- Offshore Yuan implied overnight deposit rate hits record 94%.
- SAR falls to record low vs USD in 1-yearr forwards, breaches 1000-point mark.
- GBP/USD makes fresh 5-1/2 year low at 1.4434.
- DAX up close to 2.5%, FTSE +1.5% and CAC 40 up 2.2%.
- SSEC closes up 0.2% at 3,022 points.
- NOK, CAD hammered by falling oil prices.
- Crude oil futures have fallen almost 20 percent since the beginning of the year.
- Brent down around 2.5% early but recovers back close to flat.
- UAE oil min: Low oil prices weeding out oversupply.
- China CB - Second batch of foreign institutions admitted into interbank fx market.
- ECB Bonnici - ECB needs to continuously evaluate effect of QE over time.
- ECB's Bonnici warns on impact of oil on inflation.
- ECB Villeroy - Zero bound of monetary policy has proved not to be effective lower bound.
- Russian defence min - 5 new strategic nuclear missile regiments to enter active service in 2016.
- UK December BRC Retail Sales +0.1%y/yvs previous -0.4%. 0.50% expected.
- UK November Industrial Output -0.7% m/m, +0.9% y/yvs previous 0.0% revised/1.7%. 0.0%/1.7% expected.
- UK November Manufacturing Output -0.4% m/m, -1.2% y/y vs previous -0.4%/-0.2% revised. 0.1%/-0.8% expected.
- BoJ Kuroda - Japan inflation improving steadily.
- BoJ Kuroda - Japan only halfway to its target of 2%.
- (1000 ET/1500 GMT) NIESR releases its UK GDP/growth estimates over the last three months ending in December.
Key Events Ahead
- (1515 ET/2015 GMT) Federal Reserve Bank of Richmond President Jeffrey Lacker is scheduled to speak on "Economic Outlook January 2016" before the South Carolina Business and Industry Political Education Committee in Columbia annual meeting.
FX Recap
USD: The dollar fell against other major currencies as traders wary of how high U.S. interest rates will rise this year, it dropped 0.3 percent against the yen to 117.40 yen after touching a low of 116.70 on Monday, its weakest since Aug. 24.
EUR/USD: Pair is trading in a narrow range as there was a lack of events on the European data front. The euro rose 0.2 percent to $1.0880. It made intraday high at 1.0900 and low at 1.0841 levels. Initial support is seen around at 1.0695 and resistance at 1.0992 levels.
USD/JPY: Japan's broadest measure of trade recorded a bigger surplus than expected in November, although smaller than the month before, with lower export income dragging on the trade accounts. The current account surplus shrank from ¥1.46 trillion in October to ¥1.14 trillion a month later, according to the Ministry of Finance, coming in stronger than the market forecast of a ¥895 billion surplus in November. Pair made intraday high at 118.01 and low at 117.22 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.
GBP/USD: Sterling touched a 5-1/2-year low against the dollar after data showed British industrial output suffered its sharpest fall since early 2013 in November, while manufacturing numbers also disappointed. It fell 0.4 percent on the day to $1.4483, having traded at $1.4529 just before the data's release. It was weakened to 74.95 pence per euro, taking it close to an 11-month low of 75.55 pence hit the previous day. UK factory production remained in negative territory in November, down 0.4% on a monthly basis. Total industrial production, which includes data on the extraction of oil and gas from the North Sea, also declined 0.7% between October and November. Pair made intraday high at 1.4560 and low at 1.4423 levels. Initial support is seen at 1.4391 and resistance is seen around 1.4750 levels.
NZD/USD: The New Zealand dollar edged up slightly to $0.6560 after falling as far as $0.6509 in early morning trading. Against the yen, it held at 77.24 yen, off from a four-month low on Monday. Analysts said the Kiwi would likely encounter resistance around the $0.6590 level. The sell-off on commodities sparked another round of declines in the commodity-linked currencies, with both the AUD and the NZD seen weaker on the day, although off daily lows. It made intraday high at 0.6568 and low at 0.6520 levels. Initial support is seen at 0.6491 and resistance at 0.6896 levels.
AUD/USD: The Australian dollar fell 0.5 percent to $0.6955 and a break under $0.6892 would take it to ground last trod in 2009. Against the safe-haven yen, it stood at 82.24 yen and up from a 3-year trough of 80.84. Focus will remain on tomorrow's Chinese trade balance, which should deteriorate notably from $54.1 billion to $51.3 billion, while imports are expected to decline from -8.7% to -11.0%. Slowing imports might cause further selling pressure on commodities. Pair made intraday high at 0.7004 levels and low around 0.6940 levels. Initial support is seen at 0.6924 and resistance at 0.7320 levels.
USD/CAD: The Canadian dollar hit a new 12-1/2-year low of C$1.4269 to the U.S. dollar. Oil prices remain the primary risk for CAD, as both WTI and Brent flirt with Thursday's fresh multi-year lows. WTI futures were down 5.34%, trading at $31.39 per barrel, while Brent contracts slumped 6.14% to $31.49 per barrel. Moreover, Canadian housing starts dropped to 172,965 units in December on a seasonally adjusted annual basis, according to the Canada Mortgage and Housing Corporation. It made intraday high at 1.4268 and low at 1.4201 levels.
Equities Recap
World shares dropped for the fifth straight day and were trading near their lowest level in over two years as oil prices slumped and offshore Chinese yuan deposit rates surged. European stocks recovered from early weakness as British retail companies posted strong results.
The FTSEuroFirst 300 was up 0.6 percent at 1,342 points, only its second rise this year. Britain's FTSE 100 rose 0.5 percent up, Germany's DAX climbed 1.1 percent and France's CAC 40 inched higher 0.8 percent.
MSCI's broadest measure of world stocks fell 0.2 percent and has not risen since Dec. 29. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.4 percent lower.
Japan's Nikkei closed 2.7 lower at its lowest level in almost a year, while U.S. futures slipped around 0.3 percent at the open on Wall Street. China's CSI300 Index closed up 0.7 pct at 3,215.71 points, while Shanghai Composite Index ended up 0.2 pct at 3,022.86 points.
Commodities Recap
Crude oil slipped 3 percent and was heading towards $30 per barrel and levels not seen in over a decade with traders betting on further dips. International benchmark Brent crude futures dropped over 3 percent to a low of $30.43 per barrel on Tuesday, a level last seen in April 2004, before edging back to $30.69 by 0744 GMT, still down 86 cents from their last settlement. U.S. crude West Texas Intermediate dropped to a low of $30.41 per barrel, a level last seen in December 2003, before crawling back to $30.59 per barrel.
Gold inched higher after snapping two sessions of losses, as concerns over China's economic growth and pressure on stock markets renewed the safe-haven status of the metal. Spot gold firmed 0.1 percent to $1,095 an ounce by 0633 GMT, while U.S. gold futures eased 0.2 percent to$1,094.
Treasuries Recap
U.S. 10-year treasury yield stood at 2.168 percent vs U.S. close of 2.158 percent on Monday.
Eurozone 10-year government bond yield stood at 0.578 pct, up 36 bps.
UK gilt futures pared losses after the weak industrial output data. They were 23 ticks lower on the day at 118.32, having stood at around 118.20 before the release.
Australian government bond futures dipped, with the 3-year bond contract off 3 ticks at 98.000. The 10-year contract was down 3.5 ticks at 97.2150, while the 20-year contract also fell 3.5 ticks to 96.7300. New Zealand government bonds dropped, sending yields 3 basis points higher along the curve.
