Market Roundup
- EUR/USD falls as risk appetite stabilized. -0.5%, plays 1.0840-1.0765.
- USD/JPY off 11-week 118.71 low. 119.70-118.83 range today.
- GBP/USD extends south to fresh 9 month at 1.4659 from 1.4725.
- Spread between onshore, offshore yuan widest since Sept 2011.
- India cbank likely intervened to curb rupee fall - Traders.
- DAX -0.8%, 10384 to 10173 today.
- UK Dec Markit/CIPS Construction PMI 57.8 vs previous 55.3. 56.0 expected.
- EZ Dec Inflation, flash 0.2% y/y vs previous 0.2%.
- German trade group warns on "erosion" of Europe.
- British PM Cameron to allow ministers to campaign for EU exit.
- Spain's PM sees no alternative to new elections in Catalonia.
- Kuroda: Will to take bold steps if needed for 2% price target.
- India weighs fiscal stimulus in new budget despite fast economic growth.
Economic Data Ahead
- (0830 ET/1330 GMT) Statistics Canada is scheduled to report producer prices data for November. The data showed a decline of 0.5 percent in October.
- (1330 ET/1830 GMT) Major U.S. automakers are set to report sales figures for December, analysts expect auto sales probably to have declined to 18.10 million from 18.19 million in the previous month. Investors wait to see how year-end holiday promotions, Black Friday deals impacted sales.
Key Events Ahead
No major events scheduled.
FX Beat
EUR/USD: The euro slipped towards a 1-month low against the greenback, down a quarter of a percent as risk appetite stabilized following a volatile Monday. The pair has broken major support 1.0800 which confirms major trend reversal a decline till 1.07250/1.0670/1.0620. Short term trend is still weak as long as resistance 1.09050 holds. Any break above 1.0905 will take the pair to next level till 1.0950/1.0980/1.1000. The minor resistance is around 1.0840 and break above target 1.08860/1.0905. Against the yen, the euro fell 0.7 percent to an eight-month low of 128.55 yen.
USD/JPY: The yen inched up 0.2 percent but stayed off Monday's highs. It has recovered after making a low of 118.69 and was trading around 119.69. The pair's major support is around 118.60 and break below targets 118/117.60. On the higher side it is facing resistance around 119.60 and any break above targets 120/120.40.
GBP/USD: Sterling stumbled near a 9-month low against the dollar on Tuesday, with a bullish reading on the construction sector failing to strengthen expectations for higher interest rates in a year set to be dominated by debate over a "Brexit" from Europe. Against a basket of currencies, it was broadly flat, falling 0.2 percent against the greenback and gaining around the same amount against the euro. Sterling traded at $1.4677, compared to Monday's lows of $1.4665. It is facing major resistance around 1.4760 and break above targets 1.4780/1.4820. On the lower side major support is around 1.4650 and break below targets 1.4630/1.4580 level. Overall bullish invalidation is only above 1.4850.
USD/CHF: The pair has broken major resistance 1.00350 and this confirms minor trend line reversal, a jump till 1.0125/1.0180. On the lower side minor support is around 0.9980 and break below targets 0.9945/0.9900 level. The minor resistance is around 1.00850 and break above targets 1.0125/1.0210.
AUD/USD: Australian dollar was flat after dropping more than 1 percent on Monday. It held at $0.7198, having dropped a full U.S. cent on Monday when Chinese shares plunged 7 percent. The pair's support is around 0.7150 and any break below 0.7170 will drag the pair down till 0.7100/0.7050. On the higher side minor resistance is around 0.7250 and any break above will take the pair till 0.7285/0.7305. The Aussie stood near 3-month lows at 85.62 yen and could see a retracement all the way to 81.85 cents touched in September.
NZD/USD: The New Zealand dollar was trading at $0.6745 after an overnight fall of 1.1 percent.
Equities Recap
China's injection of an estimated $20 billion to stabilize its equity and currency markets drove world shares higher from 2-1/2-month lows on Tuesday.
European shares started higher, but the profits quickly evaporated. The FTSE pan-European index remained steady at 1,401 points, Germany's DAX rose 0.9 pct, Britain's FTSE 100 climbed 1.1 pct and France's CAC 40 edged up 1.1 pct in early deals.
Tokyo's Nikkei ended down 0.42 pct at 18,374.00, MSCI's global index was 2 pct lower. China's CSI300 Index ended up 0.3 pct at 3,478.78 points, HK's Hang Seng Index finished down 0.7 pct at 21,188.72 points and Shanghai Composite Index closed down 0.3 pct at 3,287.71 points.
Commodities Recap
Oil prices lost early gains as Chinese data pulled back on sentiment in a market which already weighed down by high repeated production levels. Brent was trading at $37.09 per barrel, dropping 13 cents from its last close, WTI crude fell 9 cents at $36.67 per barrel.
Gold earned and added to the overnight rise in prices as the rising geopolitical tensions in Middle East and global stock market rout led to safe haven bids for the metal. Spot gold rose 0.3 pct to $1,077.15 an ounce.
Treasuries Recap
US 10-year Treasury yield stood at 2.258 pct vs US close of 2.245 pct on Monday.
JGB bond yields dropped to one year lows as a tumble in global equities sent investors to seek safe haven debt assets. Benchmark 10-year JGB yield fell half a basis point at 0.255 percent after touching 0.250 percent, its lowest since January 2015.
UK Gilts started 19 ticks lower than the settlement of 117.44, as predicted, as calmer Asian equity markets delivered a risk on open
Following a rally in U.S. Treasuries, New Zealand and Australian government bond prices climbed. Yields on New Zealand debt fell between 5.5 and 7 basis points across the curve. Australian government bond futures jumped to 2-month peaks, with the 3-year bond contract was up 5 ticks at 98.050. The 10-year contract gained 6 ticks to 97.2400, while the 20-year contract was 5 ticks higher at 96.7450.
