Market Roudup
- S.Africa's Forward Position at $1.424 Bln End-December Vs $2.106 Bln in November - Cbank
- S.Africa's Foreign Currency Reserves Rise By $595 Mln To $39.026 Bln in December - Cbank
- S.Africa Gross Reserves At $45.787 Bln At End-December Vs $45.14 Bln in November (Consensus $44.684 Bln)
- S.Africa Net Reserves At $40.654 Bln End-December Vs $40.471 Bln in November (Consensus $40.695 Bln) - Cbank
- Dutch Nov Manuf Output +1.0 Pct M/M After Revised +1.3 Pct In Oct - CBS
- Mauritius Inflation Rate at 1.3 Pct Year-On-Year In December - Stats Office
- Aus retail sales for Nov plus 0.4% as per f/c
- PBOC sets yuan mid-point at 6.5636/dlr vs last close 6.5929
- PBOC intervening to support Yuan via state owned banks-traders - Reuters
- Risk assets rally as USD/CNY fix lower than expected
- N.Korea military boosting troop deployment - Yonhap
- Japan Nov inflation-adj real wages fall for first time in five mths but o/time pay +1.1% y/y
- (0200 ET/0700 GMT) German Trade Data
- (0245 ET/0745 GMT) France Trade Data
- (0600 ET/1100 GMT) Brazil PPI
Key Events Ahead
No Major Events Scheduled
FX Beat
USD: The dollar index is around 98.74 levels, up about 0.3 pct from Thursday's close. DXY which rose over 9 percent last year, is predicted to end 2016 at 102.0.
EUR/USD: The euro dropped 0.64 percent to 1.0857 in the early trade, after having climbed up to 1.0929 in the previous session. The market anticipates the euro to fall below parity with the U.S. dollar on expectations that the Fed would further increase its interest rate more this year. The pair currently trades at 1.058, having touched sessions low of 1.0855. It is seen moving between the range of 1.0855-1.0933. Immediate support is located at 1.0844 (Nov 4 Low), break below could drag the pair to further losses. On the upside, the pair face resistance at 1.0946 (Jan 4 High).
USD/JPY: The yen reversed course and dropped against the dollar as it pulled back from Thursday's 4 1/2-month high of 117.33. The greenback was still poised to lose 1.7 percent this week. The safe-haven yen largely benefited after China guided the yuan sharply lower in the previous sessions creating risk aversion across market on concrens of slowdown in the Chinese economy. Attention could be shifted back on Fed and prospects of more U.S. interest rate hikes this year, if U.S. non-farm payrolls post strong positive data. Immediate resistance is located at 118.75 (Previous session High), while on the downside a close below 117.72 will take the pair to 116 and then 115.60 levels.
AUD/USD: The Australian dollar rebounded on Friday after the Central Bank of China set a higher yuan guidance rate for the first time in 9 days.The Aussie strengthened to 0.7057 after falling to a 3-month low of 0.6980 on Thursday. Investors are seen bullish as retail sales in November showed a 0.4 percent rise in line with forecasts. Currently the pair trades at 0.7057 levels, having touched session highs of 0.7076. Immediate resistance is located at 0.7086 (Previous Session High), break above could take the pair to 0.7111 (Oct 5 High). While on the downside, support is seen at 0.6998 (Oct 1 Low), break below could drag the pair to 0.6980 (Previous Session Low). Against the yen, the Aussie bounced to 83.43 but was still within reach of a 4-month trough set overnight.
NZD/USD: The New Zealand dollars broke a 4-day losing streak on Friday after China's central bank set a higher yuan guidance rate than expected. The kiwi climbed 0.5 percent to 0.6625, having touched a 1-month low of 0.6590 in the previous session. The pair currently trades at 0.6645, after going as high as 0.6677. 0.6590 is strong trendline support, NZD/USD held support at 0.6590 and has edged higher on the day. Immediate resistance for the pair is seen at 0.6667 (Daily High Jan 7), while support on the downside lies at 0.6611 (Dec 7 Low). Against its counter part yen, it trades higher at 78.59, after falling continuously in the previous 6 sessions.
USD/CNY: Yuan firmed in early trade on Friday after the central bank strengthened the yuan's midpoint rate for the first time in 9 days on Friday, fixing it at 6.5636 per dollar, firmer than the previous fix of 6.5646 and previous day's close of 6.5929. China allowed fall in the yuan in 5 months on Thursday, pressuring regional currencies and sending global markets tumbling as investors feared it would trigger competitive devaluations. In spot trade, yuan opened at 6.5700 and was trading at 6.5759 in early trade, 0.19 percent away from the midpoint, while the offshore yuan was trading 1.29 percent away from the onshore spot at 6.662 per dollar.
Equities Recap
Asian shares rebounded on Friday, led by strong gains for battered Chinese stocks after China suspended its market circuit breaker and set a firmer midpoint rate for trading of the yuan for the first time in 9 days. Friday's advances seemed to reduce some of the fears that have hit global markets, but Shares in Asia were still on track for their biggest weekly fall in more than 4 months.
MSCI's broadest index of Asia-Pacific shares outside Japan erased earlier losses to be up 0.6 percent, while Taiwan Stocks edged up 0.5 pct at 7,893.97 points.
Australia's S&P/ASX 200 Index closed down 0.32 pct at 4,994.50 points, while Nikkei edged down 0.39 pct at 17,697.96, with Seoul Shares climbing up 0.67 pct.
Commodities Recap
Gold hit a fresh 9-week high above $1,100 an ounce on Friday, as investors sprinted to safe-haven assets due to unstable over the Chinese economy and tumbling stock markets. Spot gold was steady at $1,108.65 an ounce by 0044 GMT, after climbing to $1,112 earlier in the session, its highest since Nov. 4.
Oil prices rose more than 2 percent on Friday, following China shares higher after Beijing deactivated a circuit breaker mechanism that suspended equities trading, although a persistent global crude surplus kept a lid on gains. Brent rose 58 cents to $34.33 a barrel by 0327 GMT, near an intraday high of $34.72. It was about $2 away from Thursday's $32.16, a level last seen in 2004. U.S. West Texas Intermediate was up 64 cents at $33.91 a barrel.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.179 percent versus previous close of 2.153 percent after it dropped to a 2 1/2-month low of 2.119 percent on Thursday.
Australian government bond futures were off 2-month peaks as the 3-year bond contract eased 3 ticks to 98.020. The 10-year contract shed 5 ticks to 97.2350, while the 20-year contract edged down 4.5 ticks to 98.7550.
New Zealand government bonds eased, sending yields slightly higher across the curve.
Canadian government bond prices were lower across the maturity curve, with the benchmark 10-year falling 18 Canadian cents to yield 1.348 percent, while the 2-year priced down 5.5 Canadian cents to yield 0.438 percent. The Canada-U.S. 2-year bond spread was 2.3 basis points narrower at -54.6 basis points as Canadian government bonds underperformed on reduced expectation of a Bank of Canada rate cut.
