Market Roundup
- Strong German business morale signals modest growth in Q4: Ifo
- UK inflation holds below BoE target
- Euro zone inflation confirmed at 1% as food prices rise
- Oil falls as U.S. inventories rise
- Gold consolidates as investors await trade deal details
Economic Data Ahead
- (0700 ET/1200 GMT) U.S MBA Mortgage Applications (Dec 13) (Prior 3.8%)
- (0830 ET/1330 GMT) BoC Consumer Price Index Core (YoY) (Nov) (Forecast 1.9%, Prior 1.9%)
- (0830 ET/1330 GMT) BoC Consumer Price Index Core (MoM) (Nov) (Forecast -0.2%, Prior 0.4%)
Key Events Ahead
- (0900 ET/1400 GMT) SNB's Quarterly Bulletin (Q4)
- (1240 ET/1740 GMT) U.S. Fed's Evans speech
FX Beat
DXY: The US Dollar Index, which tracks the greenback's value against a basket of six major currencies extends grind higher. DXY was up 0.09 percent at 97.27 at 11:00 GMT.
EUR/USD: The single currency unimpressed by upbeat German IFO Business Climate Index. EUR/USD trades 0.15 percent lower on the day at 1.1132 at around 10:00 GMT. The major has likely paused its upward grind at 200-DMA which is offering stiff resistance at 1.1150. Technical studies support gains in the pair. Volatility is rising and breakout at 200-DMA could propel the pair higher. Next major hurdle on the upside lies at 55W EMA at 1.1213. On the flipside, rejection at 200-DMA and retrace below 5-DMA (1.1134) could see dip till 110-EMA at 1.1097.
USD/CHF: Swiss National Bank (SNB) Chairman Jordan's comments on the central bank’s monetary policy and inflation outlook likely keep the Swiss Franc supported. USD/CHF erased early gains on the day and edged lower from session highs at 0.9818 to trade at 0.9800 at 10:10 GMT. Major trend in the pair is bearish. Price action has slipped below 200W MA. The pair finds minor support at 0.9800 level. Break below will plummet prices. Scope for dip till 0.9730. Bearish invalidation only above 200-DMA.
GBP/USD: Cable muted to the latest UK consumer inflation figures amid fears of a no-deal Brexit. Headline UK CPI came in line with consensus estimates and rose 0.2 percent MoM in November as compared to a fall of 0.2 percent recorded in the previous month. GBP/USD extended weakness on the day and was trading 0.21% lower at 1.3101 at 10:25 GMT. The pair was holding above 20-DMA support at 1.3055. Break below could see more downside. Next major support lies at 50-DMA at 1.2930.
USD/JPY: USD/JPY slips lower for the second straight session. Major trend in the pair is bullish and price is likely consolidating above 200-DMA. Minor pullback finds series of strong supports till 109.02 (converged 50-DMA and 200H MA). Break below 109 mark could see more weakness. Retrace below 200-DMA (108.76) invalidates bullish bias.
Equities Recap
European stocks mixed on Wednesday. At around 11:00 GMT, The Stoxx Europe 600 was up 0.13% at 415.44. The German DAX declined 0.19% to 13,261.97.
The French CAC 40 gained 0.14% to 5,976.64 and the U.K. FTSE 100 was up 0.13% at 7,535.31.
Commodities Recap
Gold edges higher as cautious markets boost gold’s safe-haven status. The yellow metal gained 0.21 percent on the day and was trading at 1479.07 at 11:15 GMT.
U.S. oil consolidates near multi-month highs. Positive comments from US Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer buoy energy traders.
At around 11:20 GMT, WTI trades rangebound around $60.51 while Brent remains sidelined at $ 65.82.
Treasuries Recap
U.S.: The U.S. Treasuries jumped during Wednesday’s afternoon session amid a muted trading session that witnessed data of little economic significance. Also, a speech by Federal Reserve President Evans, due later in the day shall add further direction into the bond market. The yield on the benchmark 10-year Treasury yield slumped 2 basis points to 1.870 percent, the super-long 30-year bond yield also suffered nearly 2 basis points to 2.299 percent and the yield on the short-term 2-year lost 1 basis point to 1.623 percent.
UK: The United Kingdom’s gilts remained flat during European trading hours Wednesday after the country’s consumer price inflation (CPI) for the month of November rose, albeit remaining unchanged from that in October, also cheering market expectations. Investors will now eye Britain’s retail sales for the similar period, scheduled to be released on December 19 by 09:30GMT for further direction into the debt market. The yield on the benchmark 10-year gilts, hovered around 0.760 percent, the 30-year yield remained flat at 1.277 percent and the yield on the short-term 2-year slipped 1 basis point to 0.524 percent.
EUR: The German bunds remained tad higher during European session Wednesday despite a better-than-expected rise in the country’s Ifo business climate index for the month of December, along with a rise in eurozone’s November consumer price inflation (CPI), albeit meeting market expectations. The German 10-year bond yield, which move inversely to its price, remained flat at 0.292 percent, the yield on 30-year note traded tad down at 0.216 percent and the yield on short-term 2-year too remained steady at -0.647 percent.
AUS: The Australian bonds slumped during Asian session Wednesday amid a muted trading session that witnessed data of little economic significance ahead of the country’s employment report for the month of November, scheduled to be released on December 19 by 00:30GMT for further direction into the debt market. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4 basis points to 1.201 percent, the yield on the long-term 30-year bond surged 4 basis points to 1.808 percent and the yield on short-term 2-year gained 3 basis points to 0.781 percent.
