Market Roundup
- Reuters Poll-BOJ seen keeping -0.1 pct interest rate, 10-year JGB yield target at around zero until Q4 2017
- Reuters Poll-15 of 25 economists see BOJ on hold until mid-2017 before easing further
- Malaysia Central Bank denies any freeze of foreign exchange trading in ringgit - state news agency
- Indonesia Central Bank official says short-term forex hedging caused rupiah's sharp fall today
- Malaysia's Central Bank says ringgit should not be priced out of sync with fundamentals
- Malaysia's Central Bank says ringgit situation now is a result of speculative positioning
- Malaysia's Central Bank says ringgit levels must be supported by underlying transactions on a daily basis
- Malaysia's Central Bank says Q3 growth underpinned by private expenditure and net exports
- Malaysia's Q3 current account surplus at 6.0 bln rgt vs 1.9 bln rgt in q2
- Malaysia's Central Bank says Q3 GDP 4.3 pct on year vs Reuters poll 4.1 pct
- Indonesia Oct motorbike sales YY increase to -5.3 % vs previous -7.8 %
- Indonesia Q3 balance of payments increase to 5.7 bln $ vs previous 2.20 bln $
- Indonesia Q3 current account % GDP increase to -1.8 % vs previous -2.2 % (revised from -2 %)
Economic Data Ahead
- (0200 ET/0700 GMT) Germany HICP Final 7
- (0200 ET/0700 GMT) Germany CPI Final
- (0200 ET/0700 GMT) Turkey Current Account Balance
- (0200 ET/0700 GMT) Sweden Reg Unemployment Rate
- (0430 ET/0930 GMT) Great Britain Construction O/P Volume
- (0500 ET/1000 GMT) Preliminary Michigan Consumer Sentiment Index
Key Events Ahead
- (0900 ET/1400 GMT) Federal Reserve Vice Chair Stanley Fischer's speech
- (0950 ET/1450 GMT) Bank of Canada Governor Stephen S. Poloz speech
FX Beat
DXY: The dollar eased across the board, but traded near multi-week highs versus its major peers. The greenback against a basket of currencies trades 0.2 percent lower at 98.65, having hit a high of 99.08 in the previous session, its highest since Oct. 25.
EUR/USD: The euro recovered after declining to a 2-week low on Thursday, as the greenback weakened amid risk-off market profile. However, the sentiment around the dollar remains strong on the prospects that the new US administration could boost fiscal stimulus including infrastructure plans and other measures on trade, immigration and taxes in order to spur U.S. economic growth. The European currency trades 0.1 percent up at 1.0906, pulling further away from a low of 1.0886 hit in the previous session, its lowest since Oct. 27. Investors now await German consumer price figures, preliminary Michigan Consumer Sentiment Index and Federal Reserve Vice Chair Stanley Fischer's speech for further momentum on the major. Immediate resistance is located at 1.0954 (5-DMA) a break above could take it near 1.1000. On the downside, support is seen at 1.0850, a break below could drag it lower till 1.08520.
USD/JPY: The dollar edged down, after hitting a 3-1/2-month high in the previous session on higher U.S. bond yields and views that Donald Trump presidency could stimulate the U.S. economy fiscally and possibly trigger more aggressive rate hikes by the Federal Reserve. On Wednesday, the major briefly slumped to a low of 101.90 as markets feared Trump win, however, it has rallied since then as U.S. long-dated Treasury yields rose to their highest in more than 10 months on Trump's policies expectations. The major trades 0.3 percent down at 106.47, having hit a high of 106.94 on Thursday, it’s highest since July 21 and was set to end the week on a 3.6 percent gain. Investors will continue to track overall market sentiment ahead of Fed's Stanley Fischer speech, which could provide further insights on the U.S. monetary policy. Immediate resistance is located at 107.00, a break above targets 107.50. On the downside, support is seen at 106.00 (5-DMA), a break below could take it lower 105.50.
GBP/USD: Sterling touched a 5-week high against the dollar and a 6-week peak versus the euro on Thursday, as investors unwound short positions against the pound. Markets have absorbed Republican candidate Donald Trump's victory in the presidential election and now shift its focus on upcoming European political risks. The major rose more than 1 percent to reach as high as 1.2584 in the previous session, while against a trade-weighted basket of currencies, sterling hit a 5-week high of 76.5 and was on track for its best fortnightly performance in almost eight years, having gained around 3.5 percent. The pair trades 0.1 percent up at 1.2565, attempting to regain the 1.2600 handle. In absence of macro fundamental data from the UK docket, investors will continue track sentiment around political events in the coming months, from an Italian referendum next month to French presidential elections. Immediate resistance is located at 1.2600, a break above could take it near 1.25700. On the downside, support is seen at 1.2458 (5-DMA), a break below targets 1.2350. Against the euro, the pound trades 0.1 percent higher at 86.79 pence, having hit a high of 86.61 pence the day before, its highest since Sept. 27.
AUD/USD: The Australian dollar retreated after declining to an early 2-week low on surging U.S. bond yields that gave the greenback a broad boost. The major hit a more than 6-month high on Tuesday, but was set for its worst weekly drop since July 22. The Antipodean currencies came under immense selling pressure as the yields on 10-year Treasuries advanced 33 basis points so far this week, amid speculation the policies of President-elect Donald Trump could strengthen U.S. inflation. The Aussie trades flat at 0.7614, having hit a low of 0.7560, it’s lowest since Oct. 28. Market attention now remains on Reserve Bank of Australia Governor Phil Lowe's speech due on Tuesday, followed by jobs and wage reports. Immediate support is seen at 0.7560 (Session Low), a break below could drag it near 0.7500. On the upside, resistance is located at 0.7647 (20-DMA), a break above targets 0.7700.
NZD/USD: The New Zealand dollar declined, extending losses for third consecutive session, as the greenback stood tall across the board. On Thursday, the major hit a 9-day low of 0.7176, however, recouped some losses to close above 0.7200 handle, supported by strong economic growth and RBNZ's indication that it was done cutting rates. Moreover, data released overnight showed New Zealand's Business PMI weakened to 55.2 in October from 57.5 in September, which added to the selling pressure. The Kiwi trades flat at 0.7213, having touched an intra-day low of 0.7187 and was down 1.7 percent for the week after gains in the last three weeks. The pair will continue to get influenced by the USD price-action, amid holiday-thinned markets. Immediate resistance is located at 0.7250, a break above targets 0.7300. On the downside, support is seen at 0.7176 (Previous Session Low), a break below could drag it lower 0.7150.
Equities Recap
Asian shares and emerging market currencies declined as investors feared aggressive rate hikes by the Federal Reserve under incoming President Donald Trump will trigger capital outflows.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.4 percent.
Tokyo's Nikkei added 0.18 percent at 17,374.79 points, Australia's S&P/ASX 200 index gained 0.44 percent to 5,352.20 points and South Korea's KOSPI was trading 0.70 percent lower at 1,988.59 points.
Shanghai composite index rose 0.81 percent to 3,196.27 points, while CSI300 index was trading 0.70 percent higher at 3,415.18 points.
Hong Kong’s Hang Seng was trading 1.17 percent down at 22,572.99 points. Taiwan shares shed 2.1 percent at 8,957.76 points.
Commodities Recap
Crude oil prices edged up, however, remained near multi-week lows, as the market worried over a persistent fuel oversupply that is not expected to decline unless OPEC and other producers make a significant cut to their output. International benchmark Brent crude was trading 0.2 percent higher at $45.67 per barrel by 0406 GMT, but within the sight of a 3-month low of $44.38 on Wednesday. U.S. West Texas Intermediate crude rose 0.4 percent at $44.45 a barrel, having declined to a low of $43.06 earlier in the week, its lowest since Sept. 20.
Gold nudged up, after declining to a near 4-week low and was set for its first weekly drop in four, while investors continued to mull over the economic outlook under Donald Trump presidency. Spot gold 0.1 percent up at $1,260.07 an ounce at 0415 GMT, having hit an intra-day low of $1251.11, its lowest since Oct. 17, but was set to end the week down 3.6 percent. U.S. gold futures were down 0.6 percent at $1,259.30 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.1378 percent, while 5-year yield was at 1.5488 percent.
The Australian government bonds slumped on expectations that U.S. President-elect Donald Trump's policies, such as fiscal expansion and protectionism on international trade, could support growth and inflation. The yield on the benchmark 10-year Treasury note rose nearly 9 basis points to 2.583 percent (highest in 6 months), the yield on 15-year note jumped 8 basis points to 3.012 percent and the yield on short-term 2-year climbed 4 basis points to 1.723 percent.
The New Zealand 10-year Treasury yields jumped above 3 percent mark for the first time in eight months following weakness in the global debt market. The yield on the benchmark 10-year bond rose 9 basis points to 3.065 percent, the yield on 7-year note also ended 7-1/2 basis points higher at 2.733 percent and the yield on short-term 2-year note slid 1 basis point to 2.135 percent (rose 5 basis points from yesterdays close of 2.085 percent).
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The price of 2-year Canadian bond fell 7.5 Canadian cents to yield 0.628 percent and the benchmark 10-year lost 56 Canadian cents to yield 1.432 percent. The yields on both were the highest since May.
