Market Roundup
- New Zealand Dec business confidence index +23.0%, outlook +34.4%, Nov 14.6, 32, sentiment highest in eight months.
- New Zealand Nov ANZ job ads +2.0% m/m, +1.8% y/y, third straight month of gains.
- China Nov home prices +0.3% m/m, +0.9% y/y, Oct +0.2%, +0.1%.
- China firms' profits hit record lows, face deflation - China Beige Book.
- Foreign CB US debt holdings -$7.688 bln to $3.310 trln week-ended Dec 16, Treasuries -$8.296 bln to $2.991 trln, agencies +$399 mln to $272.413 bln.
- NY Fed - Swaps with foreign CBs $138 mln, BoJ $3 mln, ECB $135 mln.
- Lipper - US stock funds post $13.2 bln outflows week-ended Dec 16, Japan funds $776 mln outflow, largest since Dec'14, HY bond funds $3.8 bln outflow, largest since Aug'14, inv-grade corp bonds $5.1 bln outflow, largest ever.
- BoJ leaves monetary policy steady, to up monetary base at annual Y80 trln pace, economic assessment left unchanged, to up ETF buys to Y300 bln annual pace, expand loan scheme for growth-oriented firms, to up ceiling for J-REIT buys, to extend duration of JGB purchases, to start selling financial institution stock from April next year, vote to maintain monetary base target 8-1, new asset purchase guidelines 6-3, Kiuchi dissents in former vote,Ishida/Sato/Kiuchi in second.
Economic Data Ahead
- (0245 ET/0745 GMT) France Nov producer prices; last +0.2% m/m.
- (0400 ET/0900 GMT) Eurozone Oct current account balance last E33.1 bln surplus nsa, E29.4 bln sa.
- (0400 ET/0900 GMT) Eurozone Oct net investment flow; last E10.5 bln outflow.
- (0400 ET/0900 GMT) Italy Nov wage inflation; last +0.1% m/m, +1.2% y/y.
- (0400 ET/0900 GMT) Norway Dec unemployment, 3.0% nsa forecast; last 2.9%, 99.38k.
- (0900 ET/1400 GMT) Belgium Dec consumer confidence index; last -4.0.
- (0445 ET/0945 GMT) United States Dec Markit PMI services - flash, 56.0 forecast; last 56.1.
- (0445 ET/0945 GMT) United States Dec Markit PMI composite - flash; last 55.9.
- (1100 ET/1600 GMT) United States Dec KC Fed composite, manufacturing indices; last 1.0, 3.0.
Key Events Ahead
- N/A Norges Bank Gov Olsen addresses Regional Network.
- N/A UK DMO GBP1.5/2.5/1.5 bln 1/3/6-month treasury bill auctions.
- (0400 ET/0900 GMT) ECB/Austria CB Nowotny press conference on latest fin'l stability report.
- (0400 ET/0900 GMT) Finland updated economic forecasts.
- (1230 ET/1730 GMT) Richmond Fed Lacker in panel discussion at Charlotte, VA conference.
- 20th December 2015 BoC Gov Poloz presentation at Canada fed/prov FinMin meeting in Ottawa.
FX Beat
USD: The dollar index hovered around 99.000, holding onto a 1.2 percent gain on Thursday, its biggest rise in over a month. The greenback rose broadly after the Fed ended months of speculation by lifting its benchmark rate off zero.
EUR/USD: The euro was up about 0.2 percent $1.0841, but down more than 1.3 percent off from week's peak of $1.1060. The demand for the euro strengthens as market closes negative on the Wall Street and cautious trades seen on the Asian indices. The pair is 0.24% up trading at 1.0852. It sees support at 1.0796 levels (Dec 7 Low) and resistance is located at 1.0900 levels (5-MA).
USD/JPY: The dollar rose more the 0.6 pct vs yen, hits a 2-week high of 123.54 after BOJ kept monetary policy steady and pledged to increase monetary base at annual pace of 80 trln yen. It is likely to make new cyclical highs in the near term as US interest rate expectations adjust higher. Fed's own projections were for 100 bps of hikes in 2016. By contrast, the futures market was only discounting just over 50 basis points of tightening. It has breached 122.46 (61.8% of the Nov-Dec slide) & the 21-DMA at 122.43. A close above those hurdles would open the way for a retest of the Nov 18 peak at 123.75. It currently trades at 122.05 levels after going as low as 121.82 levels. Immediate support is located at 121.97 (10-MA) break below this level will expose the pair downwards towards 121.77 levels (50- MA).
AUD/USD: The Australian dollar dipped below 71 U.S. cents for the first time in a month, before edging back to $0.7123. Pair has hit channel base and rebounded from lows, RSI is biased higher and has scope to run, Daily Stochs show bullish crossover at oversold levels. Long lower wicks on 4-hourly candles and hanging man and doji formations indicate scope for some upside. Pair could test 38.2 % Fib of 0.7385-0.7096 fall at 0.7206. The Aussie currently trades at 0.7134 levels, having touched a daily high of 0.7142 levels and low of 0.7112 levels. Immediate resistance is located at 0.7145 (Daily Cloud Base) with support ssen at 0.7103 (Daily Low Nov 19).
NZD/USD: The New Zealand dollar dropped to its lowest in over a week at $0.6687, after trading as high as $0.6801 the previous day. The combination of pressured global commodity prices and last week's easing from the Reserve Bank of New Zealand continue selling pressure on the kiwi. Currently it trades at 0.6695 levels, having touched a daily low of 0.6681 levels. Support is located at 0.6656 levels (50-DMA) while resistance is faced at 0.6720 levels (10-DMA).
USD/CNY: China's yuan strengthened on Friday after 10 straight sessions of weakness against the dollar through Thursday, the longest weakening streak on record, after the PBoC guided the Chinese currency lower. The Cental Bank set the midpoint rate at 6.4814 per dollar prior to market open, compared with the previous fix of 6.4757. The spot market opened at 6.4870 per dollar, and was trading at 6.4832 at 0306 GMT, up from the previous close of 6.4837.
Equities Recap
Asian shares took their cue from Wall Street and slipped on Friday, but were still on track for gains in a week marked by the first U.S. interest rate hike in nearly a decade and a depreciating yuan.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent, but still on track to log a 1.6 percent rise for the week while Taiwan stocks slipped 0.6 percent, shrinking gains for the week to 1.9 percent.
Australia's S&P/ASX200 Index edged down 0.07 pct at 5,098.30 points, while Tokyo's Nikkei closes down 1.90 pct at 18,986.80 with Seoul shares down 0.02 pct.
Commodities Recap
Gold steadied on Friday but largely retained losses made a day earlier when it suffered its biggest slide in 5 months after the Federal Reserve hiked U.S. rates for the first time in nearly a decade, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs. Spot gold edged up 0.3 percent to $1,053.96 an ounce by 0051 GMT, as the dollar eased on profit taking following sharp gains.
Crude futures were mixed in Asian trading on Friday as fresh signs of inventory building and the Federal Reserves rate hike this week kept prices under pressure amid a global glut of oil that shows no sign of abating. U.S. crude futures continued to slip in Asian trading, down 0.2 percent at $34.89 a barrel, while Brent was up by 3 cents at $37.09 a barrel, after it dropped 33 cents to $37.06 a barrel on Thursday. U.S. crude's West Texas Intermediate (WTI) futures were down 13 cents at $34.82 a barrel by 0350 GMT. The contract fell 1.6 percent to $34.95 a barrel on Thursday.
Treasuries Recap
U.S. 10-Year Treasuries yield stood at 2.2164 percent down by 0.022.
Australian government bond futures edged up in a bullish flattening of the curve, as the 3-year bond contract gained 3 ticks to 97.900, while the 10-year contract rose 5.5 ticks to 97.1400 with the 20-year contract added 6 ticks to 96.6500.
New Zealand government bonds gained, sending yields seven basis points lower.
Canadian government bond prices rose across the maturity curve, with the benchmark 10-year gained 72 Canadian cents to yield 1.432 percent while the 2-year up 5.5 Canadian cents to yield 0.524 percent. The curve flattened, as the spread between the 2-year and 10-year yields narrowed by 4.8 basis points to 91.4 basis points, indicating outperformance for longer-dated maturities.
