Market Roundup
- PBOC fixes CNY at 6.8592 vs USD, spot (CNH=D3) as high as 6.8819.
- Australia Q3 wage price index +0.4% q/q, +1.9% y/y, +0.5% and +2.0% forecast, wage growth at record low, flags disinflation danger.
- Australia Oct Westpac/MI leading index 97.11, Sept 97.05, above-trend growth slows, 6-mo AR deviation from trend +0.43, last +0.63.
- Non-resident holdings of NZ government debt 61.0% in October, Sept 61.9%.
- New Zealand TWI weights updated, USD, JPY up touch, EUR and CNY off.
- New Zealand Fonterra GDT price index +4.5% at latest dairy auction, last +11.4%, volume off, demand up.
Economic Data Ahead
- (0430 ET/0930 GMT) Great Britain Oct claimant count, 2.0k forecast; last 0.7k.
- (0430 ET/0930 GMT) Great Britain Sep ILO unemployment, 4.9%; last 4.9%.
- (0430 ET/0930 GMT) Great Britain Sep average weekly earnings – 3-mo average, +2.4% y/y forecast; last +2.3%.
- (0430 ET/0930 GMT) Great Britain Sep - ex-bonus, +2.4% y/y forecast; last +2.3%.
- (0500 ET/1000 GMT) Switzerland Nov ZEW investor sentiment index; last 5.2.
- (0830 ET/1330 GMT) United States Oct PPI - final demand, +0.3% m/m, +1.2% y/y forecast; last +0.3%, +0.7%.
- (0830 ET/1330 GMT) United States Oct – ex-food/energy, +0.2% m/m, +1.5% y/y forecast; last +0.2%, +1.2%.
- (0915 ET/1415 GMT) United States Oct industrial output, +0.2% m/m forecast; last +0.1%.
- (0915 ET/1415 GMT) United States Oct capacity utilization, 75.5% forecast; last 75.4%.
- (1000 ET/1500 GMT) United States Nov NAHB housing market index, 63.0 forecast; last 63.0.
Key Events Ahead
- N/A Euro Finance Week in Frankfurt.
- N/A BoE DepGov Cunliffe lecture at Manchester University.
- N/A Norway NOK2 bln 4.5% 2019 NST-473 bond, Sweden government bond auctions.
- (0305 ET/0805 GMT) St Louis Fed Bullard in a panel discussion at London conference.
- (0540 ET/1040 GMT) Portugal E1.25-1.5 bln 6 and 12-month treasury bill auctions.
- (0745 ET/1245 GMT) Minny Fed Kashkari speaks in New York.
- (1600 ET/2100 GMT) US Treasury Sept int’l capital flows (TIC report), Aug $78.3 bln inflow.
- (1730 ET/2230 GMT) Philly Fed Harker speaks in Philadelphia.
FX Beat
DXY: The dollar slightly edged down versus the euro and the yen, as Treasury yields weakened, however, traded within the sight of multi-month highs after stronger-than-expected US retail sales data reinforced the outlook for a Federal Reserve interest rate hike in December. The greenback against a basket of currencies trades 0.1 percent down at 100.02, having touched an 11-month high of 100.26 on Tuesday. FxWirePro's Hourly Dollar Strength Index stood at 116.02 (Bias Highly Bullish) by 0500 GMT.
EUR/USD: The euro edged up, halting its 7-days losing streak as the weakness in the Treasury yields undermined the bid tone around the greenback. Data released on Tuesday showed U.S. retail sales advanced, indicating positive sentiment among the consumers, which boosted the dollar and increased the prospects of Fed rate hike in December. The European currency trades 0.2 percent up at 1.0743, putting further distance between a low of 1.0709 hit on Monday, its lowest level since December. FxWirePro's Hourly Euro Strength Index stood at 23.08 (Bias Neutral) by 0100 GMT. In absence of macro-fundamentals from the Eurozone docket, markets would closely track the treasury yields ahead of U.S. industrial production figures. Immediate resistance is located at 1.0789 (5-DMA) a break above could take it over1.0800. On the downside, support is seen at 1.0709 (Nov 14 Low), a break below could drag it lower 1.0700.
USD/JPY: The dollar nudged down, after rising to a fresh 5-1/2 month high above the 109.00 handle in the previous session on the back of stronger-than-expected U.S. October retail sales data. The major ran into fresh selling pressure, hitting an intra-day low of 108.79 as the US treasury yields retreated, however, it bounced back to trade above 109.00 level amid risk-on market profile. The pair trades flat at 109.10, having hit a high of 109.33 on Tuesday, it’s strongest since Jun. 2. Markets now await series of U.S. economic data, including producer price index, industrial production, capacity utilization and housing market index. FxWirePro's Hourly Yen Strength Index remained Neutral at -57.97 by 0400 GMT. Immediate resistance is located at 109.58 (June 2 High), a break above targets 110.00. On the downside, support is seen at 108.00 (5-DMA), a break below could take it lower 107.30.
GBP/USD: Sterling rose, after declining below the 1.2400 handle in the previous session on reports associated with Britain's exit from the European Union. A leaked memo indicated that the economy had no overall plan for Brexit and might take six months to concur one, due to disagreement in Prime Minister Theresa May's government. The major hit a 5-day low on Tuesday after UK CPI rose less than expected during October. However, it made a recovery to close above 1.2450 following BoE's quarterly Inflation Report Hearing and testimonies by Governor Carney and MPC members on inflation and the economic outlook before Parliament's Treasury Committee. Sterling trades flat at 1.2460, having hit a low of 1.2379, its lowest since Nov 10. FxWirePro's Hourly Sterling Strength Index stood at 64.40 (Bias Neutral) by 0400 GMT. Markets now await UK employment data for further momentum on the pair. Immediate resistance is located at 1.2510 (5-DMA), a break above could take it near 1.2600. On the downside, support is seen at 1.2400, a break below targets 1.2349 (20-DMA). Against the euro, the pound trades 0.2 percent lower at 86.20 pence, having hit a low of 87.07 pence on Tuesday, it’s lowest since Nov. 10.
AUD/USD: The Australian dollar declined, reversing most of its previous session gains after data showed domestic wages grew at their slowest pace in the last quarter, indicating a downside risk to inflation. The wage price index rose just 0.4 percent in July-September, the smallest increase since 1997, while annual wage growth stood at 1.9 percent, it’s the lowest on record, and missing forecasts of 2.0 percent. However, the downside was limited as a recent rebound in commodity export prices, strengthened Australia's terms of trade. The Aussie trades 0.1 percent lower at 0.7549, hovering towards an intra-day low of 0.7540. FxWirePro's Hourly Aussie Strength Index stood Neutral at - 43.66 by 0500 GMT (lower than the benchmark of -75 for bearish trend). Investors will continue to digest domestic wage report, ahead of series of U.S. economic data due later in the day. Immediate support is seen at 0.7511 (Previous Session Low), a break below could drag it lower 0.7500. On the upside, resistance is located at 0.7580, a break above targets 0.7626 (20-DMA).
NZD/USD: The New Zealand dollar slumped below the 0.7100 handle, extending losses for the sixth straight day, as the greenback strengthened on growing expectations of a Federal Reserve rate hike in December. However, the losses were capped as Global Dairy Trade prices increased 4.5 percent, with all dairy products registering gains in average prices. The economy will continue to assess the impact of several strong earthquakes, while analysts expect rebuilding work will likely push inflation higher, reducing the prospects of another rate cut by the Reserve Bank of New Zealand next year. The Kiwi trades 0.1 percent down at 0.7095, hovering just above a 1-month low of 0.7070 hit early this week. FxWirePro's Hourly Kiwi Strength Index was Neutral at -28.47 by 0500 GMT. Markets will continue to track overall market sentiment, ahead of U.S. macro-fundamentals for fresh clues on the pair. Immediate resistance is located at 0.7150, a break above targets 0.7201 (20-DMA). On the downside, support is seen at 0.7070 (Nov 14 Low), a break below could drag it near 0.7030.
Equities Recap
Asian shares gained, following an overnight rally in Wall Street shares as a sell-off in global bonds boosted demand for risky assets.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent in early trade, retreating from a 4-month low touched in the previous session.
Tokyo's Nikkei rose 1.08 percent at 17,765.96 points, Australia's S&P/ASX 200 index edged up 0.04 percent to 5,328.50 points and South Korea's KOSPI was trading 0.78 percent higher at 1,982.72 points.
Shanghai composite index declined 0.25 percent to 3,199.08 points, while CSI300 index was trading 0.15 percent lower at 3,424.72 points.
Hong Kong’s Hang Seng was trading 0.6 percent up at 22,455.97 points. Taiwan shares added 0.4 percent at 8,962.22 points.
Commodities Recap
Crude oil prices edged down, following a gain of nearly 6 percent in the previous session, after an industry report showed an unexpected build in U.S. crude stocks. International benchmark Brent crude was trading 0.2 percent lower at $46.82 per barrel by 0357 GMT, having touched a near 2-week high of $47.20 on Tuesday. U.S. West Texas Intermediate crude declined 0.28 percent at $45.61 a barrel, having hit a high of $46.06 in the previous session, its highest since Nov. 2.
Gold prices nudged up, extending gains from the previous session, with markets focusing on the impact of U.S. president-elect Donald Trump's economic policies. Spot gold rose 0.2 percent at $1,230.95 an ounce at 0402 GMT, after gaining 0.66 percent on Tuesday. U.S. gold futures were up 0.3 percent at $1,228.10 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.2260 percent lower by 0.012 bps, while 5-year yield was 0.007 bps down at 1.6674 percent.
The Australian government bonds traded nearly flat, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note hovered around 2.66 percent mark and the yield on short-term 2-year remained steady at 1.81 percent.
The New Zealand government bonds closed marginally higher as the economy is still reeling from the impact of powerful earthquakes. Also, investors did not react to the strengthening GDT auction prices, which climbed 4.5 percent in the overnight auction. The yield on the benchmark 10-year bond fell 1 basis point to 3.100 percent, the yield on 7-year note ended nearly 1 basis point lower at 2.753 percent and the yield on short-term 2-year note slid 1 basis point to 2.125 percent.
Canadian government bond prices were higher across the yield curve, with the 2-year up 1 Canadian cent to yield 0.665 percent and the benchmark 10-year rising 8 Canadian cents to yield 1.542 percent. The 20-year and 30-year prices rose more sharply as the longer-dated bonds recovered some lost ground. The 10-year yield touched its highest in 11 months at 1.591 percent on Monday, as investors speculate that U.S. President-elect Donald Trump will pursue policies that raise inflation.
