- Yuan firmed Monday after Central Bank set daily midpoint rate higher at 6.5626 per dollar.
- Yuan gains 1% offshore, biggest one-day rise in 4-months, to 1-week high of 6.6170.
- Yen eases after PBOC sets stronger Yuan guidance rate.
- AUD/USD up 0.6% from 4 month low. Plays in-between 0.6927 to 0.7016.
- USD/ZAR surged to 17.9950 at thin Asia open.
- GBP/USD recovers from 1.4491 to 1.4582 but sentiment stays with bears.
- EUR/USD drops from 1.0970 -1.0872. EUR/GBP 0.7555-0.7461 levels.
- Euro zone January SENTIX Index 9.6 vs previous 15.7. 12.2 expected.
- Switzerland November Retail Sales -3.1% vs previous -0.6% revised.
- Switzerland domestic sight deposits 404.004bln in w/e January 8 vs previous 403.759bln.
- Norway December CPI 0-0.4% m/m, +2.3% y/y. -0.2%/+2.6% expected.
- SSEC closes down 5.3% at 3,016.70 points.
- Saudi Bank Governor: remains committed to U.S dollar peg.
- Saudi Aramco would sell downstream ops, not upstream.
- Catalan independence back on track as new leader sworn in.
- (0815 ET/1315 GMT) Canada's national housing agency releases housing starts for December, which likely dropped to 200k from 211.9k in November.
- (0900 ET/1400 GMT) Mexico reports its industrial production data for November. Industrial output shrank for the first timein five monthsin October after mining slumped and factory output barely expanded.
- (1030 ET/1530 GMT) Bank of Canada releases its Business Outlook Survey.
Key Events Ahead
- (1270 ET/1720 GMT) Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on monetary policy before the Rotary Club of Atlanta.
- (1950 ET/0050 GMT) Federal Reserve Bank of Dallas President Rob Kaplan speaks before the North Texas Economic Forum hosted by Dallas chapters of Financial Executive International, Association for Corporate Growth and National Association of Corporate Directors. These are among the first round of comments after the rate hike so will be important to understand the debate moving forward and parameters for a second hike.
FX Recap
USD: The dollar index nudged up to 98.656. The dollar built on its gains against the yen in early European trade, up 0.3 percent at 117.68 yen. Earlier it touched a low of 116.70 yen, the lowest since late August. It surged as much as 10.3 percent to 17.9950 rand, before tracking back to 16.5945.
EUR/USD: The euro eased 0.4 percent to $1.0882, still above Friday's low of $1.0803. The shared European currency supported around $1.09 handle and fell to fresh daily lows shortly after the Europe market open. The calendar is rather empty on Monday, with only Spanish industrial data catching investor's attention. On a non-calendar-adjusted basis, industrial output in Spain climbed 5.7% year-on-year in the reported period, after posting a revised 0.2% drop in the tenth month of 2015. Today Euro zone Sentix Investor Confidence data came with negative numbers at 9.6% vs 15.7 previous release. It made intraday high at 1.0969 and low at 1.0872 levels. Initial support is seen around at 1.0695 and resistance at 1.0992 levels.
USD/JPY: The yen hit five-month highs in Asian trade to retreat after the PBOC made moves in Hong Kong markets to support the Yuan. The greenback was rising notably on Monday and was trying to erase last week's losses. As there are no macro events planned on Monday, volatility might be lower and the pair should trade according to the sentiment, therefore falling while the risk aversion is in place and vice versa. On Tuesday, the Japanese current account and trade balance data are due, which might cause some volatility during the Asian session. Japan observes a bank holiday today. Pair made intraday high at 117.92 and low at 116.69 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.
GBP/USD: Sterling rose from a 5-1/2-year-low against the dollar, recovering from a brutal sell-off as investors pushed back chances of a rate hike. It was up 0.4 percent at $1.4570, having slipped to $1.4491 in early Asian trade, a level not seen since June 2010, with the pound losing nearly 5 percent in the last month against the dollar. Against the euro, the pound hit a 11-month low of 75.55 pence per euro in Asian trade, before recovering to trade at 74.72 pence in European deals. The UK pound extended its recovery from multi-year lows seen last week, despite the US dollar being strongly bid after solid US jobs data on Friday. The lack of macroeconomic data on today's domestic schedule leaves the pair at the mercy of overall market sentiment. Pair made intraday high at 1.4582 and low at 1.4493 levels. Initial support is seen at 1.4467 and resistance is seen around 1.4850 levels.
NZD/USD: The New Zealand dollar continued to fall, edging down to touch a 6-week trough of $0.6509. It was last at $0.6525 having been as high as $0.6677 on Friday. It has some support at the $0.6430 level. The Kiwi touched a 4-month trough of 76.05 yen, before trimming losses to 76.49. New Zealand building approvals rose for the second month in a row in November, suggesting construction activity could be one of the key drivers to growth again in 2016. Consents rose a seasonally-adjusted 1.8% month-on-month to 2,831 in November, according to Statistics New Zealand, following a revised 5.4% increase in October. It made intraday high at 0.6579 and low at 0.6508 levels. Initial support is seen at 0.6491 and resistance at 0.6896 levels.
AUD/USD: The Australian dollar recovered from a 4-month low to stand 0.3 percent higher at $0.6977. A break under $0.6892 would take it to the weakest level since 2009. The Aussie dived to its lowest level since 2012 against the yen at 80.84 yen, having plunged 7 percent last week in the largest such loss in five years. The week ahead is relatively quiet until the latter half, with no new data out of Australia until Thursday when the closely watched employment change and unemployment rates are released. Pair made intraday high at 0.7015 levels and low around 0.6926 levels. Initial support is seen at 0.6924 and resistance at 0.7320 levels.
Equities Recap
World stocks slid to near 2-1/2 year lows on Monday as Chinese markets drove Asia to a 4-year trough and sent oil and commodity markets lower again.
Europe's main indices were steady at start but the Germany's DAX and France's CAC climbed more than 1 percent and London's FTSE 100 and Wall Street futures both clawed back into positive territory. Ftseurofirst 300 turned higher, was up 0.4 pct, while Euro stoxx 50 rose 0.7 pct.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.8 percent to its lowest since late 2011. China's main indexes plunged more than 5 percent, Australian stocks fell 1.2 percent and the Philippines shares dropped 4.3 percent.
Commodities Recap
Oil prices dropped for a sixth session to trade at almost 12-year lows on China's slow growth and traders increased bets against any near-term recovery. Brent crude futures were down by 47 cents at $33.08 a barrel by 0935 GMT, off 15 percent in a week, while U.S. West Texas Intermediate was down 52 cents at $32.64 per barrel.
Gold inched higher and was trading close to last session's 9-week high as pressure on Asian stock markets supported safe-haven bids for the metal. Spot gold rose 0.1 percent to $1,105.30 an ounce by 0725 GMT. U.S. gold gained 0.7 percent to $1,105.40.
Treasuries Recap
Yields on 3-, 7-, and 10-year U.S. Treasuries posted their biggest weekly declines since early October last year, while 5-year yields dropped by the most since Sept. 2013. U.S. 10-year Treasury futures were up 3 ticks.
Euro zone 10-year bond yields were 1 to 4 bps higher on the day with hefty bond supply this week putting some upward pressure on yields.
The yield on Spain's 10-year government bond yield rose 3.6 basis points to 1.75 percent , underperforming German Bunds, whose yield rose 1.7 bps to 0.53 percent, and Italian bonds were up 3.3 bps at 1.57 percent.
Australian 3-year government bond futures were up 6 ticks to 98.060, the 10-year contract added 4.5 ticks to 97.2650, while the 20-year contract was 5.5 ticks higher at 96.7900.
New Zealand government bonds gained, with yields falling as much as 3.6 basis points at the long end.
