Market Roundup
- Japan Dec Consumer Confidence Index at 42.7 Vs Previous 42.6
- China December Vehicle Sales +16.9 Pct Yr/Yr - China Passenger Car Association
- China 2015 Vehicle Sales +8.5 Pct Yr/Yr - China Passenger Car Association
- Japan Dec Outstanding Bank Loans +2.2 Pct Yr/Yr - BOJ
- United Kingdom Dec BRC Retail Sales YY Increases to +0.1 % (Forecast 0.50 %) Vs previous -0.4 %
- Japan Nov Current Account NSA Jpy Decreases to +1143.5 Bln Jpy (Forecast 858.5 Bln Jpy) vs previous 1458.4 Bln Jpy
- Fed's Kaplan says that by March there should be enough information to make a rate decision
- Fed's Kaplan says may not be enough data before January to make a decision to raise rates
- Kaplan says four rate hikes in 2016 is not baked in cake, believe policymakers will be open-minded
- Kaplan says market does believe fed will raise rates gradually and based on economic data
- PBoC Sets Yuan Mid-Point at 6.5628 / Dlr Vs Last Close 6.5695
- China's Steel Production and Demand to Continue to drop in 2016- CISA
Economic Data Ahead
- (0430 ET/ 0930 GMT) Great Britain Industrial and Manufacturing Output
- (0600 ET/1100 GMT) United States NFIB Business Optimism
- (0600 ET/1100 GMT) South Africa Manuf. Prod Index
- (0700 ET/1200 GMT) India Consumer Price Index
- (0700 ET/1200 GMT) India Industrial and Manufacturing Output
Key Events Ahead
- (0530 ET/ 1030 GMT) Fed's Stanley Fisher Speech
- (0530 ET/ 1030 GMT) Bank of Japan Governor Kuroda Speech
FX Beat
USD: The dollar edged down against the euro and yen in the Asian trade on Tuesday, drifting towards a 4-month low against the perceived safe-haven yen as crude oil prices continued to tumble. Against a basket of currencies, the dollar index trades at 98.68.
EUR/USD: The euro edged up 0.25 percent to 1.0885 levels hovering closer to sessions high of 1.0888, after going as low as 1.0841. While the major Asian indices are turning negative, with the Chinese equities continue to tumble, the pair ran through fresh bids and breathed a sigh relief. Traders are seen bullish in the session as the pair continues to advance. Immediate resistance is located at 1.0891 (15 -DMA), while on the downside, support is located at 1.0836 (Dec 4 Low).
USD/JPY: The dollar dropped about 0.36 percent to 117.32, after touching a low of 116.69 on Monday, its lowest since Aug. 24. Further pressure is faced by the dollar as Japan's December Consumer Confidence Index came in at 42.7, above expectations of 42.3. Fresh cues are expected on BOJ Governor Kuroda's speech. The pair currently trades around 117.31, having touched sessions high of 118.01. Immediate support lies at 117.19 (Jan 8 Low). While on the upside, resistance is seen at 118.02 (Sessions high).
AUD/USD: The Australian dollar is down about 0.12 percent at $0.6985, remaining above a 4-month low of $0.6927 touched on Monday. The Aussie closed up at 0.6994 on Monday after following a bearish trend in the previous five sessions. Currently the pair moves within a thin range of 0.6969 - 0.7004. It continues to face downward pressure from dropping oil prices and worries in China's economy. Traders await for employment data which is scheduled on Thursday, which is expected to provide momentum to the market. Immediate support is located at 0.6969 (Session's Low), break below could drag the to further losses, nearing 4-months low. On the upside, resistance is seen at 0.7023 (Sept 29 High). Versus the safe-haven yen, the Aussie trades around 81.95 yen, after having touched a 3-year trough of 80.88 in early trade.
NZD/USD: The New Zealand dollar trades edged up slightly at 0.6558, drifting away from the lows struck in the previous sessions. Kiwi witnessed a bearish trend in its previous sessions as investors remain wary on China's recent erratic yuan guidance and its ultimate policy intentions. Currently the pair trades at 0.6558, having touched a daily high of 0.6568. Immediate support is located at 0.6536 (Jan 8 Low) while the pair faces resistance at 0.6579 (Previous session High). Against its counterpart yen, it trades at 77.09, off from a 4-month low on Monday.
USD/CNY: China's central Bank set the mid-point for the yuan at 6.5628, barely changed from the previous strong fix and higher than its late levels on Monday, signalling an urge for stabilisation. With the yuan slipping slightly in early trade despite what dealers called aggressive intervention to support the currency, it seems to appear that the investors have not bought Beijing's line. Perceived mis-steps by China's authorities have stoked concerns in global markets that Beijing might be losing its grip on economic policy, just as the country looks set to post its slowest growth in 25 years.
Equities Recap
Asian stocks held near 4-year lows as investors worried over the extent of China's economic slowdown and its impact on emerging markets. MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.4 percent higher but still stood near a 4-year low touched on Monday, and was still down more than 8 percent since the start of 2016, while Taiwan stocks also edged down 0.3 oct at 7,768.45 points.
Australia's S&P/ASX 200 Index edged down 0.35 pct at 4,915.00 points, while Nikkei Index dropped 2.71 pct at 17,218.96, with Seoul shares down at 0.21 pct.
Commodities Recap
Gold edged higher on Tuesday, as concerns over China's economic growth and pressure on stock markets rekindled the safe-haven status of the precious metal. Spot gold steadied 0.2 percent to $1,096.4 an ounce by 0218 GMT, while U.S. gold futures were changed at $1,096.1. Silver edged down 0.1 percent at $13.87 an ounce, while platinum dropped 1.2 percent at $834.49 an ounce.
Crude oil prices continued a relentless dive early on Tuesday, dropping as much as 20 percent since the beginning of the year as traders bet on further price falls. U.S. crude West Texas Intermediate was trading at $30.98 per barrel at 0311 GMT on Tuesday, down 43 cents from the last settlement, while Brent crude futures dropped 43 cents to $31.12 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.1701 percent up by 0.012.
Australian government bond futures dropped, with the 3-year bond contract off 3 ticks at 98.000. The 10-year contract was down 3.5 ticks at 97.2150, while the 20-year contract also dropped 3.5 ticks to 96.7300.
New Zealand government bonds eased, sending yields 3 basis points higher along the curve.
Canadian government bond prices were mixed across the maturity curve, with the benchmark 10-year dropping 23 Canadian cents to yield 1.323 percent, while the 2-year price up 4.5 Canadian cents to yield 0.393 percent. The curve steepened as the spread between the 2- and 10-year yields widened by 4.8 basis points to 93.0 basis points. The Canada-U.S. 10-year bond spread also widened, 1.8 basis points to -85.1 basis points as U.S. Treasuries underperformed.
