Market Roundup
- USD/JPY hit 11 week low at 118.71 from 120.46.
- USD/CHF off from 10025 to 0.9925 but recovers into NY.
- EUR/USD better bid but limited at 1.0946 (from 1.0827 low).
- EUR/GBP gives back gains after peaking at 0.7423. Tests 0.7371.
- EZ Dec Markit Mfg final PMI 53.2 vs previous 53.1.
- UK Dec Markit/CIPS 51.9 vs previous 52.5 revised. 52.7 expected.
- UK Nov BOE Consumer Credit 1.476 bln vs previous 1.207 bln revised. 1.30bln expected.
- UK consumer credit grows at fastest rate in almost a decade in November.
- UK Nov Mortgage Lending 3.873 bln vs previous 3.633 bln revised. 3.70 bln expected.
- UK Nov Mortgage Approvals 70/410k vs previous 69.867k revised. 69.650k expected.
- UK Nov M4 Money Supply 0.4% vs previous 0.6%.
- Swiss Dec Manufacturing PMI 52.1 vs prev 49.7.
- Swiss domestic sight deposits fall to 403.759 bln from 405.989 bln w/e Jan 1.
- Onshore and offshore yuan weaken to more than 4-year lows.
- Dollar/Saudi riyal forwards jump on Saudi-Iran tensions.
- Poland wants Britain's help over NATO troops in Brexit talks.
- Proportion of big UK companies backing EU membership falls - Deloitte.
Economic Data Ahead
- (0930 ET/1430 GMT) The RBC Canadian Manufacturing Purchasing Managers' index for December, a measure of manufacturing business conditions, is scheduled for release. It edged up to a seasonally adjusted 48.6 in November from 48.0 in October.
- (0945 ET/1445 GMT) The financial firm Markit releases its manufacturing PMI for the month of December, the index stood at 51.30 in the previous month.
- (1000 ET/1500 GMT) Economists expect U.S. construction spending to have risen 0.7 percent in November.
- (1000 ET/1500 GMT) The Institute for Supply Management's (ISM) index of national factory activity is estimated to have risen to 49 in November.
Key Events Ahead
- (1045 ET/1545 GMT) FRB New York FedTrade Operation 30-year Fannie Mae/Freddie Mac (max $2.325 bn).
- (1630 ET/2130 GMT) Federal Reserve Bank of San Francisco President John Williams will participate in the panel, "The Implementation of Macroprudential Policies by Central Banks", before the American Economic Association/ASSA annual meeting in San Francisco.
FX Beat
USD: The dollar touched an 11-week low against the yen on Monday, hit by a renewed stock market sell-off in China that drove investors preferring for the traditional security of the Japanese yen and the Swiss franc. Against the basket of currencies it was trading at 98.20, down 0.5 pct.
USD/JPY: The cautious mood towards riskier assets helped the Japanese yen, with the dollar falling below 119 yen for the first time since mid-October. It rose around 1 percent to 118.995 yen. The pair has broken major support 120 and declined till 118.70. Major support is around 118.60 and break below targets 118/117.60. On the higher side it is facing resistance around 119.30 and any break above targets 119.60/120.
EUR/USD: The euro firmed 0.5 percent to $1.0915. It has slightly recovered till 1.09461 after making a low of 1.08272. Major resistance is around 1.1000 and any break above 1.100 will take the pair to 1.1060/1.1090 level. The minor resistance is around 1.0950. On the downside minor support is around 1.0880 and break below targets 1.0840/1.0800. Major trend reversal is only below 1.0800.
GBP/USD: Sterling hit a 9-month low against the dollar on Monday, as concerns that UK growth would not be strong enough to justify a rate hike this year, and jitters over a possible "Brexit" from Europe, weighed on the currency. It fell to $1.4684, its lowest since April, leaving it almost 5 percent down from two months ago. It has slightly recovered till 1.4815 at the time of writing. It is facing major resistance around 1.4850 and break above targets 1.4880/1.4920/1.4950. On the lower side major support is around 1.4775 and break below targets 1.4720/1.4650 level. Overall bullish invalidation is only above 1.5100. Against the euro, sterling hit a 2-1/2-month low of 74.235 pence before recovering to 73.79 pence, flat on the day.
USD/CHF: The Swiss franc rose around 1 percent against the dollar 0.9941 francs. The pair has once again made a high of 1.00280 and started to decline from that level. Short term trend is still weak as long as resistance 1.00350 holds. On the lower side minor support is around 0.9980 and break below targets 0.9945/0.9900 level. Any break above 1.00350 will take the pair to next level around 1.00580/1.010.
AUD/USD: The Australian dollar, which is tend to be dependent on growth and the buoyancy of commodity prices, was sharply lower in light post-holiday trade, but was hovering near 6-month highs against a soggy pound. It dropped to $0.7233 against a broadly firmer U.S. dollar, from $0.7285 on Thursday, pulling closer to a trough under 71 cents touched mid-December. The Aussie has broken major support 0.7240 and declined till 0.7198. The pair's support is around 0.7170 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. Sterling was trading at A$2.0326, having dropped 21 cents since June. A break under A$2.0161-68, the 61.8 percent retracement of the March-August climb, could see a move all the way to A$1.8809.
NZD/USD: The New Zealand dollar dropped nearly 1 percent in the session to $0.6765 in light trade with financial markets there shut for a public holiday. They will re-open on Tuesday. It lost more than 10 percent in 2015, but dairy prices showed signs of bottoming out last year and analysts reckon this could give it a leg up over the Aussie in 2016.
Equities Recap
European shares started the new year in red after the weak Chinese data renewed global growth worries, while rising tensions in the Middle East drove bond yields lower and oil prices higher.
European stocks were led by Asia. The pan-European FTSEurofirst 300 index dropped 2.3 pct, while the euro zone's blue-chip Euro STOXX 50 index fell 2.6 pct. Germany's DAX declined 3.4 percent, France's CAC dipped 1.2 pct, UK's FTSE was down 0.6 pct.
Tokyo's Nikkei ended down 3.06 pct at 18,450.98. Adding to the worries, China's central bank fixed the yuan at a 4-1/2 year low. Mainland Chinese shares dropped 7 pct, prompting the stock exchange to halt trading. Shanghai Composite Index closed down 6.9 pct at 3,296.26 points, HK's Hang Seng Index went down 2.7 pct at 21,327.12 points
Commodities Recap
Brent crude oil, which dropped 35 pct previous year due to concerns of supplyglut in a slow down of global economy, rose more than a dollar to high of $38.5 per barrel before falling back to $37.47.
Gold rose more than 1 pct, strengthened by increasing tensions in Middle East and sharp fall in stocks and USD following weak Chinese data that fuelled fears over global growth. Spot gold rose 1.2 pct at $1,073.20 an ounce, while U.S. gold futures for February delivery climbed $12.30 an ounce at $1,072.50.
Treasuries Recap
US 10 year Treasury note yield stood at 2.2268 pct, dropping by 0.048 pct.
German 10-year Bunds slipped 6 basis points to 0.575 percent.
UK Gilts started 27 touches higher than the settlement of 116.77, as expected, as core markets started the year on a higher footing.
Australian government bond futures were mixed, with the 3-year bond contract falling 1 tick at 97.950. The 10-year contract gained half a tick to 97.1200, while the 20-year contract rose one tick to 96.6200.
