Market Roundup
- Japan FinMin Aso – To compile third extra budget for current FY – Reuters.
- Japan MoF/ESRI survey – Q4 big Mfg sentiment index +7.5, Q3 +2.9, +4.6 forecast in Q1 ’17, ‘16/17 CAPEX +2.5% y/y, previous survey +4.9%.
- Japan Nov money supply M2 +4.0% y/y, M3 +3.4%, broadest liquidity +1.9%, Oct +3.7%, rev +3.1% and rev +1.6%.
- Japan’s frugal millennials a bad omen for its economy – Reuters.
- PBOC fixes yuan at 6.8972 vs USD, yesterday 6.8731, biggest daily percentage move since October 21, 241 ticks or 0.35%.
- China SAFE – Cross-border capital flow stable – Xinhua.
- China Nov CPI +0.1% m/m, +2.3% y/y, +0.1% and +2.2% forecast, y/y rise largest since April ’16, food CPI +4.0% y/y, non-food +1.8%.
- China Nov PPI +1.5% m/m, +3.3% y/y, +2.2% forecast, y/y rise most since Oct ’11.
- China private banks’ assets reach CNY132.9 bln in Q3 – Xinhua.
- Foreign CB US debt holdings +$12.140 bln to $3.139 trln Dec 7 week, Treasury holdings +$10.781 bln to $2.813 trln, agencies +$1.103 bln to $265.528 bln.
- NY Fed – Swaps with foreign CBs $1.329 bln Dec 7 week, all with ECB.
- Lipper – US-based taxable bond funds break five-week outflow streak.
- Australia Oct owner-occupied housing finance +0.8% m/m, -1% forecast, value of investment housing finance +0.7%.
- New Zealand Nov electronic card retail sales -0.1% m/m, +5.1% y/y, earthquake weighed.
Economic Data Ahead
- (0145 ET/0645 GMT) Switzerland Nov unemployment, 3.3% sa forecast; last 3.3% sa, 3.2% nsa.
- (0200 ET/0700 GMT) Sweden Oct trade balance, E21.5 bln surplus forecast; last E21.3 bln surplus.
- (0200 ET/0700 GMT) Norway Nov CPI, +0.3% m/m, +3.5% y/y forecast; last +0.5%, +3.7%.
- (0200 ET/0700 GMT) Norway Nov – core, +0.1% m/m, +2.9% y/y forecast; last +0.2%, +2.9%.
- (0200 ET/0700 GMT) Norway Nov PPI; last -4.5% y/y.
- (0245 ET/0745 GMT) France Oct industrial output; last -1.1% m/m.
- (0245 ET/0745 GMT) France Oct budget balance; last E83.0 bln deficit.
- (0430 ET/0930 GMT) Great Britain Oct trade balance, GBP11.8 bln deficit forecast; last GBP12.7 bln def.
- (0430 ET/0930 GMT) Great Britain Oct - non-EU bal, GBP 3.48 bln deficit forecast; last GBP 3.97 bln def.
- (0430 ET/0930 GMT) Great Britain Oct construction output, +0.2% m/m, -0.1% y/y forecast; last +0.3%, +0.2%.
- (1000 ET/1500 GMT) United States Dec U.Mich sentiment index – prelim, 94.5 forecast; last 93.8.
- (1000 ET/1500 GMT) United States Oct wholesale sales, +0.5% m/m forecast; last +0.2%.
- (1000 ET/1500 GMT) United States Oct wholesale inventories, -0.4% m/m forecast; last -0.4%.
Key Events Ahead
- N/A EU interior ministers meeting on migration in Brussels.
- (0300 ET/0800 GMT) 25th anniversary Maastricht Treaty conference, various attendees.
- (0315 ET/0815 GMT) ECB/Belgium CB Smets speaks at Brussels conference.
- (0500 ET/1000 GMT) Sweden 4.0/1.0% 2020/25 inflation-linked government bond auctions.
- (0600 ET/1100 GMT) UK DMO GBP1.5/1.5/2.0 bln 3/6/12-month treasury bill auctions.
- N/A ECB Coeure, French FinMin Sapin others speak at Paris conference.
FX Beat
DXY: The dollar gained versus the euro and the yen as the U.S. bond yields inched higher. The greenback against a basket of currencies traded higher at 101.10, retreating from a low of 99.43 hit in the previous session, its lowest since Nov. It was on track to gain 0.3 percent this week. 14. FxWirePro's Hourly Dollar Strength Index stood at 11.51 (Neutral) by 0500 GMT.
EUR/USD: The euro extended losses to a 4-day low below the 1.0600 handle after the European Central Bank trimmed the size of its asset purchase program and dismissed any speculation of tapering the programme. On Thursday, the ECB stated that the bond buys would be cut to 60 billion euros a month from 80 billion euros starting April, however, it opted to extend bond purchases to December from March. The European currency trades lower at 1.0605, having touched a 4-week high of 1.0873 on Thursday following ECB decision. Investors’ will continue to scrutinize the ECB policy decision, amid a lack of relevant macro-fundamental drivers from both the continents. FxWirePro's Hourly Euro Strength Index stood at -63.65 (Bearish) by 0400 GMT. Immediate resistance is located at 1.0656 (21-DMA), a break above targets 1.0700. On the downside, support is seen at 1.0564 (Nov 26 Low), a break below could drag it till 1.0500.
USD/JPY: The dollar advanced, extending gains above the 114.00 handle, as the Treasury yield edged back towards a 1-1/2-year peak scaled last week, following an overnight rise in euro zone debt yields. Moreover, the major was also supported by the widening of U.S.-Japan interest rate differentials, with the benchmark 10-year U.S. Treasury note yield rising to 2.445 percent. The pair trades 0.3 percent up at 114.43, hovering towards a 10-month high of 114.82 set last week. FxWirePro's Hourly Yen Strength Index stood at -24.63 (Neutral) by 0400 GMT. Investors attention will remain on the U.S. preliminary consumer sentiment index and wholesale inventories report, ahead of next week's Federal Reserve policy meeting, where it is highly expected to hike interest rate. Immediate resistance is located at 114.80, a break above targets 115.00/ 115.30. On the downside, support is seen at 113.40, a break below could take it lower 113.00.
GBP/USD: Sterling was little changed, following a three straight day’s decline, as investors await the UK trade balance data, which is expected to show the trade deficit narrowed somewhat in October. On Thursday, the major tumbled to an 8-day low as the dollar strength after data showed U.S. weekly unemployment claims fell 10,000 to 258k for the week ended Dec. 2, dragging the British currency further into negative territory. Sterling trades flat at 1.2580, after rising as high as 1.2704 the day before. FxWirePro's Hourly Sterling Strength Index stood at -106.87 (Highly Bearish) by 0400 GMT. Markets will closely watch UK's consumer inflation expectation report and trade balance data for further momentum on the pair. Immediate resistance is located at 1.2640 (5-DMA), a break above could take it over 1.2700. On the downside, support is seen at 1.2549 (Previous Session Low), a break below targets 1.2520 (21-DMA). Against the euro, the pound trades at 84.30 pence, having hit a low of 85.71 pence the prior session, it’s weakest since Nov. 30.
AUD/USD: The Australian dollar declined as markets shifted their attention towards next week's Federal Reserve policy meeting outcome. Investors seem to have ignored the better-than-expected Chinese inflation report, which showed Consumer Price Index stood at 0.1 percent in November, in line with estimates, while on annualized basis, it rose 2.3 percent, compared to forecasts of 2.2 and previous 2.1 percent. The Aussie trades lower at 0.7463, retreating from a high of 0.7507 hit on Thursday, its strongest since Nov. 16. FxWirePro's Hourly Aussie Strength Index stood at 86.10 (Slightly Bullish) by 0500 GMT. The major will continue to track overall market sentiment, ahead of the U.S. economic data. Immediate support is seen at 0.7428 (Previous Session Low), a break below could drag it near 0.7400. On the upside, resistance is located at 0.7500, a break above targets 0.7544.
NZD/USD: The New Zealand dollar was nearly unchanged, as investors cautiously await Federal Reserve's policy meeting next week. Markets seem to have fully priced in an interest rate hike possibility at the Fed's upcoming meeting, while attention will also remain on whether the central bank hints at further monetary tightening in 2017. The Kiwi trades flat at 0.7174, having touched a high of 0.7222 in the previous session, its highest since Nov 11. FxWirePro's Hourly Kiwi Strength Index was at 3.30 (Neutral) by 0500 GMT. The major will be driven by board based market sentiment, ahead of the U.S. macro-fundamental data and Baker Hughes U.S. Oil Rig count figures. Immediate resistance is located at 0.7200, a break above could take it near 0.7248 (Oct 19- High). On the downside, support is seen at 0.7128 (10-DMA), a break below could drag it till 0.7100.
Equities Recap
Asian shares advanced and were on track for strong weekly gains, while the euro nursed losses after the European Central Bank trimmed the size of its asset purchase program.
MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.5 percent but was set for a weekly gain of 2.2 percent.
Tokyo's Nikkei advanced 1.22 percent at 18,995.32 points, Australia's S&P/ASX 200 index gained 0.28 percent at 5,559.40 points and South Korea's KOSPI was trading 0.35 percent lower at 2,024.16 points.
Shanghai composite index rose 0.65 percent to 3,236.27 points, while CSI300 index was trading 0.8 percent higher at 3,498.04 points.
Hong Kong’s Hang Seng was trading 0.37 percent down at 22,777.54 points. Taiwan shares added 0.2 percent at 9,392.68 points.
Commodities Recap
Crude oil prices declined as markets doubt that non-OPEC producers might agree to cut output after a cartel agreement to restrain production. International benchmark Brent crude was 0.24 percent down at $53.79 per barrel by 0400 GMT, having hit an 8-day low of $52.79 in the previous session. U.S. West Texas Intermediate crude fell 0.1 percent at $50.86 a barrel, after declining as low as $49.59 on Thursday, its lowest since Dec. 1.
Gold prices declined and were on track for a fifth straight weekly drop, as a stronger U.S. dollar and expectations of a Federal Reserve rate hike next week weighed on the metal's safe-haven appeal. Spot gold was down 0.3 percent at $1,167.02 an ounce by 0405 GMT and was set for a weekly fall of about 0.8 percent. U.S. gold futures shed 0.2 percent to $1,169.60 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.4310 percent higher by 0.042 bps, while 5-year yield was up by 0.037 bps at 1.8558 percent.
The Australian government bonds witnessed a heavy sell-off on last day of the week as investors await the Federal Reserve’s next week monetary policy decision. The yield on the benchmark 10-year Treasury note rose 8-1/2 basis points to 2.83 percent, the yield on 15-year note jumped 9 basis points to 3.29 percent and the yield on short-term 2-year bounced 3-1/2 basis points to 1.86 percent.
The New Zealand government bonds closed mixed as investors await next week’s third-quarter gross domestic product (GDP) data. The yield on the benchmark 10-year bond closed 1 basis point lower at 3.29 percent, the yield on 7-year note ended down nearly 1 basis point to 2.86 percent and the yield on short-term 2-year note jumped 5 basis points to 2.20 percent.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries and German government bonds. The 2-year fell 3 Canadian cents to yield 0.719 percent and the benchmark 10-year declined 58 Canadian cents to yield 1.662 percent.
