Market Roundup
- India December Nikkei Markit Mfg PMI Decreases To 49.1 versus previous 50.3
- Indonesia Nov Foreign Tourist Decreases To 1.70 % versus previous 2.11 %
- Indonesia Dec Core Inflation YY Decreases To 3.95 % (Forecast 4.17 %) versus previous 4.77 %
- Indonesia Dec Inflation YY Decreases To 3.35 % (Forecast 3.00 %) versus previous 4.89 %
- Indonesia Dec Inflation MM Increases To 0.96 % (Forecast 0.61 %) versus previous 0.21 %
- Indonesia Dec Nikkei PMI Increases to 47.8 versus previous 46.9
- China MFG PMI for December was 49.7 up from 49.6 in November aw expected
- China non-MFG PMI came in at a strong 54.4 up from 53.6 in November
- China Dec Caixin manufacturing PMI 48.2 (vs poll 49.0, nov 48.6), contracts for tenth month
- China Caixin manufacturing PMI shows Dec new export orders contracted after two months of expansion
- PBOC sets yuan mid-point at 6.5032 / dlr vs last close 6.4936
- China's offshore yuan (CNH) fell by 400 pips to a fresh four-year low on Monday
- China Stock Market Falls 7 pct; Trading Halted until Market Close
- Shanghai Composite plunged more than 4% at one stage
- Asia equity markets tumble on rising China concerns
- Japan Dec final manufacturing PMI steady at 52.6
- Fed's Mester, in interview, says more than four rate hikes in 2016 likely appropriate
- Fed's Mester says more optimistic than most FOMC colleagues on pace of tightening -Reuters interview
- Fed's Mester says still comfortable with median fed forecast of four hikes in 2016 -interview
- Mester says does not need to see evidence of inflation for subsequent rate hikes -interview
- Mester says every meeting is 'live' for possible second hike -interview
Economic Data Ahead
- (0400 ET/0900 GMT) Eurozone Markit Mfg PMI for Dec (53.1 expected)
- (0430 ET/0930 GMT) United Kingdom MFG PMI
- (0430 ET/0930 GMT) United Kingdom mortgage lending and Mortgage Approvals
- (0430 ET/0930 GMT) United Kingdom BOE Consumer Credit
- (0800 ET/1300 GMT) German CPI and HICP
Key Events Ahead
No Major Events Scheduled
FX Beat
USD: The dollar dropped to a 10-week low against the yen as tensions in the Middle East and soft Chinese data added bids to the safe-haven Japanese currency in the first trading session of 2016. The greenback also eased against the Swiss franc, as the franc gained 0.3 percent to 0.9997 franc per dollar, moving away from a 3-1/2-week low of 1.0030 hit the previous session. The dollar index rose to 99.855, its highest since Dec. 18 before pulling back to 98.664.
EUR/USD: The euro was up 0.16 percent at 1.0880, after briefly slipping to 1.0827, sessions low. The pair currently trades at 1.0878 levels, after having touched a daily high of 1.0904 levels and it trades between the range of 1.0904 - 1.0827. Proceeding this year, the traders expect divergence in central bank monetary policies to give USD an edge over its peers. Immediate support is located at 1.0804 (Dec 18 Low), while on the up side, the pair faces resistance at 1.0937 (Dec 31 High).
USD/JPY: The pair has broken below the 120 handle for the first time since October as Chinese data induced risk-off weighs on USD. The dollar was down 0.64 percent at 119.42 yen, below strong trendline support on 24th Dec and after a brief period on sideways trade has seen sharp slump on the day. Technically, a break of the psychological 120 handle leaves the downside exposed towards the 119.01 (61.8% Fib of 116.08 to 123.75 rise) ahead of the uptrend at 118.06 (Oct 15 low). Moving average studies indicate further downside for USD/JPY, next significant level of support is at 119.01 (61.8% Fib of 116.08 to 123.75 rise). Resistance on the upside is located at 120 levels and further ahead at 120.46 (Session high Jan 4).
AUD/USD: The Australian dollar, was down 0.9 percent at 0.7218 in the wake of Monday's poor Chinese factory activity data. The Aussie lost roughly 12 percent in 2015 on factors including falling commodity prices, rate cuts by the Reserve Bank of Australia and prospects of slower growth in China. Whether the RBA sees the need for further easing and Chinese economic performance are seen dictating the pace of the Aussie in 2016. Currently the pair trades at 0.7224, after having touched sessions high of 0.7301 and falling as low as 0.7208. Immediate support is seen at 0.7197 (Oct 23 Low), while on the upside, resistance is located at 0.7303 (Dec 30 High).
NZD/USD: The New Zealand dollar was down 0.9 percent at 0.6768 . The kiwi suffered a loss exceeding 10 percent in 2015, but dairy prices showed signs of bottoming out last year. The pair currently trades at 0.6753 levels, after falling from a session high of 0.6835 levels. Support is located at 0.6740 (Dec 15 Low), break below could drag the pair to further losses to 0.6737 (Oct 26 Low). It faces resistance at 0.6842 (Dec 24 High) and break above can take the pair to 0.6853 (Dec 28 High).
USD/CNY: Yuan weakened against the dollar at its open on Monday after PBoC set the yuan midpoint rate at 6.5032 per dollar, more than 4-1/2-year low and 0.15 percent weaker than the previous fix of 6.4936. The spot market opened at 6.5120 per dollar, and was trading at 6.5096 at midday, 0.25 percent weaker than the previous close. The offshore yuan was trading 1.56 percent weaker than the onshore spot at 6.6125 per dollar, edging near a 5-year low touched last week, while in the onshore trade, the yuan hit its lowest since April 2011. The yuan finished 2015 with a record yearly loss of 4.7 percent after volatile trading in last five months and the market widely expects the Chinese currency to continue depreciation this year also.
Equities Recap
Asian shares dropped on Monday on the first day of trading in 2016 after China factory activity contracted and the yuan weakened, while oil prices jumped as much as 3 percent
on rising tensions in the Middle East.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.7 percent, after shedding nearly 12 percent in 2015 as China's cooling economy took a toll on its trade-reliant Asian neighbours and global commodity prices. Mainland China shares tumbled more than 4 percent, while Taiwan Stocks closed down 2.7 pct at 8,114.26 points.
Australia's S&P/ASX 200 Index edged down 0.50 pct at 5,269.20 Points, while Nikkei dropped 3.06 pct to 2-1/2-month lows, at 18,450.98 with Seoul Shares down by 2.03 pct.
Commodities Recap
Gold inched higher on Monday, bolstered by a jump in oil prices and safe-haven bids from rising geopolitical tensions in the Middle East that knocked equities and the dollar lower. Spot gold was up 0.4 percent to $1,064.40 an ounce by 0323 GMT, while U.S. gold futures rose 0.3 percent. Silver jumped nearly 1 percent to $13.91.
Oil prices surged during the start of 2016 trading as relations between top crude producers Saudi Arabia and Iran deteriorated, raising concerns about potential supply disruptions, though weak Asian manufacturing data kept a lid on bullish expectations. Global oil benchmark Brent climbed more than a dollar to a high of $38.50 per barrel on Monday, before easing back to $38.10 at 0350 GMT, still up over 2 percent. U.S. crude's West Texas Intermediate futures were up 77 cents, or 2.08 percent, at $37.81 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.241 percent down by 0.034.
Australian government bond futures were mixed, with the 3-year bond contract down 1 tick at 97.950. The 10-year contract added half a tick to 97.1200, while the 20-year contract was up one tick to 96.6200.
Canadian government bond prices were higher across the maturity curve. The benchmark 10-year was up 8 Canadian cents to yield 1.393 percent, while the 2-year price rose 1.5 Canadian cents to yield 0.476 percent. The Canada-U.S. 2-year bond spread was 1.9 basis points narrower at -57.6 basis points, while the 10-year spread was 2.7 basis points narrower at -87.6 basis points, trimming recent outperformance for Canadian government bonds.
