Market Roundup
- USD/JPY -0.2%, EUR/USD -0.18%, GBP/USD +0.2%
- DXY +0.08%, DAX -0.95%, Brent -0.85%, Iron +0.15%
- Switzerland Q3 GDP 1.3% y/y vs 2.0% previous, 1.8% expected
- EZ Oct Producer prices vs -1.5% previous, -1.0% expected
- UK Nov Construction PMI 52.8 vs 52.6 previous, 52.2 expected
- Turkey President Erdogan-people should convert FX into Gold and TRY
- Erdogan says no option but to keep cutting rates
- USD/TRY hits a new record high of 3.5525
- Russian CB Gov-next rate cut not probable before Q1 or Q2
- Japan seen cutting tax view in test for Abenomics – Nikkei
- Japan Nov monetary base +22.2% y/y to Y419.84 trln, record high
- Japan unions look to keep wage demands at ’16 levels – Nikkei
- CBA issues Y20 bln ’26 subordinated notes
- PBOC CNY fix 6.8794 vs USD, yesterday 6.8958
- HKMA – Yuan deposit see noticeable drop in first 3 weeks Nov
- Australia Oct retail sales +0.5% m/m, +0.3% eyed, Sept +0.6%
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of November. The report is likely to show 175,000 jobs were added compared with 161,000 jobs in October.
- (0830 ET/1330 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of November. The rate stood at 62.8 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. Labor Department is expected to report that unemployment rate remained steady at 4.9 percent in November.
- (0830 ET/1330 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in November after gaining 0.4 percent in the month before.
- (0830 ET/1330 GMT) The Statistics Canada releases employment report for the month November. The economy probably shed 20,000 jobs, after two months of strong gains, while the participation rate stood at 65.8 percent in the previous month.
- (0830 ET/1330 GMT) Canada's unemployment rate is expected to stay unchanged at 7 percent for the month of November.
- (0945 ET/1445 GMT) The NAPM-New York releases ISM-New York Index for the month of November. The index stood at 49.2 in the previous month.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (08 ET/1345 GMT) Federal Reserve Board Governor Lael Brainard speaks on "Fintech" before the "Financial Innovation: Online Lending to Households and Small Businesses" event hosted by the Federal Reserve Board.
- (1145 ET/1645 GMT) FedTrade operation 30-year Ginnie Mae max $1.500 bln
- (1230 ET/1730 GMT) Cleveland Fed President Loretta Mester gives introductory remarks before a luncheon at the "Innovation, Market Structure, and Financial Stability" conference hosted by the Treasury Department Office of Financial Research and the Federal Reserve Bank of Cleveland.
- (1300 ET/1800 GMT) Federal Reserve Board Governor Daniel Tarullo speaks on "Financial Regulation Since the Crisis" at the "Innovation, Market Structure, and Financial Stability" conference.
FX Beat
DXY: The dollar retreated from a 9-1/2 month high hit against the yen, as investors adjusted their positions ahead of the U.S. jobs report and Italy's constitutional referendum. The greenback against a basket of currencies trades flat at 100.95, pulling away from a low of 100.70 hit earlier in the session and was on track to lose nearly 0.7 percent this week. FxWirePro's Hourly Dollar Strength Index stood at 2.56 (Neutral) by 1100 GMT.
EUR/USD: The euro declined after rising to a 2-week high earlier in the session, as investors remained cautious ahead of a constitutional referendum in Italy and a presidential election in Austria on Sunday. Markets seem to have ignored better-than-expected Eurozone's producer price index, which rose 0.8 percent in October, versus estimates of 0.2 percent rise, while on an annualized basis it stood at -0.4 percent, against projections of -1.0 percent. The European currency trades 0.13 percent down at 1.0645, having hit an early high of 1.0689, its highest since Nov. 17. FxWirePro's Hourly Euro Strength Index stood at -47.75 (Neutral) by 1000 GMT. Minor bullishness can be seen above 1.07015 (23.6% retracement of 1.12994 and 1.05180) and any break above will take the pair till 1.0755/1.08167. The short term trend reversal is only above 1.0820, while major support is located at 1.0550.
USD/JPY: The dollar eased against the Japanese yen as investors refrained from placing big bets, ahead of the highly influential employment report from the U.S. The major consolidated below the 114.00 handle, as persisting risk-off market profile underpinned the bid tone around the safe-haven yen. Investors expect the NFP report to show 175,000 jobs were added in November, however, a weak batch of weekly jobs figures released on Thursday signaled at a weaker number. The pair trades 0.2 percent down at 113.86, after rising to a high of 114.82 the day before, its highest since mid-Feb. FxWirePro's Hourly Yen Strength Index stood at -40.02 (Neutral) 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 113.50 (38.2% retracement of 114.82 and 111.35) and any break below targets 112.65 (61.8% retracement of 111.35 and 114.82)/112.
GBP/USD: Sterling held gains above the 1.2600 handle after data showed Britain's construction sector activity rose to its highest levels since March 2016. The economy's construction PMI unexpectedly rose to 52.8 in November, after registering a final reading of 52.6 in October. Moreover, Brexit minister David Davis stated on Thursday that the UK may consider making payments to the EU budget in return for access to EU markets, which strengthened the pound to multi-month highs against both the dollar and euro. Sterling trades 0.2 percent up at 1.2612, having hit a high of 1.2695 in the previous session, its highest since Oct. 6. FxWirePro's Hourly Sterling Strength Index stood at 47.48 (Neutral) by 1000 GMT. The temporary top formed at 1.26957 (Dec 2nd high) will be acting as major trend reversal level. Any break above will take the pair till 1.2745/1.2800. The minor resistance is at 1.2600. On the lower side, any break below 1.2550 will drag it down till 1.2500/1.2430. Against the euro, the pound traded 0.3 percent up at 84.38 pence, after rising as high as 83.69 pence the day before, it’s strongest since Sep. 6.
USD/CHF: The Swiss franc dropped, reversing some of its previous session gains after data showed Switzerland's economic growth stalled in the third quarter. The economy grew at an annual rate of 1.3 percent, down from 2.0 percent in the prior quarter, while on quarter basis real growth fell to zero from 0.6 percent in the previous quarter. The dollar trades 0.2 percent higher at 1.0119, having touched a low of 1.0092 earlier in the day, its weakest since Nov. 28. FxWirePro's Hourly Swiss Franc Strength Index stood at 79.20 (Bullish) by 1100 GMT. The temporary top formed this week at 1.0245 will be acting as major resistance and any further bullishness can be seen only above that level. The slight trend is looking weak and it should break below 1.0600 (Nov 18th low) for further selling. Any break below that level will drag it till 1.0020/1.000. The pair should break above temporary top at 1.0205 for further jump and any violation above will take the pair till 1.02260/1.0260.
AUD/USD: The Australian dollar edged up, extending previous session's bullish momentum after Australia's October retail sales surpassed expectations, indicating positive sentiment among the consumers. However, persisting risk-off sentiment, amid lower commodity prices and global equities undermined the bid tone around the major. The Aussie trades flat at 0.7418, having hit an intra-day high of 0.7432. FxWirePro's Hourly Aussie Strength Index stood at -116.11 (Highly Bearish) by 1100 GMT. On the higher side, minor resistance is around 0.7445 (5- day MA) and any break above will take the pair till 0.7500/0.7530 (21- day MA). The major support is around 0.7380 and break below will drag it till 0.7350/0.7300. The short term weakness is below 0.7300.
NZD/USD: The New Zealand dollar was struck between narrow ranges, as investors remained cautious ahead of the highly crucial U.S. nonfarm payroll report, which could impact the prospects of an imminent Fed interest rate hike. Moreover, bearish sentiment surrounding commodity and equity markets triggered risk aversion sentiment, forcing investors to rush towards safe-haven assets. The Kiwi trades 0.07 percent up at 0.7094, attempting to regain the 0.7100 handle and was on track to end the week 0.7 percent higher. FxWirePro's Hourly Kiwi Strength Index was at -106.56 (Highly Bearish) by 1100 GMT. Immediate resistance is located at 0.7124 (21-DMA), a break above could take it near 0.7200. On the downside, support is seen at 0.7063 (10-DMA), a break below could drag it till 0.7000.
Equities Recap
European shares slumped in early trading, weighed down by growing concerns over Italian constitutional referendum and Austrian presidential election on Sunday.
The pan-European STOXX 600 index decreased 1.16 percent at 336.89 points, while the FTSEurofirst 300 index shed 1.02 percent at 1,329.19 points.
Britain's FTSE 100 trades 0.88 percent down at 6,693.51 points, while mid-cap FTSE 250 dropped 0.7 percent at 17,374.65 points.
Germany's DAX skidded 1.07 percent at 10,421.27 points; France's CAC 40 trades 1.43 percent lower at 4,495.33 points.
Tokyo's Nikkei declined 0.47 percent to 18,426.08 points, Australia's S&P/ASX 200 index lost 0.94 percent to 5,448.70 points and South Korea's KOSPI fell 0.66 percent at 1,970.61 points.
Shanghai composite index slumped 0.9 percent at 3,243.84 points, while CSI300 index tumbled 1.0 percent at 3,243.84 points. Hong Kong’s Hang Seng shed 1.4 percent at 22,564.82 points.
Commodities Recap
Crude oil prices slightly edged down, as investors raised concerns whether major producers would implement an OPEC-Russia deal to restrict production. International benchmark Brent crude was 0.2 percent down at $53.54 per barrel by 0928 GMT, after touching a 16-month high of $54.50 in the previous session. U.S. West Texas Intermediate crude inched down 0.35 percent at $50.71 a barrel, after rising to a high of $51.77 the prior day, its highest since Oct. 20.
Gold prices recovered after declining to its lowest since early February as the dollar eased ahead of U.S. jobs data, although it was on track for a fourth consecutive weekly fall. Spot gold was up 0.4 percent at $1,175.08 an ounce by 0937 GMT, having dropped to its lowest since Feb. 5 at $1,160.58 on Thursday and was down 0.8 percent for the week. U.S. gold futures gained 0.5 percent at $1,175.30 per ounce.
Treasuries Recap
The U.S. Treasuries were pushed modestly higher as markets look ahead to the November employment report on Friday, which is expected to reveal a +180k increase in non-farm payrolls. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.43 percent, the yield on long-term 30-year Treasury dipped 1/2 basis point to 3.08 percent and the yield on short-term 2-year note slid 1/2 basis point to 1.14 percent.
The UK gilts rebounded following weakness in crude oil prices. Also, investors did not react to the higher construction PMI data, which accounts for around 5.9 percent of the country’s GDP. The yield on the benchmark 10-year gilts fell 4 basis points to 1.45 percent, the super-long 40-year bond yield dipped 3 basis points to 1.89 percent and the yield on short-term 2-year slid 4 basis points to 0.12 percent.
The German bunds traded narrowly mixed Friday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, the market now looks ahead to the ECB monetary policy meeting, which is scheduled to take place next week on December 8. The yield on the benchmark 10-year bond fell 2 basis points to 0.33 percent, the yield on long-term 30-year note dipped 2-1/2 basis points to 1 percent and the yield on short-term 2-year bond inched 1/2 basis point to -0.74 percent.
The Japanese government bonds plunged as investors moved away from the safe-haven buying amid weakness in the U.S. debt market. The benchmark 10-year bond yield rose 1 basis point to 0.04 percent, the yield on long-term 30-year note also climbed 1 basis points to 0.60 percent and the yield on short-term 2-year note bounced 1/2 basis point to -0.17 percent.
The New Zealand government bonds ended the week on a softer note following the current rout in the global debt market. The yield on the benchmark 10-year bond closed 5-1/2 basis points higher at 3.28 percent, hitting highest since January this year.
The Australian government bonds plunged following weakness in the U.S. debt market. Also, expectations of steady policy rate from the Reserve Bank of Australia (RBA) in its next week’s monetary policy meeting drove-out investors from safe-haven buying. The yield on the benchmark 10-year Treasury note rose 6 basis points to 2.86 percent, the yield on 15-year note also climbed 6 basis points to 3.28 percent and the yield on short-term 2-year inched 2-1/2 basis points to 1.89 percent.
