Market Roundup
- India Dec Nikkei Markit Svcs PMI Increases to 53.6 vs previous 50.1
- BoJ estimates Japan's April-September 2015 Potential Growth Rate at 0.23 pct
- South Africa's Rand weakens to a 3 1/2 week low against dollar of 15.7600
- China's Offshore Yuan falls to Rrcord low at 6.6843 per dollar
- Seismic event in North Korea believed to be a nuclear test
- North Korea plans major announcement at 0330 GMT - Yonhap
- PBOC USD/CNY Fix 6.5314 vs last close at 6.5157 - higher than expected
- CNY/CNH spread blew out to more than 1,300
- China to keep ban on major shareholders offloading stakes in listed firms in effect until new rules promulgated - Shanghai Securities News - RTRS
- Caixin China Services PMI for Dec 50.2 from 51.2 in Nov lowest since July 2014
- AXJ currencies and equities hit hard on spike in risk aversion
- MSCI emerging index hits the lowest level since July 2008
Economic Data Ahead
- (0400 ET/0900 GMT) Eurozone Markit Services and Composite PMI for December
- (0500 ET/1000 GMT) Eurozone PPI
Key Events Ahead
No Major Events Scheduled
FX Beat
EUR/USD: The euro trades flat at 1.0750 levels after having touched sessions high of 1.0772. It stood at $1.0748, having fallen 0.8 percent the previous day after data showed euro zone core inflation slowed for a second consecutive month in December. The downbeat data reinforces the expectations that the ECB will add further monetary stimulus to avert deflation. The pair trades between thin range of 1.0772 - 1.0739. On the downside, support is located at 1.0714 (Nov 13 Low), while on the upside, immediate resistance is seen at 1.0790 (Nov 9 High). Against its yen counterpart, it trades at 127.47, nearing a 9-month low.
USD/JPY: The dollar was trading at 118.60 yen after going as low as 118.35 in the early Asian session. The yen held firm near multi-month highs against major currencies on Wednesday after disappointing Chinese PMI and lower PBoC fix weighed on risk sentiment. Risk appetite will not be seen in the market, if the upcoming U.S. ADP jobs data due later in the NY session disappoints investors. The pair continues to fall in its fourth session, hitting a near 3-month low. The pair moves between the range of 119.16 - 118.35. Immediate support is located at 118.06 (Oct 15 Low), the pair could extend losses if 118.00 level is breached. On the upside, the pair faces resistance at 119.66 (Oct 16 High).
AUD/USD: The Australian dollar trades at 0.7110 levels after going as low as 0.7099, nearing the December trough of 0.7096. The Aussie was hit as China's central bank fixed its yuan currency lower than many expected and on a slowdown in China's services sector. The pair is been bearish in the previous two sessions, and the same trend is likely seen to be continued. Immediate support is located at 0.7096 (Dec 16 Low) and break below could drag the pair to further losses to 0.7080 (Nov 16 Low). The pair faces resistance at 0.7195 (Dec 20 High). The Aussie dropped to fresh 3-month lows at 84.18 yen, and has since pared some losses to currently trade at 84.35.
NZD/USD: The New Zealand dollar trades at 0.6647, having dropped more than two cents in one week. The kiwi trades low as global dairy auction disappointed markets, headline price index dropped 1.6 percent with whole milk powder prices down 4.4 percent. The pair continues to follow bearish trend in this week. Immediate support is seen at 0.6611 (Dec 7 Low), while on the upside, resistance is located at 0.6713 (Oct 29 High). Against the yen, it dropped to 78.85 levels, nearing 3-month low.
USD/CNY: Yuan weakened at the start of trade on Wednesday after the PBoC set the midpoint rate at 6.5314 per dollar prior to market open, weaker than the previous fix of 6.5169 and weakest level in 4-1/2 years. China has guided the yuan steadily lower since sharp devaluation of the currency rattled traders who fear it could eventually set off a round of competitive devaluations. The spot market opened at 6.5272 per dollar and was trading at 6.5315 in early trade, 158 pips away from the previous close. The offshore yuan was trading at 6.6572 per dollar, at a discount of 1.89 percent against the onshore rate.
Equities Recap
Asian stocks dropped on Wednesday as Beijing continued guiding the yuan lower and a survey pointed to weakness in China's services sector, while the Japanese yen drew support from risk aversion.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 1 percent as Chinese equities posted modest gains as authorities continued unveiling stock-supportive measures after a 7 percent plunge on Monday rattled global markets.
Shanghai shares were last up 1.1 percent after a report that China will keep in effect a ban on share sales by listed companies' major shareholders until new rules are propagated, while Taiwan stocks closed down 1.1 pct at 7,990.39 points.
Australia's S&P/ASX 200 Index slipped down 1.07 pct at 5,128.80 points, while Nikkei edged down 0.99 pct at 18,191.32, with Seoul Shares down 0.26 pct.
Commodities Recap
Gold retained gains from a 2-day rally on Wednesday, buoyed as markets shifted away from risk amid escalating tensions in the Middle East, fears of a slowdown in China and a slide in global equities. Spot gold was little changed at $1,077.80 an ounce by 0046 GMT, after gaining 1.6 percent in the last two sessions. It reached a four-week high of $1,083.30 on Monday.
Oil prices climbed higher on Wednesday, bouncing back from near 11-year lows in the previous session as concerns over growing supply and rising stock levels outweighed tensions between key Middle East producers. Brent crude prices were up 18 cents at $36.60 a barrel, after closing down 80 cents, while U.S. crude for February delivery was 19 cents higher at $36.16 a barrel at 0124 GMT, after slipping 79 cents in the previous session.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.227 percent versus previous close of 2.250 percent.
Australian government bond futures climbed, with the 10-year contract gaining 4.5 ticks to 97.2350 in a bullish flattening of the curve. The 20-year contract added 5.5 ticks to 96.7550, while the 3-year bond contract edged up 2 ticks at 98.020.
New Zealand government bonds gained, sending yields 3.5 to 4.0 basis points lower across the curve.
