Markets Roundup
- India December Imports - USD Increases to 33.96 Bln $ Vs previous 29.80 Bln $
- India December Trade Deficit Govt -USD Increases to 11.66 Bln $ Vs previous 9.78 Bln $
- India December Exports - USD Increases to 22.3 Bln $ Vs previous 20.01 Bln $
- Japan November Capacity Util Idx Chg MM Decreases to -0.1 % Vs previous 1.3 %
- Japan November Industrial Output Rev Increases to -0.9 % Vs previous -1.0 %
- Australia Dec TD/MI inflation index +0.2% m/m, +2.0% y/y, Nov +0.1%, +1.8%, trimmed-mean index -0.1% m/m, +1.7% y/y, inflation remains benign.
- Australia Dec new motor vehicle sales -0.5% m/m but still +2.2% y/y.
- Non-residents held 63.8% of NZ debt in December, November 64.1%.
- Hong Kong dollar weakest since Sept '11, at mid-point of 7.75-7.85 USD peg.
- NZ Q4 employee confidence index 101.5, Q3 99.3, 100+=optimistic.
- EU and US sanctions on Iran lifted - Various media.
- Specs trim net USD longs to lowest since October 25.2k net JPY long contracts largest since October '12, EUR 146.4k net shorts lowest since November '15.
- BoJ Gov Kuroda - Economy recovering moderately though EM slowdown affecting exports-output, annual core CPI to remain near zero for now, will maintain QQE for as long as needed, will adjust policy as needed - Reuters.
- BoJ ups economic assessment for one region, other 8 unch, moderate recoveries continuing, salaries up mainly in big cities, smaller firms lag, reluctance to hike wages still in next fiscal year.
- Japan Nov rev industrial output -0.9% m/m, prelim -1.0%, capacity utilization 98.6%, Nov 98.7%.
- China PBOC - To start implementing RRR to some banks involved in offshore yuan market, new rules effective January 25 - Reuters.
- China Dec new home prices +1.6% y/y, Nov +0.9%, Beij +8.3%, Shanghai +15.5%.
- ECB quizzes banks about high levels of bad loans - Reuters.
- Auckland soaring house prices spread to regional New Zealand - Reuters.
- (0400 ET/0900 GMT) Italy Nov trade balance - global; last bln surplus.
- (0400 ET/0900 GMT) Italy Nov trade balance - EU; last bln surplus.
- US Martin Luther King holiday.
- N/A France BTF t-note, Netherlands 3/6-mo DTC, Slovakia bond auctions.
- (0330 ET/0830 GMT) Riksbank January extraordinary meeting minutes.
- (1330 ET/1830 GMT) BoE MPC Vlieghe lecture at LSE.
FX Beat
EUR/USD: The euro trades 0.11 percent low at 1.0895, having touched sessions high of 1.0927. The pair dropped in the early reversing more than half of the previous rally. As the US markets will be closed on Monday due to the celebration of Martin Luther King day, the markets will eye economic data to set direction on further USD moves. The focus will be on upcoming ECB meeting this week, however, the markets expect the ECB to keep the policy setting unchanged this month amidst persisting global market turmoil. The pair currently trades at 1.0895, after touching sessions low of 1.0887. Immediate support is located at 1.0880 (5- DMA) while the pair faces resistance at 1.0933 (Jan 8 High). The euro also edged down against the dollar to $1.0900.
USD/JPY: The yen gave up some of its gains after having risen to 5-month high of 116.50 to the dollar on Friday. The dollar dropped to 116.50 yen in its previous session trade. Weak Japanese industrial output data and a slight decline in the economic conditions in Japan's regions add to negative sentiment around the Yen. The traders are likely to be bullish as the pair trades 0.22 percent up at 117.21, after hitting sessions high of 117.36. Immediate resistance is seen at 117.47 (5- DMA), while on the downside, support is located at 116.65 (sessions low).
USD/CAD: The Canadian dollar hit a 13-year low around C$1.4650 in early trade. Traders sold the loonie on growing expectations that the Bank of Canada will cut interest rates as early as this week. However the loonie is seen pulling away from the low, as the pair trades at 1.4518 levels. The outlook for the loonie remains weak given expectations for further weakness in oil prices. Immediate support is located at 1.4404 (5- DMA), while on the upside, resistance is located at 1.4605 (sessions high)
AUD/USD: The Australian dollar drifted away from a 7-year lows of 0.6827 hit on Friday, as investors were keen to buy what they perceived to be bargain levels, but persistent concerns about global growth kept gains in check. Strong rebound in Copper prices and minor recovery in iron ore helped in extending gains. Markets expect Australia's central bank to cut its interest rate on worries of declining commodity prices, market volatility and China's growth. Currently the pair trades at 0.6905, having touched sessions high of 0.6927. Support is seen at 0.6906 (sessions low) and resistance at 0.6937 (5- DMA). The Aussie bounced 0.9 percent higher to 80.96 yen, pulling away from 2-1/2-year lows touched on Friday against the safe-haven yen.
NZD/USD: The New Zealand dollar was steady at 0.6471, from a 3-month low of 0.6381 hit on Friday. The kiwi follows its fellow Antipodean's trend as it continues to hover towards sessions high of 0.6478. NZD/USD likely to find momentum on Chinese data which is scheduled later in this week. Currently the pair trades at 0.6475. The pair finds immediate support at 0.6490 (5- DMA), while on the downside, support is seen at 0.6404 (Sessions Low). Against its Yen counterpart, it trades at 75.89, drifthing away from a 4 month low.
USD/CNY: China's yuan firmed on Monday as the central bank announced new moves to reduce offshore speculation in the currency. PBoC stated on Monday that they will start implementing a reserve requirement ratio (RRR) to some banks involved in the offshore yuan market, in a move that seemed intended to soak up additional liquidity. The spot market opened at 6.5800 per dollar on Monday and was trading at 6.5792 in early trade, 48 pips below the previous close and 0.31 percent away from the midpoint, which was set at 6.559. The offshore yuan was trading -0.18 percent away from the onshore spot at 6.591 per dollar, firmer than the previous day's close of 6.6165.
Equities Recap
Asian shares dropped to their lowest levels since late 2011 on Monday after weak U.S. economic data and huge falls in oil prices fueled further worries about a global economic downturn.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.0 percent in early trade, while the Shanghai Composite index fell nearly 2 percent, piercing through intraday lows last seen in August. Taiwan stocks edged up 0.6 pct at 7,811.18 points.
Australia's S&P/ASX200 Index edged down 0.73 pct at 4,857.30 points, with Nikkei dropping down 1.12 pct at 16,955.57, while Seoul shares closes up 0.08 pct.
Commodities Recap
Gold opened the trading week higher on Monday, buoyed by safe-haven bids after Asian equities tumbled to their lowest since 2011. Spot gold edged up 0.2 percent at $1,091.36 an ounce by 0232 GMT, after losing 1.4 percent last week. U.S. gold for February delivery was flat at $1,091.50 an ounce.
Oil prices dropped as much as 4 percent on Monday, as the market braced for advancement in Iranian exports after the lifting of sanctions against the country at the weekend.International Brent crude dropped to $27.67 a barrel early on Monday, its lowest since 2003, before recovering to $28.56 by 0208 GMT, still down over 1 percent from its settlement on Friday. U.S. crude was down 27 cents at $29.15 a barrel, after hitting a 2003-low of $28.36 earlier in the session.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.0365.
Australian government bond futures climbed 2-month highs, with the 3-year bond contract up 5 ticks at 98.130. The 10-year contract rose 2 ticks to 97.3300, while the 20-year contract added 1.5 ticks to 96.8350.
New Zealand government bonds gained, sending yields around 4.5 basis points lower across most of the curve.
Canadian government bond prices were higher across the maturity curve, with the 10-year rising 79 Canadian cents to yield 1.147 percent, while the 2-year price up 5.5 Canadian cents to yield 0.288 percent.
