Market Roundup
- USD/JPY -0.1%, EUR/USD +0.35%, GBP/USD +0.18%
- DXY -0.22%, DAX +0.25%, Brent -0.3%, WTI -4.9%
- China’s Yuan weakens past 6.95 per US Dollar
- EZ Nov Inflation final 0.6% y/y vs 0.6% previous, 0.6% expected
- UK Dec CBI Trends Orders 0 vs -3 previous, -5 expected
- Japan tops China as largest holder of US Treasuries, $1.132 vs $1.116 trln
- Japan Toyota shooting for record group output in ’17 – Nikkei
- China – No need to worry about Fed’s impact on CNY – People’s Daily
- PBOC presses Chinese banks to help with funds after i/bk lending freezes – Caixin
- EU Summit- Germany Merkel, ECB Draghi, et al discussed Trump prospects
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts declined to a 1.230 million-unit rate in November from 1.323 million-unit in October.
- (0830 ET/1330 GMT) The U.S. building permits are likely to have decreased to a 1.240 million-unit pace in November from a 1.260 million unit pace in October.
- (0830 ET/1330 GMT) The Statistics Canada will release investment in foreign securities figures for the month of October.
- (0830 ET/1330 GMT) The Statistics Canada will report foreign portfolio investment in domestic stocks for the month of October.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (0945 ET/1445 GMT) FedTrade Ops 15-year Fannie Mae / Freddie Mac max $825 mln
- (1145 ET/1645 GMT) FedTrade Ops 30-year Fannie Mae / Freddie Mac max $2.475 bln
- (1230 ET/1730 GMT) Federal Reserve Bank of Richmond President Jeffrey Lacker participates in a panel on the economic outlook before the Charlotte Chamber of Commerce, in Charlotte, North Carolina.
FX Beat
DXY: The dollar eased versus the yen, as investors’ shifted their focus on the BoJ monetary policy review next week. The greenback against a basket of currencies traded 0.1 percent down at 102.97, after rising to a 14-year high of 103.56 on Thursday. FxWirePro's Hourly Dollar Strength Index stood at 92.92 (Slightly Bullish) by 1100 GMT.
EUR/USD: The euro attempted a solid recovery above the 1.0400 handle after data showed Eurozone's consumer price index rose at an annualized rate of 0.6 percent in November, in line with estimates and previous reading. However, the upside remains capped, as the economy's trade balance seasonally adjusted came in at 19.7 billion euros, missing projections of 25.2 billion euros. The European currency trades 0.5 percent up at 1.0462, retreating from a 21-year low of 1.0366, hit in the previous session. FxWirePro's Hourly Euro Strength Index stood at 96.73 (Slightly Bullish) by 1000 GMT. The upside is capped by 3- day EMA and any break above will take the pair to next level till 1.05250/1.0551 (5- day MA). The short-term bullishness is only above 1.06700 level. On the lower side, strong support is seen at 1.03400 (127.2% retracement of 1.03665 and 1.04720) and any violation below will drag it till 1.02835 (161.8% retracement of 1.05047 and 1.08700).
USD/JPY: The dollar edged down against the Japanese yen, after rising to a 10-month high in the previous session, as the bulls took a breather, amid subdued trading activity seen around the greenback. Markets now shift their focus towards the BoJ monetary policy review due next week, where it is expected to hold its negative interest rates and 10-year government bond yield target steady. The major trades 0.1 percent lower at 118.03, after rising as high as 118.66 on Thursday, its strongest since early Feb. FxWirePro's Hourly Yen Strength Index stood at -45.76 (Neutral) by 1000 GMT. The major resistance is around 119 and break above targets 120. On the lower side, minor support is around 117.50 and any break below targets 116.25/ 115.25 (200- HMA).
GBP/USD: Sterling gained, but traded close to a 3-week low against the dollar, amid a broad retreat in the European stocks, oil prices, and treasury yields. The major recovered some lost ground as the greenback continued its corrective phase after yesterday’s rally triggered by hawkish FOMC statement. Sterling trades 0.2 percent higher at 1.2446, after declining as low as 1.2376 on Thursday, its lowest since Nov. 23. FxWirePro's Hourly Sterling Strength Index stood at -107.76 (Highly Bearish) by 1000 GMT. The major support is at 1.2370 and any break below targets 1.23000. On the higher side, 1.2510 (3- day EMA) will be acting as minor resistance and any break above will take the pair to next level till 1.2580/1.26000. Overall trend reversal is only above 1.2780 level. Against the euro, the pound trades 0.3 percent lower at 84.08 pence, having touched a 10-day high of 83.13 pence the prior day.
USD/CHF: The Swiss franc gained, retreating from a 1-year low hit in the previous session as the greenback eased on a corrective slide. On Thursday, the Swiss currency fell to a low of 1.0343, its lowest since early Dec. 2015 after the SNB kept the interest rate record low. The major trades 0.2 percent weaker at 1.0280, having hit an intra-day low of 1.0266. FxWirePro's Hourly Swiss Franc Strength Index stood at 47.36 (Neutral) by 1000 GMT. Technically any break above major top 1.03284 confirms bullishness; a jump till 1.04000 is possible. On the lower side, minor support stands at 1.0230 (3- day EMA) and below that level targets 1.00180/1.00150. It should close below 1.0020 for further weakness.
AUD/USD: The Australian dollar fell to a fresh 3-week low, as the greenback strengthened on Federal Reserve’s hawkish outlook. The major initially rose to an intra-day high of 0.7369, however, ongoing buying interest behind the U.S. dollar weighed on the Aussie bulls sentiments. The major trades flat at 0.7356, having hit an early low of 0.7334, it’s lowest since Nov. 21 and was poised to shed 1.4 percent for the weekly. FxWirePro's Hourly Aussie Strength Index stood at -15.11 (Neutral) by 1100 GMT. On the higher side, minor resistance is around 0.7430 and any break above will take the pair till 0.7480/0.7530. The major support is around 0.7350 and break below will drag it till 0.7300.
NZD/USD: The New Zealand dollar eased, extended losses for the third consecutive session, as the U.S. dollar strengthened following Federal Reserve's policy decision and hawkish outlook on rate hikes in 2017. The Kiwi trades 0.1 percent lower at 0.7025, after slumping as low as 0.7010 in the previous session, it’s lowest since Nov. 25. FxWirePro's Hourly Kiwi Strength Index was at -75.93 (Slightly Bearish) by 1100 GMT. Immediate resistance is located at 0.7085, a break above could take it over 0.7100. On the downside, support is seen at 0.7000, a break below could drag it lower till 0.6970.
Equities Recap
European shares declined in early trade, however, were set for a second consecutive week of gains as investors adjusted their portfolios after the Fed indicated a faster-than-expected pace of U.S. rate hikes in 2017.
MSCI world equity index, which tracks shares in 46 countries was up 0.1 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent, having shed 1.8 percent on Thursday.
The pan-European STOXX 600 index decreased 0.07 percent at 358.55 points, while the FTSEurofirst 300 index shed 0.16 percent at 1,418.15 points.
Britain's FTSE 100 trades 0.03 percent down at 6,997.77 points, while mid-cap FTSE 250 tumbled 0.04 percent at 17,762.85 points.
Germany's DAX edged up 0.05 percent at 11,369.53 points; France's CAC 40 trades 0.1 percent lower at 4,813.79 points.
Tokyo's Nikkei gained 0.66 percent to 19,401.15 points, Australia's S&P/ASX 200 index fell 0.45 percent to 5,513.40 points and South Korea's KOSPI added 0.27 percent at 2,042.24 points.
Shanghai composite index climbed 0.2 percent at 3,122.98 points, while CSI300 index rose 0.2 percent at 3,346.03 points. Hong Kong’s Hang Seng lost 0.2 percent at 22,020.75 points.
Commodities Recap
Crude oil prices edged down, despite producers in the Middle East informing customers of upcoming supply cuts, however, prices were struck within a thin range as production cuts will only hit markets early next year. International benchmark Brent crude was 0.2 percent lower at $54.09 per barrel by 0930 GMT, having hit a 1-week low of $53.13 on Thursday. U.S. West Texas Intermediate crude fell 0.3 percent at $50.89 a barrel, after dropping as low as $49.93 in the previous session, it’s lowest since Dec 8.
Gold gained, pulling away from its weakest level in 10-1/2 months as the dollar consolidated after surging on interest rate increase by the U.S. Federal Reserve and hints of further hikes in 2017. Spot gold was up 0.5 percent at $1,133.90 an ounce by 0934 GMT, having hit its weakest since Feb. 2 at $1,122.64 in the previous session. The safe-haven metal was down more than 2 percent for the week and was on track for its sixth straight weekly loss. U.S. gold futures advanced 0.5 percent to $1,135.90 an ounce, after falling nearly 3 percent the day before.
Treasuries Recap
The U.S. Treasuries were narrowly mixed in thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.56 percent and the yield on short-term 2-year note up 1/2 basis point to 1.26 percent.
The UK gilts gained Friday on fresh buying as investors surrendered short-positions, booked after the Federal Reserve raised interest rates on Wednesday. The yield on the benchmark 10-year gilts fell 4 basis points to 1.44 percent, the super-long 40-year bond yield dipped 4 basis points to 1.91 percent and the yield on short-term 2-year slid 1 basis point to 0.14 percent.
The German bunds traded firmer as investors covered short positions, booked after the Federal Reserve raised interest rates for the first time this year and signalled at a faster hike in borrowing costs next year. The yield on the benchmark 10-year bond fell 3 basis points to 0.32 percent, the long-term 30-year bond yield dipped 5-1/2 basis points to 1.07 percent and the yield on short-term 3-year bond slid 2 basis points to -0.73 percent.
The Japanese government bonds traded mixed as short-term notes fell, following weakness in the U.S. Treasuries. On the other hand, long-term notes gained, after the Bank of Japan (BoJ) in its daily bond buying operations, purchased more of super-long bonds for the second time this week to control rising yields. The benchmark 10-year bond yield rose 2 basis points to 0.09 percent (highest since mid-February), the long-term 30-year bond yield fell 3 basis points to 0.70 percent and the yield on short-term 2-year note climbed 2 basis points to -0.17 percent.
The New Zealand government bonds closed nearly flat as investors remain sidelined in any big deal ahead of the Christmas holidays. Also, markets will remain keen to focus on the delayed third-quarter gross domestic product (GDP) scheduled to be released next week, which was postponed because of powerful earthquakes last month. The yield on the benchmark 10-year bond closed ½ basis point lower at 3.43 percent, the yield on 7-year note ended flat at 2.97 percent and the yield on short-term 2-year note slid 1/2 basis point to 2.26 percent.
The Australian government bonds were drifting between small gains and losses in quiet trading ahead of the Christmas holiday. The yield on the benchmark 10-year Treasury note hovered around 2.86 percent, the yield on 15-year note dipped 1/2 basis point to 3.33 percent and the yield on short-term 2-year stood flat at 1.92 percent.
