Market Roundup
- USD/CAD hits near 13 year high then eases. Plays in between 1.4650 to 1.4494 levels.
- Oil slides to lowest since 2003 after Iran sanctions lifted.
- Brent crude down to $27.67/barrel, lowest since 2003 levels.
- China's Yuan firms as central bank keep pressure on speculators.
- Shanghai Composite Index, CSI300 both close up 0.4%.
- Onshore and offshore Yuan firmer after PBOC announcement.
- GBP/USD makes fresh 5-1/2 year low at 1.4248 in early Europe, remains offered.
- EUR/USD eases to 1.0874 from 1.0943. 1.0985 was Friday's peak.
- China Premier Li - Downward pressure on economy is increasing.
- China's head stock regulator Xiao Gang has offered to resign - sources.
- FX intervention ineffective - Swedish central banker Floden in minutes.
- Political impasse means Spain faces lost year for reforms.
- SNB domestic deposits dip last wk to 403.841bln from previous 404.004bln.
- BoJ Kuroda - Data shows price gains spreading through econ.
- BoJ offers gloomy view on wages, market rout clouds outlook.
Economic Data Ahead
- No U.S or Canadian data scheduled for today.
Key Events Ahead
- US Martin Luther King holiday.
FX Beat
USD: The dollar gained around a third of a percent against the euro to $1.0886 and more than 0.6 percent to 1.0064 francs. It also inched higher to 117.29 yen.
EUR/USD: The euro edged down against the dollar to $1.0891. The shared European currency retreated from its 2016 highs seen on Friday, after demand for safe-haven currencies dissipated. The sentiment on currency markets improved, with demand for higher yielding currencies, after an announcement from China's central bank over the weekend. The third largest economy in the euro area posted a surplus of €4.409 billion in the reported month, compared to a surplus of €4.87 billion recorded in October. It made intraday high at 1.0927 and low at 1.0874 levels. The minor resistance is around 1.0950 and any break above 1.09500 will take the pair to next level 1.1000. On the lower side major support is around 1.0800 and break below targets 1.0710/1.0670 level.
USD/JPY: The safe-haven yen lost some of its gains after having risen to a 5-month high of 116.51 to the dollar on Friday. It last stood at 117.31. Today, Japan's November industrial production and capacity utilization figures came with negative numbers. Japan's Ministry of Economy, Trade and Industry Industrial output figures show a 1.7% rise year-on-year though month-on-month output slipped into contraction notching a 0.9% decline in November. The pair made intraday high at 117.43 and low at 116.65 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.
GBP/USD: Sterling recovered from a 5 1/2-year low to trade above $1.43 on Monday, after a heavy sell-off that saw investors reacting to an uncertain economic outlook for Britain. It was up 0.3 percent at $1.43, after falling to $1.4248 earlier in the London session, it's lowest since mid-2010. The euro was down 0.6 percent at 76.11 pence, after rising 1.5 percent on Friday to a one-year high of 76.935 pence. On a trade-weighted basis, the pound was 87.9, having hit a one-year low on Friday. Neither the UK nor the US calendar offers any data today; hence the cable will be driven by the overall market sentiment. China and oil prices are once again set to grab the most attention this week. Pair made intraday high at 1.4323 and low at 1.4247 levels. Initial support is seen at 1.4226 and resistance is seen around 1.4750 levels.
NZD/USD: The New Zealand dollar held steady at $0.6463, from a 3-month low of $0.6382 set on Friday. BNZ FX Strategist Jason Wong noted the November support level of $0.6430 remains a key technical level but "we think that it is only a matter of time before a more sustainable break of that support occurs, which will see the NZD fall a lot further this year. It made intraday high at 0.6479 and low at 0.6404 levels. Initial support is seen at 0.6383 and resistance at 0.6896 levels.
AUD/USD: The Australian dollar gained around half a percent while other commodity currencies stabilised despite another dip in the price of oil after Friday's 5 percent dive. It edged up nearly half a cent to $0.6906, from $0.6860 late on Friday. It was supported by some bargain hunting after it touched a 7-year trough of $0.6827 on Friday. Resistance was found at $0.6915 and support at $0.6830. The Aussie also bounced 0.7 percent higher to 80.94 yen, pulling away from 2-1/2-year lows touched last week against the safe-haven yen. The pair made intraday high at 0.6927 levels and low around 0.6834 levels. Initial support is seen at 0.6825 and resistance at 0.7050 levels.
USD/CAD: Asian investors drove the Canadian dollar to a near 13-year low of C$1.4650 against the U.S. dollar on expectations the Bank of Canada will cut interest rates as early as this week. It recovered to gain 0.2 percent on the day against its U.S. counterpart in early European trade. The pair made intraday high at 1.4605 and low at 1.4486 levels. Initial resistance is seen at 1.4655 and support at 1.4334 levels.
Equities Recap
Most of the stock markets and oil prices hit multi-year lows on Monday amid continuos worries over global growth, although European stocks were trading higher.
The FTSEuroFirst 300 index of leading shares rose 0.7 percent, Germany's DAX was climbed 0.6 percent, France's CAC 40 was up 0.4 percent and Britain's FTSE 100 inched higher 0.3 percent in the early trades.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped to its lowest since October 2011 and was last down 0.3 percent. Japan's Nikkei plunged as much as 2.8 percent to a 1-year low before closing 1.1 percent lower. MSCI's emerging stock index dropped to 6-1/2-year low and was last down 0.3 percent on the day. The volatile Shanghai Composite index closed up 0.4 percent.
Commodities Recap
Oil prices plunged to their lowest since 2003 on Monday, as the market braced for additional Iranian exports after the lifting of sanctions against the country over the weekend. Concerns about Iran's return to an already oversupplied oil market drove down Brent crude to $27.67 a barrel early on Monday. The benchmark was at $28.59 by 0921 GMT, down 38 cents from its settlement on Friday. U.S. crude was down 38 cents at $29.04 a barrel, not far from a 2003 low of $28.36 hit earlier in the session.
Gold started the week trading higher supported by safe-haven bids after Asian equities tumbled to their lowest since 2011 as investors shunned risky assets on the heels of weak U.S. economic data. Spot gold was up 0.1 percent at $1,090 an ounce by 0606 GMT, after losing 1.4 percent last week. U.S. gold for February delivery was flat at $1,089.90 an ounce.
Treasuries Recap
U.S. markets closed for the Martin Luther King Day holiday.
European bond trading, yields rose by around 1-3 basis points across "core" markets such as Germany and "peripheral" markets like Spain.
UK Gilts opened 10 ticks lower than the settlement of 119.64, as predicted, as core markets reacted to China currency sanctions rather than lower oil expectations on the lifting of Iran sanctions. No real drama so far as sellers have respected former highs on 10-year cash around the 1.72% region.
New Zealand government bonds gained, sending yields around 4.5 basis points lower across most of the curve. Australian government bond futures jumped to 2-month highs, with the 3-year bond contract up 5 ticks at 98.130. The 10-year contract rose 2 ticks to 97.3300, while the 20-year contract added 1.5 ticks to 96.8350.
