Market Roundup
- USD/JPY +0.7%, GBP/USD -0.85%, EUR/USD -0.33%
- DXY +0.23%, DAX +0.12%, Brent-1.33%, Iron -1.24%, Gold -0.35%
- Germany Dec CPI final 1.7% vs 1.7% previous, 1.7% expected
- Germany Dec HICP final 1.7% vs 1.75 previous, 1.7% expected
- UK Nov Average earnings 3month y/y 2.85 vs revised 2.6% previous, 2.6% expected
- UK Nov ILO rate 4.8% vs 4.8% previous, 4.8% expected
- EZ Dec Final CPI 1.1% vs 1.1% previous, 1.1% expected
- Japan Cab Sec Suga – To work to minimize Brexit impact on Japanese firms
- Japan seen missing debt-reduction target for fiscal ’18 – Nikkei
- Toyota forecast – US car market seen topping 17 mln in ’17 – Nikkei
- US companies are paring investment plans in China – ACC China survey, WSJ
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. consumer price index likely increased 0.3 percent in December after rising 0.2 percent in November, while in the 12 months through December, the CPI is expected to have risen 2.1 percent. Excluding food and energy, the core CPI probably rose 0.2 percent after posting a similar gain in November.
- (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.6 percent in December, after declining 0.4 in the prior month.
- (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up to 75.3 percent in December from 75.0 percent in November.
- (1000 ET/1500 GMT) The National Association of Home Builders (NAHB) is expected to report that U.S. Housing Market Index rose to 70 in January, after posting a similar increase in December.
- (1000 ET/1500 GMT) Bank of Canada will meet to announce its benchmark interest rate, where it is expected to hold interest rates at 0.50 percent.
- (1400 ET/1900 GMT) The Fed issues its Beige Book, a summary of anecdotes on the health of the economy.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- (1630 ET/2130 GMT) New Zealand will release its Business PMI index for the month of January. The index stood at 54.4 in the previous month.
- (1645 ET/2145 GMT) The Statistics New Zealand releases building permits seasonally adjusted data for the month of November. The index posted a rise of 2.6 percent in October.
- (1850 ET/2350 GMT) Japan's Ministry of Finance will report foreign bond investment for the week ending January 13.
- (1850 ET/2350 GMT) Japan's Ministry of Finance reports foreign investment in domestic stocks for the week ending January 13.
Key Events Ahead
- (0900 ET/1400 GMT) Dallas Fed President Robert Kaplan participates in a panel before the University of Texas at Austin 2017 Business Forecast.
- (0945 ET/1445 GMT) FedTrade operation 30-year Fannie Mae/ Freddie Mac max $2.125 bln
- (1100 ET/1600 GMT) Federal Reserve Bank of Minneapolis President Neel Kashkari will discuss "Economic Opportunity and Inclusive Growth" before the Minneapolis Urban League.
- (1115 ET/1615 GMT) Bank of Canada Governor Stephen S. Poloz's presser.
- (1500 ET/2000 GMT) Federal Reserve Chair Janet Yellen speaks on monetary policy before the Commonwealth Club, in San Francisco, California.
FX Beat
DXY: The dollar retreated from multi-week lows versus its major peers, as markets eagerly awaited Fed Yellen's speech for further insights on the U.S. monetary policy outlook this year. The greenback against a basket of currencies traded 0.4 percent up at 100.67, having hit a low of 100.26 on Tuesday, it’s lowest since Dec. 8. FxWirePro's Hourly Dollar Strength Index stood at -65.94 (Neutral) by 1100 GMT.
EUR/USD: The euro eased from a 6-week high hit above the 1.0700 handle, as the greenback recovered on the back of rising U.S. Treasury yields. Markets seem to have ignored upbeat Eurozone final CPI print, which rose at an annualized rate of 1.1 percent, while core CPI came in at 0.9 percent, both in line with the flash estimates. The European currency trades 0.3 percent lower at 1.0682, having touched a high of 1.0719 in the previous session, it’s highest since Dec 8. FxWirePro's Hourly Euro Strength Index stood at -26.72 (Neutral) by 1000 GMT. The bearish AB=CD pattern in the pair is expected to complete at 1.07345 level. Any break above 1.07350 will take it to next level till 1.07500/1.0800 level. On the lower side, support is at 1.06500 and any break below will drag it till 1.06090/1.05790 (7- day MA)/1.05190 (20- day MA).
USD/JPY: The dollar rebounded, reversing most of its previous session losses, as reviving U.S. Treasury bond yields and improving investor risk appetite boosted the bid tone around the greenback. The major rose 0.7 percent to trade higher at 113.43, retreating from a low of 112.60 hit in the previous session, it’s lowest since Nov. 30. FxWirePro's Hourly Yen Strength Index stood at 89.17 (Slightly Bullish) by 1000 GMT. The major resistance is around 114.01 (23.6% retracement of 118.61 and 112.61) and any break above will take the pair till 115.05 (30- day EMA). On the lower side, minor support is around 112.85 (60- day EMA) and any break below targets 112.
GBP/USD: Sterling declined below the 1.2300 handle, despite better-than-expected Britain’s wages and labor data, as the greenback recovered across the board. The economy's jobless rate stayed unchanged at 4.8% in November, while the claimant count dropped sharply by 10.1k in December from 1.3k claim in the month before. Sterling trades 0.8 percent lower at 1.2308, after rising as high as 1.2416 on Tuesday, it’s highest since Jan. 6. FxWirePro's Hourly Sterling Strength Index stood at 110.77 (Highly Bullish) by 1000 GMT. The upside remains capped by 1.2435 (Jan 6 high) and any break above will take the pair till 1.2475 (61.8% retracement of 1.27780 and 1.19860). On the lower side, short term support stands at 1.2200 and any break below will drag it till 1.2080/1.2030/1.2000. Against the euro, the pound trades 0.7 percent down at 86.93 pence, having touched a high of 86.27 the day before, it’s strongest since early Jan.
USD/CHF: The Swiss franc edged down, hovering away from a 2-month high, as the dollar retreated from multi-week lows against its major peers. The major trades 0.1 percent higher at 1.0023, having hit a low of 0.9996 in the previous session, its lowest since Nov. 17. FxWirePro's Hourly Swiss Franc Strength Index stood at -5.00 (Neutral) by 1000 GMT. Any violation above 1.0055 will take the pair to next level till 1.00832 (61.8% retracement of 1.01364 and 0.99965)/1.01365 (Jan 16 High). On the lower side, any close below 1 confirms that jump from 0.9549 till 1.03435 got over and a decline till 0.9950/0.9820 is possible.
AUD/USD: The Australian dollar eased but held near 2-month highs, as the U.S. dollar rebounded ahead of Federal Reserve Chair Janet Yellen's speech. The greenback recovered on the back of rising U.S. Treasury bond yields, while weak sentiment around the commodity prices undermined the bid tone around the Aussie. The major trades 0.2 percent lower at 0.7549, after touching a peak of 0.7568 in the previous session, it’s strongest since Nov. 16. FxWirePro's Hourly Aussie Strength Index stood at 70.99 (Bullish) by 1100 GMT. On the higher side, any close above 0.7545 (61.8% retracement of0.7778 and 0.71599) will take the pair to next level till 0.7600/0.7645. The minor support is around 0.7440 (89-day EMA) and a break below will drag it till 0.7407 (60- day EMA)/0.7359 (30- day EMA).
NZD/USD: The New Zealand dollar fell below the 0.7200 handle, however, traded within the sight of a 1-month high hit the day before. Investors now await Federal Reserve Chair Janet Yellen's speech for further clues on the U.S. monetary policy outlook. The Kiwi trades 0.3 percent down at 0.7194, having hit a high of 0.7219 on Tuesday, it’s strongest since Dec. 14. FxWirePro's Hourly Kiwi Strength Index was at 134.78 (Highly Bullish) by 1100 GMT. Immediate resistance is located at 0.7240, a break above could take it till 0.7300. On the downside, support is seen at 0.7146 (5-DMA), a break below could drag it till 0.7100.
Equities Recap
European shares declined, dragged lower by media stocks, while the dollar recovered some ground ahead of Federal Reserve Chair Janet Yellen's speech.
The pan-European STOXX 600 index decreased 0.2 percent to 361.71 points, while the FTSEurofirst 300 index slumped 0.13 percent to 1,429.05 points.
Britain's FTSE 100 trades advanced 0.1 percent to 7,226.48 points, while mid-cap FTSE 250 tumbled 0.17 percent at 18,209.77 points.
Germany's DAX edged up 0.06 percent at 11,547.08 points; France's CAC 40 trades 0.5 percent lower at 4,836.04 points.
Tokyo's Nikkei rose 0.43 percent to 18,894.37 points, Australia's S&P/ASX 200 index lost 0.45 percent to 5,673.90 points and South Korea's KOSPI fell 0.0 percent to 2,070.54 points.
Shanghai composite index jumped 0.1 percent to 3,113.01 points, while CSI300 index gained 0.4 percent at 3,339.37 points. Hong Kong’s Hang Seng added 1.1 percent at 23,098.26 points.
Commodities Recap
Crude oil prices declined, extending previous session losses as expectations that U.S. producers would boost output weighed on market sentiment. International benchmark Brent crude was trading 0.9 percent lower at $54.95 per barrel by 0958 GMT, having hit a high of $56.92 in the previous session, its highest since Jan. 9. U.S. West Texas Intermediate crude fell 1.03 percent at $51.96 a barrel, hovering towards a low of $50.75 hit on Jan. 11.
Gold prices edged down from an 8-week high hit on Tuesday as the dollar rebounded from recent lows, ahead of Donald Trump's inauguration as U.S. president later in the week. Spot gold fell 0.2 percent to $1,214.37 per ounce by 1004 GMT, hovering away from a high of $1,218.72 touched in the previous session, its highest since Nov. 22. U.S. gold futures fell 0.1 percent to $1,212 per ounce.
Treasuries Recap
The U.S. Treasuries were pushed lower after the Governor of the Federal Reserve Bank of San Francisco John C. Williams remained optimistic in his speech Tuesday about the economic growth of the country. The yield on the benchmark 10-year Treasury rose 3 basis points to 2.36 percent, the super-long 30-year bond yield jumped nearly 3 basis points to 2.95 percent and the yield on short-term 2-year note moved higher by over 2-1/2 basis points to 1.17 percent.
The UK gilts sunk as the country’s labor market remained resilient with the economy losing fewer jobs than expected and wage growth picked up toward the end of 2016. The yield on the benchmark 10-year gilts, rose 1 basis point to 1.32 percent, the super-long 30-year bond yields also moved higher by over 1 basis point to 1.98 percent while the yield on short-term 2-year crawled 1 basis point to 0.19 percent.
The German bunds slumped as the country’s consumer inflation held steady at over 3-year high in December, adding to pressure in the money market. The yield on the benchmark 10-year bond, fell nearly 2 basis points to 0.32 percent, the long-term 30-year bond yields also plunged close to 2 basis points to 1.06 percent and the yield on short-term 2-year bond slid over 1/2 basis point to -0.72 percent
The Japanese government bonds traded nearly flat as investors remain sidelined in any big deal amid a lack of any major domestic events. The benchmark 10-year bond yield, hovered around 0.05 percent, the long-term 30-year bond yields stood flat at 0.74 percent and the yield on the 3-year note remained steady at -0.17 percent.
The New Zealand government bonds modestly rose as investors await the release of the fourth-quarter consumer price inflation data, scheduled to be released on Thursday. The yield on the benchmark 10-year bond, fell 1 basis point to 3.12 percent, the yield on 7-year note also edged lower 1 basis point to 2.81 percent and the yield on the short-term 2-year note moved down 1 basis point to 2.22 percent.
The Australian government bonds gained as investors remain keen to focus on the country’s employment report scheduled to be released on January 19. The yield on the benchmark 10-year Treasury note, fell 2-1/2 basis points to 2.68 percent, the yield on 15-year note plunged 3-1/2 basis points to 3.11 percent and the yield on short-term 2-year moved down 1 basis point to 1.85 percent.
