- PBOC fixed daily mid-point for Yuan at 6.5630 to USD, little changed from previous 2 days.
- DXY rose 0.3% to 99.293 extending recovery from week's low of 98.252 (Monday).
- EUR/USD fell to 1.0805 vs Monday's 1.0970 high. 1.0860 today's top.
- USD/SAR-1-year forward in demand again 995-ppoints from 700 session low.
- European shares gain on China data: DAx +1.2%, CAC +1.6%, FTSE 100 +1.2%.
- China Dec exports, imports fall much less than expected after Yuan slides.
- ECB Praet says impact of oil fall on inflation not temporary.
- Germany's BDI expects economy to grow by almost 2 pct in 2016.
- Euro zone November Industrial Production -0.7% m/m, 1.1% y/y vs previous 0.8%/2.0% revised. -0.3%/1.3% expected.
- BOJ buys corporate bonds at negative yield for 1st time.
- (1030 ET/1530 GMT) EIA reports its crude oil stocks change for the week ending Jan 8, which likely rose to 2.504M from a drop of 5.085Ma
- (1400 ET/1900 GMT) The U.S. Treasury Department releases its budget report for December, after the U.S. federal government ran $65 billion into the red in November.
Key Events Ahead
- (0745 ET/1245 GMT) Federal Reserve Bank of Boston President Eric Rosengren speaks on the economic outlook for the U.S. economy at the Greater Boston Chamber's Government Affairs Forum in Boston.
- (1300 ET/1800 GMT) Federal Reserve Bank of Chicago President Charles Evans talks on the current economic conditions and monetary policy before the Corridor Economic Forecast Luncheon in Iowa.
FX Recap
USD: More stability in China would clear the way for the U.S. Fed to raise interest rates this year drove the dollar around half a percent higher against the euro and yen. The dollar index rose 0.3 percent to 99.246, extending its recovery from this week's low of 98.252 set on Monday. Against the yen, the dollar rose 0.6 percent to 118.30 yen, extending its recovery from a 4 1/2-month low of 116.70 yen hit on Monday.
EUR/USD: The euro dropped 0.35 percent to $1.0822, from Monday's high of $1.0970. It was trading around 1.08220 at the time of writing. The most traded currency pair in the world was seen 0.3% lower on Wednesday during the Frankfurt session and was hovering around $1.0815. The currency bloc's industrial output slowed in November, data showed on Wednesday. On a monthly basis the gauge showed a 0.7% downturn in November, down from the upwardly revised 0.8% growth see in the previous month. It made intraday high at 1.0860 and low at 1.0805 levels. The minor resistance is around 1.0850 and any break above 1.08500 will take the pair to next level 1.0900/1.0950/1.100. On the lower side major support is around 1.0800 and break below targets 1.0710/1.0670 level. Overall bullish invalidation is only above 1.100.
USD/JPY: The Japanese yen saw its upside rally end for now as it retreated back above the ¥118 handle versus the dollar. The yen and other safe-haven currencies took a back seat on Wednesday, trading 0.54% lower at ¥118.27. Nevertheless, the yen remains the best performing currency in 2016. Pair made intraday high at 118.37 and low at 117.63 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.
GBP/USD: Sterling inched higher from a 5-1/2-year low against the dollar, with an improvement in risk appetite giving the currency some respite from a brutal sell-off. It edged up 0.1 percent to $1.4468, having touched a low of $1.4352 the previous day. Against the euro, it rose about half a percent to 74.755 pence. It was still close to an 11-month trough of 77.55 pence against the single currency that it touched at the start of the week. Pair made intraday high at 1.4476 and low at 1.4418 levels. Initial support is seen at 1.4351 and resistance is seen around 1.4750 levels.
NZD/USD: The New Zealand dollar rallied 0.5 percent to $0.6564 after the China trade data, but was still near an 8-week trough of $0.6509 set on Monday. Analysts expected the Kiwi to trade between $0.6490 and $0.6580. Higher yielding currencies such as the kiwi and Aussie enjoyed the risk-on sentiment that returned to the market on Wednesday, after Chinese trade data came in better than expected. According to fresh customs data, Chinese exports rose 2.3% in December, coming in better than the 4.1% decline forecast by markets. Imports were also much more positive than expected, falling 4.0% rather than the consensus forecast of a 7.9% decline. It made intraday high at 0.6590 and low at 0.6529 levels. Initial support is seen at 0.6491 and resistance at 0.6896 levels.
AUD/USD: Australia's dollar gained 0.8 percent to $0.7032, edging back from Monday's 4-month low of $0.6927. The resistance was found at the session's peak of $0.7049. It rallied around 1 percent against the safe-haven yen and Swiss franc. The Australian dollar jumped against its US namesake on Wednesday after Chinese trade figures came in much better than markets anticipated, raising the outlook for demand from Australia's biggest trade partner. Market shifts their focus on AUD job data due tomorrow. Net job growth is forecast to decline by 11,000 in December, pushing the unemployment rate back up from the one-and-a-half year low of 5.8% in November to 5.9% last month. Pair made intraday high at 0.7048 levels and low around 0.6974 levels. Initial support is seen at 0.6924 and resistance at 0.7320 levels.
Equities Recap
Stock markets in Europe and Asia climbed after Chinese trade data eased concerns over the economy. China's exports dropped just 1.4 percent in U.S. dollar terms in December, versus forecasts of an 8 percent drop.
The Europe's FTSEurofirst 300 was up 0.6 pct, Britain's FTSE 100 rose 0.6 pct, France's CAC 40 climbed 1 pct, while Germany's DAX inched higher 1.3 pct.
Japan's Nikkei index rose 2.88 percent, Shanghai Composite Index closed down 2.4 pct at 2,949.60 points, China's CSI300 Index ended down 1.9 pct at 3,155.88 points, HK's Hang Seng Index finished up 1.1 pct at 19,934.88 points.
Commodities Recap
Oil prices climbed for the first time in eight days on positive Chinese trade data and an unexpected draw in weekly U.S. crude oil inventories drove investors to buy crude futures. Brent crude rose 87 cents at $31.73 a barrel at 0954 GMT, but remained near lows last seen nearly 12 years ago. U.S. West Texas Intermediate crude was up 88 cents at $31.32 a barrel, recovering from Tuesday's dip below $30.
Gold dropped as a rebound in stock markets reduced some of the metal's safe haven appeal with additional pressure from a strengthening dollar. Spot gold fell 0.8 percent to $1,081.80 an ounce by 0725 GMT and U.S. gold futures fell 0.3 percent to $1,081.8.
Treasuries Recap
U.S. 10-year Treasuries yield stood at 2.135 percent vs U.S. close of 2.100 percent on Tuesday.
UK Gilts opened 11 ticks lower than the settlement of 118.67, as predicted, as core fixed income markets reacted to above forecast China trade data. Due to the absence of domestic data or event risk for the day screens have been very range bound with 10-year cash operating in a 1.76% to 1.776% range.
The latest round of some 35 billion euros of government debt set to be sold in the euro zone this week pushed up bond yields. German 10-year yields edged up 1 basis point to 0.55 percent, having given up 4 bps so far this week. All other euro zone yields were up 1-3 bps.
Australian government bond futures were mixed, with the 3-year bond contract reversing earlier gains to be down 2 ticks at 97.9900. The 10-year contract was steady at 97.2150, while the 20-year contract added 3 ticks to 96.7600. New Zealand government bonds rose, sending yields 2.5 basis points lower along the curve.
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