Market Roundup
- PBoC sets Yuan mid-point at 6.4895 / dlr vs last close
- PBoC temporarily suspends some forex business for several foreign banks until end of March - sources/Spot liquidation among forex services temporarily suspended - Sources
- USD/ CNH trades above the Aug 11th PBOC inspired spike high of 6.5945 to fresh 4-year high at 6.5965
- USD/AXJ currencies ratchet higher led by rise in USD/CNH
- China Nov services trade deficit $15.6 bln vs $14.1 bln in OCT - FX REGULATOR
- CHINA JAN-NOV services trade deficit $187.9 bln - FX REGULATOR
- China FX regulator says China had Q3 current account surplus of $60.3 bln
- China FX regulator says China had Q3 capital and financial account surplus of $11.4 BLN
Economic Data Ahead
- (0200 ET/0700 GMT) Great Britain Nationwide House Price
- (0400 ET/0900 GMT) Eurozone Money - M3 Annual Growth
- (0400 ET/0900 GMT) Norway CB Currency Purchase
- (0700 ET/1200 GMT) Chile Jobless Rate
Key Events Ahead
No Major Events Scheduled
FX Beat
USD: The dollar was steady against the basket of currencies on Wednesday following a rise in U.S. debt yields, and it stood at 98.196, not far from a 1-week peak of 98.413 touched on Tuesday. It is up 8.8 percent for the year, though down nearly 2 percent for the month.
EUR/USD: The euro was flat at $1.0932 after dropping 0.4 percent overnight. A weak 5-year auction and bounce in oil prices pushed U.S. Treasury yields higher on Tuesday, favouring the greenback. The pair currently trades at 1.0933 levels, up by 0.13%, after having touched a daily low of 1.0918. Immediate support is located at 1.0914 (10- DMA), break below can take the pair to 1.0903 (Dec 14 Low). On the upside, resistance is seen at 1.0935 levels (5 - DMA).
USD/JPY: The dollar was steady at 120.36 yen, moving within a tight range of 120.57-120.35. The yen weakened on following rise in U.S. debt yields. The dollar is expected to gain against the yen in 2016 on expectations that U.S. monetary policy will diverge further, with the Federal Reserve poised to raise interest rates further next year. Currently the pair trades at 120.36 levels, after having touched a daily high of 120.57 levels. Immediate support is located at 120.25 (Nov 2 Low), break below can take the pair to 120.16 levels (Oct 27 Low). The pair faces resistance at 120.63 (Dec 28 High).
AUD/USD: The Australian dollar dropped 0.2 percent to $0.7280, after rising to $0.7303 overnight, its highest since Dec. 10. A rally in the price of iron ore and oil pushed the Aussie to 0.7294 levels, on Tuesday and a sustained break above heavy resistance around 73 cents could see a run to $0.7335 and $0.7386. It has bounced around three cents this quarter, but was still down 11 percent for the year. The pair currently trades at 0.7289 levels, after having touched sessions low of 0.7271 levels. Immediate support is seen at 0.7266 levels (5- DMA), break below can take the pair to 0.7256 levels (Dec 7 Low). On the upside, resistance is located at 0.7303 levels (Previous day High).
NZD/USD: The New Zealand dollar was down 0.3 percent at 0.6855, after having climbed to a 10-week peak of 0.6883 in the previous session. Traders are anticipating on the next major event for the kiwi, which will be the Global Dairy Trade auction in the first week of January. The pair currently trades at 0.6857, after having touched sessions high of 0.6872. It trades between the range of 0.6872 - 0.6847. The pair sees support at 0.6838 levels (5- DMA), and on the upside, resistance is located at 0.6883 levels (Previous day High). Break above can take the pair to 0.6887 (Oct 16 High).
USD/CNY: The Chinese yuan in the spot market traded at 6.4902 per dollar, in proximity of a 4-1/2-year low of 6.4948 hit on Tuesday. The dollar has gained about 4.6 percent versus the yuan so far this year. The yuan tumbled after devaluation by the PBoC in August and has retreated since, guided steadily lower by a succession of weakly set official midpoints.
Equities Recap
Asian shares unwound early gains on Wednesday, as investors turned cautious following renewed selling in recently battered crude oil futures.
MSCI's broadest index of Asia-Pacific shares outside Japan erased a positive start to edge down 0.1 percent, on track for a flat monthly performance and down 12 percent for the year, while Taiwan Stocks edged down 0.2 pct at 8,279.99 points.
Australia's S&P/ASX 200 Index climbed up 1.00 pct At 5,320.00 points, while Nikkei edged up 0.27 pct at 19,033.71, with Seoul Shares closed down 0.06 pct.
Commodities Recap
Gold was changed on Wednesday as thin liquidity and a firmer dollar capped price moves, although the metal remained on track to close the year lower for a third time in a row. Spot gold edged up about 0.2 percent to $1,070.61 an ounce, but remained poised to drop more than 9 percent for 2015 to log its third year of losses.
Oil prices dropped more than 1 percent early on Wednesday after jumping 3 percent in the previous session. Crude oil futures dropped around half a dollar early on Wednesday as the market remained under pressure from slowing demand and high supplies, while forecasts that a cold snap in Europe and the United States would be short-lived also hurt prices.
Front-month U.S. West Texas Intermediate crude futures were trading at $37.18 per barrel at 0140 GMT, down 69 cents or 1.82 percent from their last settlement. Brent futures were down 47 cents, or 1.24 percent, to $37.32 a barrel.
Treasuries Recap
The yield on benchmark 10-year U.S. Treasury notes stood at 2.292 percent, compared with its U.S. close of 2.307 percent on Tuesday.
Australian government bond futures retreated from 2-month highs, with the 3-year bond contract off 3 ticks at 97.980. The 10-year contract lost 5.5 ticks to 97.1900 in a bearish steepening of the yield curve. The 20-year contract was steady at 96.6900.
New Zealand government bonds were mixed on Wednesday, with yields down 0.5 bps at the short end and up 1.5 bps at the long end.
Canadian government bond prices were lower across the maturity curve, pressured by a pick-up in risk appetite, while the market also contended with firmer-than-expected U.S. home prices and consumer confidence, as well as a U.S. 5-year note auction. The benchmark 10-year dropped 29 Canadian cents to yield 1.41 percent, while the 2-year bond price was down 3 Canadian cents to yield 0.50 percent.
