Market Roundup
- Gold near seven-year peak
- German factory orders decline
- Norway hopes for China free-trade deal in 2020, industry minister says
- UK productivity shows small gain in third quarter - ONS
- Spain targets gross debt issuance of 196.5 billion euros in 2020
- French consumer morale falls sharply in December
Economic Data Ahead
- (0815 ET/1315 GMT) US ADP Employment Change (Dec)
Key Events Ahead
- (0800 ET/1300 GMT) ECB's De Guindos speech
- (1000 ET/1500 GMT) Fed's Brainard gives a speech
FX Beat
DXY: The dollar index surged, supported by a strong showing in the U.S. non-manufacturing business survey, ahead of Friday’s key U.S. jobs report. The greenback against a basket of currencies traded 0.1 percent up at 96.82, having touched a low of 96.36 last week, its lowest since July 1.
EUR/USD: The euro plunged to a near 2-week low after data showed German industrial orders fell unexpectedly in November on weak foreign demand and a lack of major contracts. The European currency traded 0.2 percent down at 1.1130, having touched a low of 1.1125 earlier, its lowest since December 27. Immediate resistance is located at 1.1180, a break above targets 1.1205. On the downside, support is seen at 1.11010, a break below could drag it below 1.1093.
USD/JPY: The dollar retreated from a 3-month low on a perception that Iran's rocket attacks on U.S. forces in Iraq would not lead to a wider regional conflict. Iran said it had fired 15 missiles at U.S. targets in Iraq earlier today in retaliation for last week’s U.S. drone strike that killed Iranian commander Qassem Soleimani. The major was trading 0.05 percent up at 108.50, having hit a low of 107.65 earlier, its lowest since Oct. 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. ADP employment change, consumer credit change and Fed Brinard's speech. Immediate resistance is located at 108.74, a break above targets 109.00 (21-DMA). On the downside, support is seen at 107.52, a break below could take it near at 107.31.
GBP/USD: Sterling consolidated within narrow ranges, ahead of a vote on Prime Minister Boris Johnson's Brexit bill in the lower house on Thursday. The major traded 0.1 up at 1.3128, having hit a low of 1.3053 on Friday, it’s lowest since Dec. 27. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3229, a break above could take it near 1.3284. On the downside, support is seen at 1.3070, a break below targets 1.3000. Against the euro, the pound was trading 0.3 percent up at 84.77 pence, having hit a high of 84.54 earlier, it’s highest since Dec. 31.
USD/CHF: The Swiss franc retreated from a 1-week peak on a perception that the strikes would not lead to a wider regional conflict. The major trades 0.2 percent up at 0.9716, having touched a low of 0.9665 earlier, it’s lowest since December 27. On the higher side, near-term resistance is around 0.9734 (10-DMA) and any break above will take the pair to the next level till 0.9786 (21-DMA). The near-term support is around 0.9646, and any close below that level will drag it till 0.9600.
Equities Recap
European shares slumped after an Iranian missile strike on U.S. forces in Iraq prompted investors to seek safety in safe-haven assets.
The pan-European STOXX 600 index tumbled 0.4 percent at 416.03 points, while the FTSEurofirst 300 plunged 0.4 percent to 1,626.87 points.
Britain's FTSE 100 trades 0.2 percent down at 7,560.04 points, while mid-cap FTSE 250 declined 0.8 to 21,654.26 points.
Germany's DAX eased 0.6 percent at 13,148.53 points; France's CAC 40 trades 0.4 percent lower at 5,987.83 points.
Commodities Recap
Crude oil prices surged after a rocket attack by Iran on American forces in Iraq raised the specter of a spiraling conflict and disruption to crude flows. International benchmark Brent crude was trading 0.4 percent higher at $68.55 per barrel by 1017 GMT, having hit a high of $71.31 earlier, its highest since May 22. U.S. West Texas Intermediate was trading 0.2 percent up at $62.77 a barrel, after rising as high as $65.62 earlier, its highest since April 25
Gold prices soared over the $1,600 level for the first time in nearly seven years, as investors flocked to safe haven asstes after Iran launched retaliatory missile strikes against U.S. forces in Iraq. Spot gold rose 0.7 percent to $1,582.19 per ounce by 1019 GMT, having touched a high of $1611.27 earlier, its highest since March 2013. U.S. gold futures rallied 1 percent to $1,589.30.
Treasuries Recap
The U.S. Treasuries gained during Wednesday’s afternoon session ahead of the country’s ADP non-farm employment change for the month of December, scheduled to be released today by 13:15GMT and the 10-year auction, also due to be held today by 10:00GMT further direction in the debt market. The yield on the benchmark 10-year Treasury yield fell nearly 1-1/2 basis points to 1.813 percent, the super-long 30-year bond yield slipped nearly 1 basis point to 2.298 percent and the yield on the short-term 2-year also suffered 1 basis point to 1.536 percent.
The United Kingdom’s gilts edged tad higher during mid-week European trading hours Wednesday amid a muted trading session that witnessed data of little economic significance ahead of a speech by Bank of England (BoE) Governor Mark Carney, scheduled to be delivered on January 9 by 09:30GMT. The yield on the benchmark 10-year gilts, edged tad nearly 1 basis point down to 0.787 percent, the 30-year yield also fell close to 1 basis point to 1.240 percent and the yield on the short-term 2-year suffered 2 basis points to 0.589 percent.
The German bunds remained narrowly mixed during European session Wednesday amid a muted trading session that witnessed data of little economic significance ahead of the country’s trade balance data for the month of November, scheduled to be released on January 9 by 07:00GMT. The German 10-year bond yield, which move inversely to its price, remained tad down at -0.286 percent, the yield on 30-year note traded flat at 0.261 percent and the yield on short-term 2-year slipped nearly 1 percent down to -0.631 percent.
The Australian bonds gained during Asian session Wednesday as demand for safe-haven assets rose after Iran claimed to have attacked Iran where United States troops were based, which in turn weighed on stock prices, thus providing support to the yellow metal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.188 percent, the yield on the long-term 30-year bond traded flat at 1.817 percent and the yield on short-term 2-year too steadied around 0.776 percent.
