Market Roundup
- BOJ Board Member Masai: Important to make sure intentions of BOJ policy are well understood to avoid volatility
- BOJ Board Member Masai: Hope US government continues to take appropriate policies to drive growth and lead global economy
- BOJ's Masai: No change in large JGB purchases under yield curve control scheme
- BOJ's Masai: Excessive declines in long- and super-long term rates have lowered insurance and pension returns
- Japan Oct trade balance total yen decrease to 496.2 bln JPY (forecast 615.4 bln JPY) vs previous 498.3 bln JPY
- Japan Oct imports YY decrease to -16.5 % (forecast -16.3 %) vs previous -16.3 %
- Japan Oct exports YY decrease to -10.3 % (forecast -8.6 %) vs previous -6.9 %
- Moody's- In Korea, steady macro conditions and prudent investment should support stable earnings and financial leverage
- Moody's- In China, GDP growth of 6.3% and ample market liquidity will support moderate growth in revenue and cash flows
Economic Data Ahead
- No Significant Economic Data Release
Key Events Ahead
- No Significant Event Scheduled
FX Beat
DXY: The dollar stood firm across the board, supported by rising Treasury yields and increasing prospects of a December rate hike in the United States. The greenback against a basket of currencies trades higher at 101.24, having touched a 13-1/2 -year high of 101.48 in the previous session. FxWirePro's Hourly Dollar Strength Index stood at 73.06 (Bias Bullish) by 0500 GMT.
EUR/USD: The euro edged up, snapping a 10-day losing streak, however, remained not far above Friday's 11-month low, hit on increasing political uncertainty in Europe and Trump led-dollar strength. On Friday, the major slumped as low as 1.0569, its lowest since Dec. 3, after Fed's James Bullard, stated that the Federal Reserve will raise U.S. interest rates in December barring global market volatility or weak U.S. employment data. The major's recovery is likely to remain fragile as European Central Bank is widely expected to boost easing in December, with the constitutional referendum to be held on December 4 in Italy. The European currency trades 0.1 percent up at 1.0596, having touched a high of 1.0613 earlier in the session. FxWirePro's Hourly Euro Strength Index stood at -43.56 (Bias Neutral) by 0400 GMT. In absence of major fundamental drivers from both the continents, markets attention will remain on ECB President Draghi's speech due later in the day. Immediate resistance is located at 1.0642 (5-DMA), a break above could take it near 1.0700. On the downside, support is seen at 1.0569 (Previous Session Low), a break below could drag it near 1.0520.
USD/JPY: The dollar rose above the 111.00 handle to hit a fresh near-6 month high against the Japanese yen, as investors continued to speculate that the President-elect Donald Trump's administration would embark on expansionary fiscal policies and strengthen growth. The selling pressure around the yen intensified after data released overnight showed trade balance for October rose to 496.2 billion yen, compared to 610 billion yen estimates, while imports and exports declined 10.3 percent and 16.5 percent, respectively. The major trades 0.2 percent higher at 111.05, having hit a high of 111.18 earlier in the session, it’s strongest since May 31. FxWirePro's Hourly Yen Strength Index stood at -150.21 (Bias Highly Bearish) by 0400 GMT. Amid a lack of relevant fundamental drivers from the U.S docket, the pair will track overall markets sentiment. Immediate resistance is located at 111.44, a break above targets 112.00. On the downside, support is seen at 110.05 (5-DMA), a break below could take it near 109.38 (7-EMA).
GBP/USD: Sterling slumped, extending losses for the sixth consecutive session, as board based strength in the U.S dollar weakened the bid tone around the pound. On Friday, the major tumbled to a 2-week low, weighed down by weaker growth expectations and turmoil around talks on Britain leaving the European Union. Sterling trades lower at 1.2336, hovering towards a low of 1.2302 hit in the previous session, its lowest since Nov. 3. FxWirePro's Hourly Sterling Strength Index stood at 53.23 (Bias Bullish) by 0400 GMT. With Britain's economic calendar absolutely data empty, investors will continue to track development surrounding Europe political risks. Immediate resistance is located at 1.2400 (7-EMA), a break above could take it near 1.2440 (10-DMA). On the downside, support is seen at 1.2300, a break below targets 1.2250. Against the euro, the pound trades 0.2 percent down at 85.85 pence, after declining to a low of 86.35 pence in the prior session.
AUD/USD: The Australian dollar declined to a fresh 5-month low as the greenback strengthened on the back of rising Treasury yields and on the prospects of a December rate hike in the United States. The major has shed around four U.S. cents since the election win of Republican Donald Trump led to a radical re-evaluation of the U.S. economic outlook and interest rates that sent Treasury yields higher. The Aussie trades 0.1 percent lower at 0.7326, having touched an early low of 0.7311, it’s weakest since Jun. 24. FxWirePro's Hourly Aussie Strength Index stood at - 46.01 (Bias Neutral) by 0500 GMT. The major will continue to track board based market sentiment, amid a lack of economic drivers from both the continents. Immediate support is seen at 0.7300, a break below could drag it till 0.7250. On the upside, resistance is located at 0.7350, a break above targets 0.7400
NZD/USD: The New Zealand dollar edged up, halting its 8-day losing streak, but hovered just above a 5-month low as expectations that a Trump presidency will push growth higher and faster-than-expected Fed hikes boosted the U.S. dollar to 13-1/2-year highs against a basket of currencies. The major slumped to an early low of 0.6985, its lowest since Jul. 26, however, it regained some momentum to trade above the 0.7000 handle. The Kiwi trades up at 0.7088, attempting to sustain gains above the 0.7000 level. FxWirePro's Hourly Kiwi Strength Index was at -82.20 (Bias Slightly Bearish) by 0500 GMT. Immediate resistance is located at 0.7042 (5-DMA), a break above targets 0.7070/ 0.7100. On the downside, support is seen at 0.6956, a break below could drag it near 0.6900.
Equities Recap
Asian shares were on the defensive, weakened by growing concerns that the U.S. dollar strength and rising U.S. bond yields since Donald Trump's election victory could discourage fund inflows into emerging markets.
MSCI's broadest dollar-based index of Asia-Pacific shares outside Japan fell 0.1 percent, hovering near 4-month lows.
Tokyo's Nikkei rose 0.76 percent at 18,104.84 points, Australia's S&P/ASX 200 index edged down 0.04 percent to 5,357.50 points and South Korea's KOSPI was trading 0.2 percent lower at 1,970.26 points.
Shanghai composite index rose 0.70 percent to 3,215.18 points, while CSI300 index was trading 0.66 percent higher at 3,439.91 points.
Hong Kong’s Hang Seng was trading 0.05 percent up at 22,352.28 points. Taiwan shares added 0.4 percent at 9,041.11 points.
Commodities Recap
Crude oil prices rose by more than 1 percent, extending previous session gains, boosted by OPEC's plans to cut production to rein oversupply that weighed on prices for over two years. International benchmark Brent crude was trading 1.3 percent higher at $47.41 per barrel by 0356 GMT, hovering towards a high of $47.58 hit last week, its highest since Nov. 2. U.S. West Texas Intermediate crude rose 2.90 percent at $46.88 a barrel, hitting a 3-week high of $47.01 earlier in the session.
Gold prices rose, halting a 3-session losing streak, supported by physical buying after declining to a 5-1/2-month low on Friday. Spot gold was up 0.3 percent at $1,210.85 an ounce by 0404 GMT, having dropped as much as 1 percent to $1,202.82 in the previous session, its lowest since May 30. U.S. gold futures were up 0.2 percent at $1,211.50 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.3370 percent, while 5-year yield was 0.005 bps up at 1.7843 percent.
The Australian government bonds gained as investors covered last week’s short positions. The yield on the benchmark 10-year Treasury note fell 2-1/2 basis points to 2.70 percent, the yield on 15-year note dipped 3 basis points to 3.11 percent and the yield on short-term 2-year slid 1 basis point to 1.82 percent.
The New Zealand government bonds closed a tad higher, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year bond fell ½ basis point to 3.105 percent, the yield on 7-year note also ended 1/2 basis point lower to 2.758 percent and the yield on short-term 2-year note slid 2 basis points to 2.115 percent.
