changes it makes
- ECB bond decision might not be finalized in December
- Germany Nov Flash Manufacturing PMI 54.4 vs 55.0 previous, 54.8 expected
- Germany Nov Flash Service PMI 55.0 vs 54.2 previous, 54.0 expected
- EZ Nov Flash Manufacturing PMI 53.7 vs 53.5 previous, 53.3 expected
- EZ Nov Flash Service PMI 54.1 vs 5.8 previous, 53.0 expected
- Public holiday in Japan - Labour Thanksgiving Day
- UK’s Hammond to tackle budget deficit and inject dynamism into economy
Economic Data Ahead
- (0830 ET/1330 GMT) The number of Americans filing for unemployment benefits is likely to have increased by 15,000 to a seasonally adjusted 250,000 for the week ended Nov. 19 while continuing claims for the week ended Nov. 11 is expected to rise to 2.030 m from 1.977 m.
- (0830 ET/1330 GMT) The U.S. durable goods orders are expected to have increased 1.5 percent in October after declining 0.3 percent in September, while non-defense capital goods orders excluding aircraft are likely to have risen 0.2 percent after gaining 0.1 percent the prior month.
- (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of September. The index is likely to rise 0.5 percent, after gaining 0.7 percent in August.
- (0945 ET/1445 GMT) Financial firm Markit releases U.S. preliminary Manufacturing PMI for the month of November. The index is likely to stay unchanged at 53.4, after posting a similar final reading in the previous month.
- (1000 ET/1500 GMT) The University of Michigan is expected to report that the consumer sentiment index stood at 91.6 in November, unchanged from October's final reading.
- (1000 ET/1500 GMT) The U.S. new home sales are expected to have increased 0.3 percent to a seasonally adjusted annual rate of 593,000 units in October, after rising 3.1 percent in September.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending November 18.
- (1030 ET/1530 GMT) The Energy Information Administration (EIA) reports its Natural Gas Storage for the week ending November 18.
- N/A The Statistics New Zealand will release visitor arrivals report for the month of October. The indicator posted an annualized gain of 13.0 percent in the prior month.
Key Events Ahead
- (0730 ET/1230 GMT) United Kingdom Chancellor Hammond to deliver 2016 Autumn Statement
- (1400 ET/1900 GMT) The Federal Open Market Committee issues minutes of its November 1-2 policy meeting,
FX Beat
DXY: The dollar traded within narrow ranges versus it major peers, as markets cautiously awaited FOMC latest policy meeting minutes. The greenback against a basket of currencies was little changed at 101.03, hovering just below a 13-1/2 -year high of 101.48 hit on Friday. FxWirePro's Hourly Dollar Strength Index stood at -24.96 (Bias Neutral) by 1100 GMT.
EUR/USD: The euro declined, as the greenback traded near the 13 1/2-year peak hit last week, amid growing expectations of an interest rate hike in December. Markets seem to have ignored positive Markit PMI data, as the dollar continued to gain momentum across the board, tracking a minor recovery seen in the treasury yields. The major is likely to remain on the downside, weighed down by political risks in the coming months; from an Italian constitutional referendum in less than two weeks to French and German elections next year. The European currency trades 0.1 percent down at 1.0616, within the sight of a low of 1.0569 hit on Friday, its lowest since early Dec. FxWirePro's Hourly Euro Strength Index stood at 24.02 (Bias Neutral) by 1000 GMT. The pair faces strong trend line resistance at 1.06625 and any violation above will target 1.0750/1.0820. On the lower side, any break below 1.0580 will drag it till 1.05400 (161.8% retracement of 1.0580 and 1.06490)/1.05000 in the short term.
USD/JPY: The dollar consolidated below a near 6-month high of 111.36 hit on Monday, despite prevalent risk-on market profile. Traders were reluctant to take large positions, ahead of FOMC minutes from November 1-2 meeting, which could provide further insights on the strength of the U.S. economy and clues on an anticipated interest rate hike. According to CME FedWatch, markets are now price in around a 95 percent chance of a December Fed hike. The pair trades flat at 111.05, attempting to sustain gains above the 111.00 handle. FxWirePro's Hourly Yen Strength Index stood at -92.15 (Bias Slightly Bearish) by 1000 GMT. The major resistance is around 111.63 (161.8% retracement of 110.92 and 109.80) and a break above targets 112/112.60. On the lower side, minor support is around 110.38 (5- day MA) and any break below targets 109.40/108.85 (10- day MA).
GBP/USD: Sterling slipped below the 1.2400 handle ahead of a government budget statement, which is likely to deliver only marginal additional support for an economy facing more Brexit-based volatility in 2017. Moreover, greenback's bullish momentum against its major competitors also weakened the bid tone around the British currency. Sterling trades 0.36 percent down at 1.2378, having touched an intra-day low of 1.2367. FxWirePro's Hourly Sterling Strength Index stood at -116.79 (Bias Highly Bearish) by 1000 GMT. The short term trend is slightly bearish as long as resistance 1.2530 holds and any break above will take it to next level till 1.2600/1.2660. The pair should break below 1.2300 for further weakness, a decline till 1.2200/1.2140 is possible. Against the euro, the pound trades 0.2 percent down at 85.70 pence, after falling as low as 85.81 pence earlier in the session.
USD/CHF: The Swiss franc edged down against the dollar, amid subdued trading ahead of the U.S. Thanksgiving holiday. The major trades flat at 1.0110, within the sight of a high of 1.0134 hit in the previous session, its strongest level since Feb. FxWirePro's Hourly Swiss Franc Strength Index stood at -32.83 (Bias Neutral) by 1000 GMT. Markets focus now shifts towards U.S. durable goods orders and minutes from the Fed's November policy meeting for further momentum on the pair. The minor support is around 1.0090 and any break below will drag it down till 1.00670/1.0043 (7- day EMA). On the higher side , any break above 1.01350 will take it to next level till 1.0180/1.0220.
AUD/USD: The Australian dollar extended gains above the 0.7400 handle, supported by rising crude oil prices amid risk-on market sentiment. However, the upside remains capped, as a strong greenback, which traded near the 13-1/2-year peak hit last week, weighed on the major. The Aussie trades 0.3 percent higher at 0.7427, having hit an intra-day high of 0.7444 and well away from a 5-month trough of 0.7311 touched on Monday. FxWirePro's Hourly Aussie Strength Index stood at 103.73 (Bias Highly Bullish) by 1100 GMT. On the higher side, minor resistance is around 0.7487 (10- day MA) and any break above will take it till 0.7520/0.7580. The major support is around 0.73000 and break below will drag it till 0.7280/0.7250.
NZD/USD: The New Zealand dollar consolidated between a narrow range, as the dollar steadied near a recent 13-1/2-year peak, ahead of the U.S. Thanksgiving holiday. Markets cautiously await FOMC meeting minutes, U.S. durable goods orders, weekly jobless claims and new home sales data for further clues on the pair's direction. The Kiwi trades flat at 0.7064, hovering above the 0.7050 level. FxWirePro's Hourly Kiwi Strength Index was at 94.33 (Bias Slightly Bullish) by 0500 GMT. Immediate resistance is located at 0.7088 (9-EMA), a break above could take it over 0.7100. On the downside, support is seen at 0.7031 (Previous Session Low), a break below could drag it near 0.7000.
Equities Recap
European shares traded in a volatile market, as investors focused on the diverging path of U.S. and Eurozone monetary policy, ahead of Federal Open Market Committee latest policy meeting minutes.
The pan-European STOXX 600 index increased 0.08 percent at 341.28 points, while the FTSEurofirst 300 index added 0.13 percent at 1,345.88 points.
Britain's FTSE 100 trades 0.7 percent up at 6,868.91 points, while mid-cap FTSE 250 rose 0.32 percent at 17,735.09 points.
Germany's DAX eased 0.03 percent at 10,711.52 points; France's CAC 40 trades 0.08 percent higher at 4,552.11 points.
Australia's S&P/ASX 200 index jumped 1.35 percent to 5,486.60 points and South Korea's KOSPI gained 0.23 percent at 1,987.95 points.
Shanghai composite index declined 0.2 percent to 3,241.14 points, while CSI300 index added 0.2 percent at 3,474.73 points. Hong Kong’s Hang Seng ended flat at 22,676.69 points.
Commodities Recap
Crude oil prices edged up, as markets expect OPEC would agree to a crude oil production cut at a ministerial meeting at the end of this month. Global benchmark Brent crude was trading 0.12 percent higher at $49.06 per barrel by 0912 GMT, having hit a 3-week high of $49.93 the day before. U.S. West Texas Intermediate crude rose 0.21 percent at $47.98 a barrel, after rising as high as $49.17 in the previous session, its highest since Oct. 31.
Gold consolidated between a narrow range, as the U.S. dollar traded near 13-1/2 year highs, ahead of the Federal Reserve policy meeting latest policy meeting minutes release. Spot gold was little changed at $1,211.48 an ounce by 0919 GMT, having eased 0.15 percent in the previous session. U.S. gold futures rose 0.1 percent to $1,212.40 per ounce.
Treasuries Recap
The U.S. Treasuries were little changed as market look ahead to the minutes of the 1-2 November FOMC meeting, in an attempt to estimate the Fed's most likely policy step. The yield on the benchmark 10-year Treasury note hovered around 2.32 percent, the yield on long-term 30-year Treasury remained steady 3 percent and the yield on short-term 2-year note stood flat at 1.09 percent.
The UK gilts slumped ahead of Chancellor Philip Hammond's autumn statement, which is scheduled to be released today at 12:30 GMT. The yield on the benchmark 10-year gilts rose 2-1/2 basis points to 1.38 percent, the super-long 30-year bond yield jumped 3-1/2 basis points to 2.04 percent and the yield on short-term 2-year bounced 3 basis points to 0.17 percent.
German: The German bunds traded modestly firmer as investors remained cautious ahead of the 10-year auction. Also, lower than expected manufacturing PMI for November drove investors towards safe-haven buying. The yield on the benchmark 10-year bond fell 1 basis point to 0.21 percent, the yield on long-term 30-year note dipped 1/2 basis point to 0.86 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.74 percent.
The New Zealand government bonds slumped as investors moved away from the safe-haven buying after the Federal Reserve December rate hike probability finally reached 100 percent, boosting demand for riskier assets. The yield on the benchmark 10-year bond rose 5-1/2 basis points to 3.14 percent, the yield on 7-year note also ended 4 basis points higher to 2.77 percent and the yield on short-term 2-year note bounced 3-1/2 basis points to 2.13 percent.
The Australian government bonds slumped as investors moved away from the sage-haven buying following hawkish comments from the Reserve Bank of Australia Assistant Governor Christopher Kent. The yield on the benchmark 10-year Treasury note rose more than 6 basis points to 2.73 percent (highest since January this year), the yield on 15-year note jumped 4-1/2 basis points to 3.12 percent and the yield on short-term 3-year bounced 4 basis points to 1.93 percent.
