Market Roundup
- GBP/USD -0.9%, USD/JPY -0.3%, EUR/USD -0.5%
- DXY +0.26%, DAX -0.55%, Brent +0.15%, Iron +7.2%, Gold +0.45%
- Sunday Times said UK ministers expect UK Supreme Court ruling on Article 50 Jan 23
- Spokeswoman for British PM May says talk of hard Brexit is speculation
- The UK set to choose sharp break from European Open – Sunday/New York Times
- UK’s May to urge national unity amid reports of “hard Brexit”
- UK likely to leave single market unless May performs a volte face –M.Wolf FT
- Trump says Brexit to be a great thing, wants quick trade deal with the UK
- BOJ offers brighter view on regional Japan economies
- Baker McKenzie - UK M&A to drop sharply in ’17 as investors await Brexit clarity
- CFTC IMM CTA – Specs cut USD longs latest wk, EUR shorts 65.8k smallest since Jun
- China CASS Xiao - Should stop intervening in FX and let CNY float – China SJ
- S. Korea Vice FinMin Choi – Watching FX volatility closely
- ESM Regling – Brexit bigger problem for the UK than rest of Europe
- SNB ViceChair Zurbruegg – Negative rates key for monetary policy
- Zurbruegg negative rates will help head off excessive CHF appreciation - NZZ am Sonntag
Economic Data Ahead
- (1600 ET/2100 GMT) The New Zealand Institute of Economic Research (NZIER) will report its Business Confidence for the fourth quarter. The indicator came in at 26 percent in the prior quarter.
Key Events Ahead
- (1330 ET/1830 GMT) Bank of England Governor Mark Carney's speech at London School of Economics
FX Beat
DXY: The dollar gained versus most of its major peers, as investors eye U.S. President-elect Donald Trump's likely economic policies after he takes office on Friday. The greenback against a basket of currencies traded 0.4 percent up at 101.58, retreating from a low of 100.72 hit last week, it’s weakest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at 24.17 (Neutral) by 1100 GMT.
EUR/USD: The euro declined below the 1.0600 handle, halting its three-day winning streak, weakened by a fresh bout of greenback buying interest. Markets seem to have ignored Eurozone's mixed trade balance figures and European Central Bank Governing Council member Francois Villeroy comments, as the focus remains on Thursday's ECB monetary policy meeting. The European currency trades 0.4 percent lower at 1.0592, having touched a peak of 1.0684 last week, its highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at -51.76 (Bullish) by 1000 GMT. On the higher side, the pair should break above 1.06800 for further bullishness till 1.0798 (Dec 5 High)/1.08730 (Dec 8 High). The major support is around 200- HMA at 1.05600 and any violation below will drag it down till 1.0518 (20- day SMA)/1.04800/1.04500 (Jan 11 Low).
USD/JPY: The dollar retreated after declining over 1-month low, as renewed concerns of a ‘hard Brexit’ triggered a fresh wave of risk-aversion, strengthening the Japanese yen's safe-haven demand. The pair trades 0.15 percent lower at 114.24, after slumping as low as 113.62 earlier in the session, it’s lowest since Dec. 8. FxWirePro's Hourly Yen Strength Index stood at 49.58 (Neutral) by 1000 GMT. The major resistance is around 115.29 (30- day EMA) and any break above will take the pair till 116.75 (61.8% retracement of 118.61 and 113.75) /117.53 (Jan 9 High) /118. On the lower side, minor support is around 113.10 (Dec 12 low) and any break below targets 112.85/112.
GBP/USD: Sterling attempted a minor recovery, after declining to a 3-month low below the 1.2000 handle on expectations that PM May speech scheduled on Tuesday will trigger fresh signal of a Hard Brexit. Moreover, the recovery appears fragile as this week’s U.K. Supreme Court hearing on the Article 50 challenge, where the government is widely expected to lose continues to weigh on market sentiment. Sterling trades 1.1 percent lower at 1.2053, having hit a low of 1.1987 earlier in the day, its lowest since Oct. 7. FxWirePro's Hourly Sterling Strength Index stood at -63.88 (Bearish) by 1000 GMT. Any close above 1.2220 will take the pair to next level till 1.2328 (30- day EMA)/ 1.24325 (Jan 5 High). On the lower side, the near-term support stands at 1.1980 and any break below will drag it down till 1.19048 Brexit low.
USD/CHF: The Swiss franc declined, as the greenback strengthened on the back of expectations that Trump's policies would boost inflation, combined with prospects of three Fed interest rates hikes. The dollar trades 0.4 percent up at 1.0125, hovering away from a low of 1.0042 hit on Friday, its lowest since Dec. 8. FxWirePro's Hourly Swiss Franc Strength Index stood at 41.94 (Neutral) by 1000 GMT. The pair should close below 1.0330 for further bearishness to continue and any break below 1.0033 level will drag the pair down till 1.0000 (psychological support) /0.9945 (50% retracement of 0.9550 and 1.0344). On the higher side, near term resistance is around 1.0150 and any break above 1.0150 will take it till 1.0175 (61.8% retracement of 1.0248 and 1.00561)/1.0200/1.0250 (Jan 11 High).
AUD/USD: The Australian dollar tumbled below the 0.7500 handle, as a fresh bout of risk aversion weakened the bid tone around the Aussie. Moreover, subdued trading activity in commodity prices and global political uncertainties weighed on market sentiment. The Aussie trades 0.3 percent down at 0.7469, having hit a high of 0.7518 last week, it’s highest since Dec. 14. FxWirePro's Hourly Aussie Strength Index stood at 55.64 (Bullish) by 1000 GMT. On the higher side, any close above 0.7500 (200- day MA) will take it to next level till 0.7545 (61.8% retracement of 0.7778 and 0.71599)/0.7600. The minor support is around 0.7435 (89-day EMA) and break below will drag it till 0.7400 (60- day EMA)/0.7340 (30- day EMA).
NZD/USD: The New Zealand reversed gains after rising to a fresh 1-month high, as investors seemed to trim some bearish U.S. dollar bets ahead of the President-elect Donald Trump's inauguration later in the week. The Kiwi trades 0.6 percent down at 0.7085, pulling away from a high of 0.7147 hit earlier in the day, it’s strongest since Dec. 14. FxWirePro's Hourly Kiwi Strength Index was at 58.79 (Bullish) by 1100 GMT. Immediate resistance is located at 0.7147 (Session High), a break above could take it till 0.7200. On the downside, support is seen at 0.7056 (7-DMA), a break below could drag it lower 0.7050.
Equities Recap
European shares declined, weighed down by losses among financial stocks, while uncertainty over the terms of Britain's exit from the European Union dragged sterling to a 3-month low.
The pan-European STOXX 600 index decreased 0.58 percent to 363.81 points, while the FTSEurofirst 300 index slumped 0.6 percent to 1,438.07 points.
Britain's FTSE 100 trades flat at 7,337.67 points, while mid-cap FTSE 250 tumbled 0.10 percent at 18,353.83 points.
Germany's DAX declined 0.56 percent at 11,563.58 points; France's CAC 40 trades 0.6 percent lower at 4,891.70 points.
Tokyo's Nikkei fell 1.00 percent to 19,095.24 points, Australia's S&P/ASX 200 index rose 0.42 percent to 5,745.20 points and South Korea's KOSPI fell 0.6 percent to 2,064.17 points.
Shanghai composite index tumbled 0.3 percent at 3,103.43 points, while CSI300 index ended flat 0.1 percent at 3,319.45 points. Hong Kong’s Hang Seng shed 1.0 percent at 22,718.15 points.
Commodities Recap
Crude oil prices steadied after declining in the previous session as markets doubt that OPEC and other producers would fully implement crude output cuts. International benchmark Brent crude was trading at $55.60 per barrel by 0944 GMT, having declined to $53.57 last week, it’s lowest since Dec. 15. U.S. West Texas Intermediate crude fell 0.1 percent at $52.47 a barrel, having hit a low of $50.69 on Nov 11.
Gold prices advanced, extending gains for the sixth straight day, as concerns over Britain's exit from the European Union and U.S. policy uncertainty ahead of President-elect Donald Trump's inauguration weighed on investor sentiment. Spot gold rose 0.4 percent to $1,202.05 per ounce by 0949 GMT, having hit a high of $1,208.41 earlier in the session, its strongest since Nov. 23. U.S. gold futures were up 0.6 percent at $1,203.40 per ounce.
Treasuries Recap
The UK gilts climbed as fears mounted of a hard Brexit and in the run up to the United Kingdom Prime Minister Theresa May’s speech, scheduled for Tuesday. The yield on the benchmark 10-year gilts, fell 3-1/2 basis points to 1.33 percent, the super-long 30-year bond yield also plunged 2-1/2 basis points to 2.00 percent and the yield on short-term 2-year slid 1 basis point to 0.17 percent.
The German bunds gained, following renewed fears of a hard Brexit and in the run up to the United Kingdom Prime Minister Theresa May’s speech, scheduled for Tuesday. The yield on the benchmark 10-year bond, fell 2 basis points to 0.32 percent, the long-term 30-year bond yields also plunged 1-1/2 basis points to 1.07 percent and the yield on short-term 2-year bond barely slid 2-1/2 basis points to -0.74 percent.
The Japanese government bonds traded modestly lower following higher-than-expected producer price inflation data amid a relatively subdued trading session as U.S. markets remain closed on account of 'Martin Luther King Day'. The benchmark 10-year bond yield, rose 1/2 basis point to 0.05 percent, the long-term 30-year bond yields rose 1 basis point to 0.74 percent and the yield on short-term 2-year note almost remained flat at -0.21 percent.
The New Zealand government bonds closed modestly higher after recent economic data showed that the country’s food prices fell in December ahead of the fourth-quarter consumer inflation data, which is scheduled for release next week. The yield on the benchmark 10-year bond, ended 1 basis point lower at 3.15 percent, the yield on 7-year note also closed down 1 basis point to 2.82 percent and the yield on the short-term 2-year note moved down 1 basis point to 2.20 percent.
Australian bonds traded narrowly mixed in thin trading activity during a relatively quiet session that witnessed data of little significance. The 10-yield on the benchmark 10-year Treasury note, hovered around 2.71 percent, the yield on 15-year note remained steady at 3.13 percent and the yield on short-term 2-year moved down 1/2 basis point to 1.86 percent.
