Market Roundup
- China currency: down a peg, the renminbi should keep falling - FT Lex.
- IMF - Developing countries face new reality oflower growth - Financial Times.
- Japan Dec money supply M2 +3.0% y/y, M3 +2.5%, broadest liquidity +3.6%.
- Japan Nov industrial machinery orders +2.8% y/y to bln - JIMA.
- Toyota North America production to hit new record in '16 - Kyodo.
- China Dec trade surplus US$60.09 bln, exports -1.4% y/y, imports -7.6%, US$53 bln surplus, -8.0% and -11.5% forecast.
- China Dec trade surplus CNY382.1 bln, exports +2.3% y/y, imports -4.0%, '15 trln surplus, exports -1.8%, external demand weak, imports -13.2%, crude oil +8.8%, iron ore +2.2%, exports in Q1 '16 facing mounting pressure.
- China Dec vehicle sales +15.4% y/y, passenger vehicles +18.3%.
- US Pres Obama - Talk of America's economic decline 'political hot air, calls on Congress to approve TPP - Reuters.
- Richmond Fed Lacker - Inflation pressure not on horizon, US-China economies linked less than equity market moves imply - Reuters.
- Brexit is the easy bit - Financial Times.
- New Zealand Dec QV residential property price index +14.2% y/y, Nov +15%.
Economic Data Ahead
- (0200 ET/0700 GMT) Sweden Dec unemployment; last 7.8%.
- (0245 ET/0745 GMT) France Dec HICP - final, +0.1% m/m, +0.2% y/y forecast; prelim -0.2%, +0.1%.
- (0245 ET/0745 GMT) France Nov current account balance; last E1.4 bln deficit.
- (0500 ET/1000 GMT) Eurozone Nov industrial output, -0.3% m/m, +1.3% y/y forecast; last +0.6%, +1.9%.
- (1400 ET/1900 GMT) United States Dec Federal budget, $10 bln deficit forecast; last $2 bln surplus.
- N/A Belgium 10-year bond syndication.
- N/A Norway NOK3 bln 1.75% 2025 NST477 bond, Sweden 3/6-mo t-bill auctions.
- (0500 ET/1000 GMT) Italy E1.5-2/2.5-3/1.25-1.75 bln 0.3/1.45/1.65% 2018/22/32 BTP auctions.
- (0530 ET/1030 GMT) Germany E5 bln 2026 Bund auction.
- (0600 ET/1100 GMT) ECB Lautenschlaeger speech at Frankfurt luncheon.
- (0745 ET/1245 GMT) Boston Fed Rosengren speech at Boston forum.
- (0800 ET/1300 GMT) SNB Zurbruegg speech in Zurich.
- (1300 ET/1800 GMT)Chicago Fed Evans speech at Cedar Rapids luncheon.
- (1400 ET/1900 GMT) Fed Beige Book.
USD: The dollar recovered ground against the yen and the euro on Wednesday after Chinese authorities intervened heavily to halt the yuan's fall. The dollar index edged up 0.14 percent to 99.15, extending its recovery from this week's low of 98.25 set on Monday.
EUR/USD: The euro dropped 0.24% to 1.0830, after having touched a sessions high of 1.0860. Traders continue to be bearish, following the previous three sessions trend. The pair came under renewed selling pressure after China's December exports and imports were both better than market expectations, reducing the bids for the safe-havens such as the EUR, JPY. The dollar also strengthened from the risk-on rally seen in the Asian indices and rising US treasury yields. Currently the pair trades at 1.0834, after going as low as 1.0811. Immediate support is located at 1.0803 (Jan 8 Low), while on the upside, resistance is seen at 1.0880 (5- DMA).
USD/JPY: The dollar rose 0.54 percent to 118.26 yen, after falling to a 4 1/2-month low of 116.70 yen on Monday. Better than expected China's December export and import data strengthened optimism in the markets, bolstering with it risk-on sentiment and supporting USD. Traders are seen bullish in the sessions as the pair continues to advance. It currently trades above the 118.00 level, hovering close to sessions high of 118.35. Immediate resistance is seen at 118.81 (Jan 8 High), while support is located at 117.32 (Jan 7 Low).
AUD/USD: The The Australian regained some ground on Wednesday after better-than-expected Chinese trade helped to ease concerns about the world's second largest economy. The Aussie advanced 0.6 percent to 0.7029, drifting away from the 4-month low of 0.6927 touched on Monday. Most of the gains came after China reported a decline of 1.4 percent in December exports versus an expected drop of 8 percent, while imports dropped by 7.6 percent versus forecasts of 11.5 percent. The pair currently trades at 0.7024, having touched sessions high of 0.7048 and a low of 0.6974. Immediate resistance is seen at 0.7064 (Nov 10 High), while support is located at 0.6974 (Sessions Low). Against its Japan counterpart yen, it stood at 83.03.
NZD/USD: The new Zealand dollar was firmer following heavy intervention by Chinese authorities to halt the yuan's fall and stabilise its currency. The kiwi rallied nearly 0.5 percent to 0.6563 after China's trade data, but still near an 8-week trough of 0.6509 set on Monday. According to a private survey released on Tuesday, prices for New Zealand's main commodities dropped in December, with dairy prices down 3.5 percent. The pair trades within the range of 0.6529 - 0.6590. Support is located at 0.6520 (Nov 27 Low), while on the upside, the pair faces resistance at 0.6605 (Nov 20 High). Against the yen, the kiwi trades at 1.09 percent up at 77.70.
USD/CNY: The PBoC set the mid-point for the yuan at 6.5630 to the dollar, nearly unchanged from the previous two days firm fixes. Global Investors seemed to welcome the stabilisation, bidding up equities and yuan proxies such as the Australian dollar while knocking back the safe-haven yen. Putting a pressure on offshore sellers of the currency by making it prohibitively expensive to speculate against the yuan in offshore markets, the central bank held the line on its yuan for a fourth straight session on Wednesday. Market players are still unclear about the long-term policy outlook as Beijing appears to have stabilised the yuan for now.
Equities Recap
Asian shares advanced on Wednesday after Chinese data trade data beat expectations, offering a ray of light for the global economy.
MSCI's broadest index of Asia-Pacific shares outside Japan advanced by 1.6 percent and was away from its lowest since late 2011. Even China's markets found some relief with the Shanghai Composite Index edging up 0.8 percent and the CSI300 index climbing 0.9 percent, while Taiwan stocks edged up 0.7 pct at 7,824.61 points.
Australia's S&P/ASX 200 Index closed up 1.33 pct at 4,990.50 points, while Nikkei advanced 2.88 pct at 17,715.63, with Seoul Shares up 1.48 pct.
Commodities Recap
Gold lost some ground on Wednesday as a rebound in stock markets reduced some of the precious metal's safe haven appeal with additional pressure from a strengthening greenback. Spot gold dropped 0.2 percent to $1,084.20 an ounce by 0347 GMT and U.S. gold futures edged down 0.2 percent to $1,083.20. While Silver added 0.2 percent to $13.82 an ounce, with platinum gaining 0.6 percent to $837.53 an ounce.
Crude futures rose on Wednesday for the first time in eight days, with U.S. oil drifting further away from the widely watched $30-per-barrel level breached the previous session.
U.S. West Texas Intermediate crude was up 44 cents at $30.88 a barrel at 0354 GMT. Brent crude, the global benchmark, was up 24 cents at $31.10 a barrel. The contract dropped 69 cents to settle at $30.86, after bottoming at $30.34, on Tuesday.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.135 percent versus previous close of 2.100 percent.
Australian government bond futures were mixed, with the 3-year bond contract reversing earlier gains to be down 2 ticks at 97.9900. The 10-year contract was steady at 97.2150, while the 20-year contract added 3 ticks to 96.7600.
New Zealand government bonds gained, sending yields 2.5 basis points lower along the curve.
Canadian government bond prices were higher across the maturity curve, with the benchmark 10-year rising 57 Canadian cents to yield 1.262 percent, while the 2-year price up 10 Canadian cents to yield 0.341 percent.
