Market Roundup
- Malaysia's Nov Factory Output up 1.8 pct from year ago versus Reuters Poll 4.0 pct
- Australia Dec overall job ads -0.1 pct mth/mth, s/ADJ - ANZ
- Australia Dec internet job ads -0.1 pct mth/mth, s/adj - ANZ
- NZ Nov Building Consents plus 1.8% vs plus 5.1% in Oct
- PBOC sets Yuan mid-point at 6.5626 / dlr vs last close 6.5938 (6.5850 expected)
- CPI for December came in at plus 1.6% Y/Y as expected and up from 1.5% in November
- PPI unchanged from Nov at minus 5.9% against expectations of minus 5.8%
- Risk assets briefly recovered after USD/CNY fix before falling again
- Heading into afternoon MSCI AXJ Equity index down over 2.0%; oil down 2.15%
- Asian session was volatile with ZAR falling over 10% vs JPY and USD shoprtly after the open
- Tokyo holiday
Economic Data Ahead
- (0430 ET/0930 GMT) EZ Sentix Index for January 12.2 expected
No Major Events Scheduled
FX Beat
USD: The dollar was steady against the yen at 117.35, having touched a low of 116.70 yen in early Monday session, its lowest level since late August. The dollar index is up 0.07 percent to 98.44 after falling to session low of 98.24.
EUR/USD: The euro edges lower from session highs of 1.0969, but well above Friday's low of 1.0803. The recent U.S. Nonfarm Payrolls data likely keep the greenback in favour and limit the euro's advance, while markets expect another rate hike from the Fed later in the H1. Market await for Eurozone Sentix Index data (Jan), which will released later in the day. The traders are seen bearish, as the pair currently trades at 1.0915. Immediate support is seen at 1.0893 (15 - DMA), while on the upside, resistance is located at 1.0991 (Dec 29 High).
USD/JPY: The dollar dropped to a near 5- month low of 116.69 yen in early trade, before steadying around 117.31. After China's central bank set a stronger guidance rate for the yuan on Monday, the safe haven yen eased against the dollar, reducing fears that Beijing is trying to weaken its currency to gain a competitive export advantage. Japan's financial markets will be closed for a public holiday, resulting in thinner trade. The pair trades around 117.00 levels. Immediate resistance is located at 117.44 (Sessions High). On the downside, support is located at 116.69 (Sessions Low), break below could drag the pair to further losses, nearing 6 - month low.
AUD/USD: The Australian dollar is trading low around 0.6970 as traders remain bearish in the start of the week. Much of the recent weakness came after Beijing set unpredictable yuan guidance, leading markets to question China's ultimate policy intentions. Further weakness in the pair is seen after ANZ Job Advertisement data dropped 0.1 % against its previous of 1.3%, which indicated low employment growth in Australia questioning the future labor market conditions. Currently the pair trades at 0.6969, hovering towards multi year lows. Major support is located around 0.6900 and break below targets 0.676/0.6590, while minor resistance is seen at 0.7385 (Previous Session High). Against the yen, the Aussie trades at 81.74 yen. It dropped to 80.88 yen earlier, it's lowest level against the yen since October 2012.
NZD/USD: The New Zealand dollar continued to fall, edging down to touch a 6-week trough of 0.6509. It was last at 0.6533 after having been as high as 0.6677 on Friday. The traders continue to follow the bearish trend dragging the kiwi to multi- week lows. The pair sees support at 0.6493 (Nov 23 Low), break below could drag the pair to 0.6469 (Nov 16 Low). Resistance is located at 0.6559 (Nov 24 High). Against its counterpart yen, it continues to follow its previous seven sessions bearish trend as it trades at 76.62, having touched sessions low of 76.09.
USD/CNY: Yuan firmed on Monday after the central bank set the mid-point for the yuan at 6.5626 per dollar higher for a second day, after allowing it to weaken for eight consecutive sessions. PBoC guided its yuan currency sharply stronger in a move that might calm concerns about a competitive devaluation, but only added to market confusion as to Beijing's ultimate policy intent. This has heightened tensions ahead of China trade data on Wednesday where further declines are expected in exports and imports. Figures posted over the weekend showed Chinese consumer inflation at a subdued 1.6 percent in December, while producer prices dropped 5.9 percent on the year.
Equities Recap
Asian share markets dropped lower on Monday after Wall Street suffered its worst starting week in history and doubts over Beijing's economic competence sent investors into the arms of the safe-haven yen and sovereign bonds. With currency markets volatile as the South African rand collapsed to record lows at one point before bouncing and the absence of Tokyo for a holiday only made liquidity even harder to come by, heightening volatility.
With the Shanghai Composite Index and the CSI300 index both falling around 2 percent in the early trade, after a 10 percent plunge last week which triggered a global sell-off of riskier assets, equity investors are seemed less than reassured.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2 percent,while Taiwan Stocks closed down 1.3 Pct at 7,788.42 points.
Australia's S&P/ASX 200 Index closed down 1.15 pct at 4,933.50 points, with Seoul Shares also slipping down 1.03 pct.
Commodities Recap
Gold edged higher on Monday, trading close to last session's 9-week high as pressure on Asian stock markets supported safe-haven bids for the metal. Spot gold gained 0.1 percent to $1,105 an ounce by 0330 GMT, while U.S. gold gained 0.7 percent to $1,105.2. Silver rose 0.4 percent at $13.986 an ounce, while platinum lost 0.5 percent at $870.25 an ounce. Palladium was down 1.2 percent to $488.25 an ounce.
Crude oil prices dropped over 2 percent on Monday as China's economic slowdown dented the outlook for demand and traders are placing record bets on even lower prices as they increasingly lose faith in a significant market recovery. Global benchmark Brent was down 89 cents, almost over 2.6 percent, to $32.66 per barrel at 0319 GMT, and U.S. West Texas Intermediate crude was down about 2.3 percent to $32.39.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.115 percent down by 0.015. Yields on 10-, 7-, and 3-year U.S. Treasuries all had their biggest weekly declines since early October last year, while five-year yields dropped by the most since Sept. 2013.
The Australian government bond futures edged up higher, with the 3-year bond contract up 6 ticks to 98.060. The 10-year contract added 4.5 ticks to 97.2650, while the 20-year contract was 5.5 ticks higher at 96.7900.
New Zealand government bonds gained, with yields dropping as much as 3.6 basis points at the long end.
