- USD/CNY fix instantly pushed USD/CNH from 6.7000 to 6.7600.
- Dealers - PBOC had intervened to reverse more than 1% fall in offshore.
- SSEC closed down 7.3% to 3115.90, Nikkei off 2.3% at close.
- USD/JPY breaks 118-117.50 barriers. Plays from 118.75 to 117.33 levels.
- EUR/USD recovers to 1.0870, easier circa 1.0840 into NY. 1.0772 early low.
- GBP/USD breaks 2015 1.457 base. Sold from 1.4640 to 1.4554 levels.
- China-Mechanism to fix CNY to dollar midpoint achieved anticipated result.
- China FX trading platform - Yuan midpoint will be more market-based in the future.
- China FX reserves drop record USD 108 bln December.
- USD/ZAR scales fresh record high of 16.20.
- European shares drop sharply as worries over China intensify.
- DAX -3% to 9810 from 10145. Index some 20% below 2015 record high.
- UK December Halifax House Prices 1.7% m/m vs previous 0.0% revised. 0.5% expected.
- EZ November Retail Sales -0.3% m/m, 1.4% y/y vs previous -0.2%/2.4% revised. 0.2%/2.0% expected.
- EZ December Economic Sentiment 106.8 vs previous 106.1. 106.1 expected.
- EZ December Industry Sentiment -2.0 vs previous -3.2. -2.9 expected.
- EZ Dec Consumer Confidence final -5.7 vs previous -5.9. -5.7 expected.
- SNB forex reserves decline in December, at 559.682bln vs 562.626bln.
- (0630 ET/1130 GMT) Challenger Job Cuts (Dec) (previous 30,953).
- (0730 ET/1230 GMT) Initial Claims (weekly Jan 3) (consensus 275k, previous 287k).
- (0730 ET/1230 GMT) Continued Claims (w/e Dec 26) (consensus 2.193 mn, previous 2.198 mn).
Key Events Ahead
- (0745 ET/1245 GMT) FRB Richmond's Lacker on the U.S. economic outlook.
- (1315 ET/1815 GMT) FRB Chicago's Evans on current economic conditions & monetary policy.
FX Recap
USD: The dollar dropped to 117.66 yen, a level not seen since late August, and was last trading at 117.95 yen, still down 0.4 percent on the day.
EUR/USD: The euro was flat against the dollar at $1.0778, having gained earlier after investors saw a dovish slant in minutes of the Federal Reserve's December meeting. It was down 0.3 percent against the yen, close to Wednesday's nine-month lows. The euro zone jobless rate dipped to a fresh four-year low in November, the latest report published by the EU statistics office showed on Thursday. The euro area seasonally-adjusted unemployment rate came in at 10.5% in November 2015, down from 10.6% in October 2015, and from 11.5% in November 2014. It made intraday high at 1.0869 and low at 1.0771 levels. Initial support is seen around at 1.0695 and resistance at 1.0960 levels.
USD/JPY: The yen rose to its highest against the dollar in more than four months on Thursday as investors looked for a haven after China guided the Yuan aggressively lower, fuelling fresh anxiety about its economy and its policy intentions. The sell-off did not stop on Thursday and the greenback was easing again, with the pair hitting stops below the ¥118 mark. During the London session, it was 0.7% weaker, trading at four-month lows around ¥117.60. In the previous session, US Trade balance as well as ADP job data came with positive numbers but USD failed to recover against JPY. Pair made intraday high at 118.16 and low at 117.33 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.
GBP/USD: Sterling slid to 5-1/2 year low of $1.4561, it dropped to 6-week low of 74.42 pence per euro. Sterling started its fourth session of losses, falling as low as to $1.4554, dropping to its lowest since mid-2010. Sterling continued its freefall and declined for a fourth session, quickly approaching 2010 lows. The primary concerns include tension between Saudi Arabia and Iran, a North Korean bomb test and China's economic slowdown, while oil prices continued their recent freefall, with Brent crude hitting its lowest levels since 2004. Pair made intraday high at 1.4640 and low at 1.4554 levels. Initial support is seen at 1.4552 and resistance is seen around 1.4850 levels.
NZD/USD: The New Zealand dollar fell to a one-month trough of $0.6616, from $0.6636 early. The kiwi dropped as far as 78.02 yen. Moreover pair is just supported above 0.66 levels. It made intraday high at 0.6666 and low at 0.6613 levels. Initial support is seen at 0.6601 and resistance at 0.6896 levels.
AUD/USD: The Aussie dropped to a 2-month low of $0.7025, having dropped more than 3 percent since the start of New Year. It was last trading 0.2 percent lower at $0.7056. The Aussie hit 82.94 yen, it's lowest since September. New building approvals fell at the fastest pace in over three years in November, in new signs that demand for property in Australia is waning. Pair made intraday high at 0.7086 levels and low around 0.6982 levels. Initial support is seen at 0.6974 and resistance at 0.7320 levels.
Equities Recap
The worries of competitive devaluations across Asia drove global shares lower after China guided its yuan lower and Shanghai shares plunged by 7 percent. Oil prices also fell to levels not seen since the early 2000s.
European stock markets inched lower, with the pan-European FTSEurofirst 300 index down 2.3 percent and the euro zone's blue-chip Euro STOXX index falling 2.5 percent. MCCI's 46-country All World index dropped 1 percent to hit a 3-month low. The benchmark emerging stock index fell 2.5 percent to a 6 1/2-year low as investors dumped risky assets.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2 percent to its lowest since late September. Japan's Nikkei shed 2.2 percent. China's CSI300 index closed down 6.9 pct at 3,294.38 points. HK's Hang Seng Index ended down 3.1 pct at 20,333.34 points.
Commodities Recap
Oil dropped below $33 a barrel to levels not seen since the early 2000s, as a plunge in Chinese equities shocked investors already concerned by near-record production and massive stockpiles of unwanted crude. Brent fell more than 5 percent, or about $2 per barrel, to a low of $32.16, a level not seen since April 2004. It had recovered to $32.87 by 0857 GMT. U.S. crude futures dropped more than 5 percent to a low of $32.10 per barrel, a level not seen since late 2003, before bouncing slightly to $32.56.
Gold rose above $1,100 an ounce for the first time in nine weeks as investors preferred to park money into the safe-haven metal amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions. Spot gold climbed to a 9-week high of $1,102.80 an ounce, before paring some gains to trade up 0.5 percent at $1,099.32 by 0644 GMT. U.S. gold futures also jumped for a fourth straight session to a nine-week high of $1,102.50.
Treasuries Recap
US 10-year Treasury yield stood at 2.1455, down 0.032 pct.
German 2-year bond yields extended falls under -0.40 percent, sharply below ECBs depo rate of -0.30 pct. 10-year yields dropped below 0.50 percent for the first time in over a month.
UK Gilts opened 27 ticks higher than the settlement of 118.29, as expected, as China worries and less hawkish FOMC minutes underpinned core fixed income markets. Buyers triggered stops by a break of resistance from contract highs at 118.73, but have stopped short of psychological resistance at 119.00 reaching a high of 118.91.
Greek 2-year bond yields rose 82 basis points to 3-week high of 9.39 pct amid global market rout.
Australian government bond futures rose, with the 3-year bond contract up 4 ticks at 98.040. The 10-year contract gained 4.5 ticks to 97.2750. The 20-year contract was steady at 96.7600. New Zealand government bonds gained, sending yields 3 basis points lower.
