Market Roundup
- India W/E Fx Reserves, USD Increases to 352.51 Bln $ versus previous 352.100 Bln $
- Brazil Dec IPCA-15 Mid-Month CPI YY increases to 10.71 % (forecast 10.64 %) versus previous 10.28 %
- Brazil Dec IPCA-15 Mid-Month Cpi Increase to 1.18 % (forecast 1.11 %) versus previous 0.85 %
- Brazil Oct IBC-BR Economic activity Decreases to -0.63 % (forecast -0.50 %) versus previous -0.50 %
- Italy Nov Wage Inflation YY Increases to 1.3 % versus previous 1.2 %
- Eurozone Oct Net Investment Flow, Eur Increases to 47.6 Bln Eur versus previous -10.5 Bln Eur
- Eurozone Oct Current Account SA, Eur decrease to 20.4 Bln Eur versus previous 29.4 Bln Eur
- Eurozone Oct Current Account NSA, Eur decreases to 25.9 Bln Eur versus previous 33.1 Bln Eur
- Italy Nov Wage Inflation MM Increase to 0.2 % versus previous 0.10
- USD/JPY falls after BOJ stimulus disappoints. Plays 123.59-121.07
- EUR/JPY down from 133.78 to 131.05. Off lows into NY, 131.64 recovery hi
- DXY down 0.35% from 99.182-98.695. 99.294 Thurs 2 week peak
- EUR/USD recovered to 1.0868 before slipping back to 1.0805 in Europe
- BOJ keeps base money target, fine-tunes stimulus scheme to promote capex - RTRS
- BoJ new measures less than meets the eye - RTRS
- BoJ Kuroda: Move aimed at supplementing QQE - RTRS
- Fin Min Amari: BoJ steps for smooth implementation of QQE - RTRS
- No CB Gov: Important that monetary policy contributes to weakening ccy to a suitably weak level
- China regulator to conduct stress tests on securities/futures institutions - RTRS
- China regulator publishes rules to regulate money market futures - RTRS
- China govt will be concerned if yuan drops more than 3-5% - MNSI
Economic Data Ahead
- (0830 ET/1330 GMT) Canada's annual inflation rate in November is expected to have edged up to 1.5 percent. The annual core rate, which strips out volatile items, is seen rising to a more robust 2.3 percent.
- (0830 ET/1330 GMT) Statistics Canada will release Canadian wholesale trade in October which is likely to have increased by 0.1 percent from the previous month.
- (0945 ET/1445 GMT) Financial firm Markit releases the preliminary Purchasing Managers Index for the services sector for the month of December. Expectations are for the index to come in at 56.0, a bit lower than its final reading of 56.1 in November.
Key Events Ahead
- (1045 ET/1545 GMT) FedTrade Operation 30-Year Ginnie Mae (max $1.150 bn)
- (1230 ET/1730 GMT)Federal Reserve Bank of Richmond President Jeffrey Lacker participates in economic outlook panel before the Charlotte Chamber of Commerce 2015 Economic Outlook Conference.
FX Beat
USD: The dollar index dropped 0.4 percent to 98.910 after hitting 99.294 overnight, its highest in two weeks. It advanced slightly on Friday, but remained on track to record its strongest week since early November, after the Fed lifted its benchmark rate off zero. The greenback dropped 1.1 percent against the Japanese currency to 121.16, while it was broadly flat against the euro.
EUR/USD: The euro edged up 0.2 percent at $1.0846, drifthing away from a 10-day low of $1.0802 hit overnight. It declined after making an intraday high of 1.08685 at the time of writing and is currently trading around 1.08216. Intraday trend is still weak as long resistance 1.0920 holds. Any break above 1.0920 will take the pair to 1.0960/1.1100 level. On the downside major support is around 1.0780 and break below targets 1.0720/1.0670, while minor support is around 1.0830/1.0790.
USD/JPY: The dollar skidded against the yen on Friday after a set of stimulus measures the Bank of Japan unveiled were deemed too modest to drive the greenback higher. The pair has declined after making a high of 123.54. It is currently trading around 121.60. Intraday trend is still weak as long as resistance 122.25 holds. On the higher side any break above122.25 targets 123/123.65. Minor support is at 121 and break below targets 120.60/120.
GBP/USD: Sterling edged up 0.2 percent on Friday to $1.4925, having traded as low as $1.4865 on Thursday, its weakest since late April. It was up from an 8-month low against a weaker dollar but was still on track for its worst week, with investors anticipating the Bank of England in no rush to follow the U.S. Federal Reserve with an interest rate rise. It is currently trading around 1.49292. On the lower side major support is around 1.4900 and break below targets 1.4850/1.4800 level. It is facing minor resistance around 1.501 and break above will take the pair to next level around 1.5060/1.5090. Further bullishness is only above 1.5100. Against the euro, the pound inched up 0.1 percent to 72.56 pence.
USD/CHF: The pair has made a high of 0.9990 and retreated from that level. It is currently trading at 0.9957. Short term trend is still weak as long as resistance l 1.0030 is possible. On the lower side support is at 0.9929 (55 day 4H EMA) and break below will drag the pair down till 0.9900/0.9870/0.9850 is possible. Overall bullish invalidation is only below 0.9800.
AUD/USD: The Australian dollar dropped to $0.7117, having shed 1.4 percent on Thursday. Aussie has broken major support 0.7150 and declined till 0.7096 from that level. The pair's major intraday resistance is around 0.7160 and break above targets 0.7200/0.7240. On the lower side major support is around 0.7080 and any break below will target 0.7050/0.7220
NZD/USD: The New Zealand dollar shed the week's gains as broad U.S. dollar strength pressured global commodity prices. The kiwi is trading above the cloud with Tenkan and Kijun positively aligned. Strong support by channel base at 0.6670, which is also the cloud top. Breaks below 0.6670 for further weakness, tests of 0.6610-20 levels then likely, while resistance on the upside is located at 0.6717 (10 DMA) ahead of 0.6740 (Dec 7 high).
Equities Recap
A stronger dollar and weaker commodity made the investors turn out to be cautious as a set of central banks moved in a direction laid by Fed by rising its rates after almost a decade.
European stocks dropped back from 1-week high hitin last session, taking their cue from earlier drops in Asia on Wall street, because of thrd straight week losses in oil prices.
The pan-European FTSEurofirst 300 index dropped 0.6 pct, UK's FTSE dipped 0.6 pct, France's CAC was down 1 pct and Germany's DAX fell 0.9 pct in early deals.
Tokyo's Nikkei Average closed down 1.90 pct at 18,986.80, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 pct, but still on track to finish the week up 1.5 pct. China's CSI300 Index ended up 0.3 pct at 3,767.91 points Shanghai Composite Index finished steady at 3,578.96 point
Emerging market stocks dropped 0.8 pct, erasing nearly all of the 1 pct gain booked on Thursday.
Commodities Recap
Wall street recorded drop on Thursday as crude oil futures at mutli year lows on supply glut as well as a solid USD following US Fed's widely expected monetary tightening. US crude futures were near lowest levels since 2009 at $34.98 per barrel, while Brent crude inched higher to $37.25, heading to record its third week of losses.
Gold rose modestly from previousious session, when suffered from biggest drop in 5 months. Spot gold climbed 0.4 pct, after tumbling 2 pct on Thursday, down 1.7 pct for the week.
Treasuries Recap
US 10-year Treasury yield stood at 2.2163, dropping by 0.022 pct.
JGB prices closed the day unchanged to modestly higher, pushing yields down by 0.5bp to 1bp from yesterday's afternoon close.
UK Gilts started 18 touches higher than the closng value, as expected, because of external core markets went risk off in light of further BoJ easing and equities softness.
New Zealand government bonds earned, pushing yields 7 bps lower. Australian government bond futures rose in a bullish flattening of the curve. The 3-year bond contract earned 3 ticks to 97.900, while the 10-year contract went up 5.5 ticks to 97.1400.
