Market Roundup
- USD/JPY +0.01%, EUR/USD +0.02%, GBP/USD -0.4%
- DXY +0.09%, DAX +0.7%, Brent +0.8%, Iron +6.0%, Gold +0.3%
- Switzerland Oct Trade Balance. CHF 2.678 bln vs revised 4.325 bln previous
- UK Oct PSNB GBP4.301 bln m/m vs 9.24 bln previous, 5.9 bln expected
- UK Oct PSNCR –GBP3.413 bln m/m vs 18.929 bln previous
- UK Nov CBI Trends Orders -3 vs -17 previous, -9.0 expected
- OPEC discussing 6month duration for oil output-limiting agreement-Nigeria
- SA Unemployment 27.1% in Q3, worst since 2003
- UK’s Farage-in good position with U.S President Elect to help build ties
- Trump to spell out TPP exit on first day in office
- BoJ Kuroda – Will continue to buy large amount of JGBs under new policy
- BoJ Amamiya – Prepared to use fixed-rate operations in future
- Magnitude 6.3 earthquake hits New Zealand North Island
- EU to retaliate against US bank capital rules- Financial Times
- CASS/ex-PBOC Yu, Xiao– PBOC should accelerate yuan depreciation
Economic Data Ahead
- (0830 ET/1330 GMT) Statistics Canada is expected to report that retail sales gained 0.6 percent in September from a decline of 0.1 percent in August. While excluding autos, retail sales are likely to have risen 0.5 percent, after staying unchanged in the previous month.
- (1000 ET/1500 GMT) National Association of Realtors is likely to show that U.S. existing home sales declined 0.5 percent to an annual rate of 5.43 million units in October,
- (1000 ET/1500 GMT) Federal Reserve Bank of Richmond will publish it Manufacturing Index for November. The index posted a drop of 4 in the previous month.
- (1000 ET/1400 GMT) The European Commission releases Eurozone's preliminary Consumer Confidence reading for the month of November. The index is expected to slump 7.8 percent after posting a drop of 8.0 in the prior month.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
- N/A The Statistics New Zealand will release visitor arrivals report for the month of October. The indicator posted an annualized gain of 13.0 percent in the prior month.
Key Events Ahead
- (0945 ET/1445 GMT) FedTrade 30-yr Fannie Mae/Freddie Mac max $2.500 bln
- (1145 ET/1645 GMT) FedTrade 30-yr Ginnie Mae max $1.225 bln
FX Beat
DXY: The dollar consolidated gains against its major peers, as the Treasury yields accelerated losses across the curve. The greenback against a basket of currencies trades up at 100.90, within the sight of a 13-1/2 -year high of 101.48 hit on Friday. FxWirePro's Hourly Dollar Strength Index stood at 69.62 (Bias Bullish) by 1100 GMT.
EUR/USD: The euro extended gains for the second consecutive day, as the greenback eased across the board. However, the major failed to benefit from the ongoing weakness in the dollar and consolidated between a narrow range near the 1.0650 level. The European currency trades 0.1 percent at 1.0637, having hit an intra-day high of 1.0657 earlier in the session. FxWirePro's Hourly Euro Strength Index stood at -51.14 (Bias Slightly Bearish) by 1100 GMT. The pair faces strong trend line resistance at 1.0662 and any violation above will target 1.0750/1.0820. On the lower side, any break below 1.0580 will drag it till 1.0540 (161.8% retracement of 1.0580 and 1.0649)/1.0500 in the short term.
USD/JPY: The Japanese yen gained, pulling away from a near 6-month low of 111.36 hit in the previous session. The greenback came under fresh selling pressure as the treasury yields accelerated losses across the curve. However, the downside remains capped amid a slightly improved risk sentiment as oil and global equity markets continued to trade in the positive territory. The pair trades flat at 110.77, having hit a low of 110.26 earlier in the session. FxWirePro's Hourly Yen Strength Index stood at -59.22 (Bias Slightly Bearish) by 1100 GMT. The major resistance is around 111.63 (161.8% retracement of 110.92 and 109.80) and a break above targets 112/112.60. On the lower side, minor support is around 109.51 (5- day MA) and any break below targets 108/107.65 (10- day MA).
GBP/USD: Sterling edged down after rising to a 1-week high on views that Britain's exit from the European Union will be softer than had been expected. Britain's public finance showed a marginally smaller-than-expected deficit in October, however, it was still weaker on an annualized basis. Sterling trades 0.3 percent down at 1.2445, having touched a 1-week high of 1.2512 earlier in the session. FxWirePro's Hourly Sterling Strength Index stood at 43.40 (Bias Neutral) by 1000 GMT. Investors’ attention remains on Wednesday's budget update from the British government. The short term trend is slightly bearish as long as resistance 1.2530 holds. The pair should break below 1.2300 for further weakness, a decline till 1.2200/1.2140 is possible. Against the euro, the pound trades 0.6 percent down at 85.48 pence, after rising as high as 84.89 pence in the previous session, its highest since Sept. 16.
USD/CHF: The Swiss franc edged down, reversing most of its previous session gains, as the greenback stood firm across the board. The major trades 0.1 percent up at 1.0093, having touched an intra-day high of 1.0118. FxWirePro's Hourly Swiss Franc Strength Index stood at -103.63 (Bias Highly Bearish) by 1000 GMT. The short-term trend is bullish as long as support 1.0058 (5- day MA) holds. Any violation below 1.0037 confirms minor weakness, a decline till 1.000/0.9950 is possible. On the higher side, resistance stands at 1.0125 and any indicative close above targets 1.0180/1.0220
AUD/USD: The Australian dollar extended its recovery momentum above the 0.7400 handle, following comments from Reserve Bank of Australia Assistant Governor Christopher Kent. In his speech he stated that stronger growth would push inflation higher to more normal levels, however, rising unemployment rate pointed to spare capacity. The Aussie trades 0.4 percent higher at 0.7397, hovering towards an early high of 0.7413. FxWirePro's Hourly Aussie Strength Index stood at 91.33 (Bias Slightly Bullish) by 1000 GMT. On the higher side, minor resistance is around 0.7420 (23.6% retracement of 0.7778 and 0.7310) and any break above will take the pair till 0.7480/0.7520. The major support is around 0.73000 and break below will drag it till 0.7280/0.72500.
NZD/USD: The New Zealand dollar edged up, but failed to extend its recovery momentum, amid growing expectations of Fed rate-hike action in December and prospect of fiscal stimulus from Trump administration, which supported the U.S dollar. Moreover, the major finds support from the persistent recovery in commodity prices, which kept the bid tone around the Kiwi intact. The pair trades 0.1 percent up at 0.7071, having hit an intra-day high of 0.7085. FxWirePro's Hourly Kiwi Strength Index was at 50.10 (Bias Bullish) by 1000 GMT. Immediate resistance is located at 0.7106 (10-DMA), a break above targets 0.7150. On the downside, support is seen at 0.7035, a break below could drag it near 0.7000.
Equities Recap
European shares gained, as the rally in oil and metals prices strengthened metals and mining stocks, amid risk-on market profile.
The pan-European STOXX 600 index increased 0.4 percent at 341.60 points, while the FTSEurofirst 300 index added 0.37 percent at 1,347.35 points.
Britain's FTSE 100 trades 0.8 percent up at 6,837.80 points, while mid-cap FTSE 250 rose 0.8 percent at 17,673.59 points.
Germany's DAX advanced 0.5 percent at 10,734.70 points; France's CAC 40 trades 0.76percent higher at 4,564.12 points.
Tokyo's Nikkei rose 0.31 percent to 18,162.94 points, Australia's S&P/ASX 200 index jumped 1.33 percent to 5,422.40 points and South Korea's KOSPI gained 0.89 percent at 1,983.47 points.
Shanghai composite index climbed 0.9 percent to 3,248.35 points, while CSI300 index added 0.8 percent at 3,468.36 points. Hong Kong’s Hang Seng soared 1.4 percent at 22,678.07 points.
Commodities Recap
Crude oil prices advanced, hitting their highest level since October, as the market expect the producer cartel OPEC to cut output levels, however, a failure to agree a cut could further deteriorate the oversupplied market by early 2017. Global benchmark Brent crude was trading 1.61 percent higher at $49.80 per barrel by 1000 GMT, after rising to a high of $49.93, its highest since Oct. 31. U.S. West Texas Intermediate crude rose 1.6 percent at $49.09 a barrel, having hit a 3-week high of $49.17 earlier in the session.
Gold prices climbed, extending gains from the previous session, supported by an easing U.S. dollar and physical buying in Asia. Spot gold was up 0.35 percent at $1,218.03 an ounce by 1002 GMT, having gained 0.4 percent to snap a three-session losing streak. U.S. gold futures were up 0.64 percent at $1,217.50 per ounce, after earlier rising as high as $1,220.90.
Treasuries Recap
The U.S. Treasuries saw mixed performance during a relatively quiet Tuesday session that witnessed data of little significance. The yield on the benchmark 10-year Treasury note fell 4 basis points to 2.29 percent, the yield on long-term 30-year Treasury dipped 4-1/2 basis points to 2.96 percent and the yield on short-term 2-year note bounced 1 basis point to 1.10 percent.
The UK gilts strengthened as investors remained cautious ahead of the 10-year auction. The yield on the benchmark 10-year gilts fell 4 basis points to 1.39 percent, the super-long 40-year bond yield dipped 3 basis points to 1.82 percent and the yield on short-term 3-year slid 3 basis points to 0.27 percent.
The German bund yields eased after a long rally following the United States Treasury prices. The yield on the benchmark 10-year bond fell 4 basis points to 0.24 percent, the yield on long-term 30-year note dipped 4-1/2 basis points to 0.858 percent and the yield on short-term 2-year bond slid 2-1/2 basis points to -0.70 percent.
The Japanese government bonds traded nearly flat as markets were mostly quiet with little in the way of market-moving news, and with no important data scheduled for release in Asia today. The benchmark 10-year bond yield hovered around 0.02 percent, the yield on long-term 30-year note remained steady at 0.61 percent and the yield on short-term 2-year note stood flat at -0.17 percent.
The New Zealand government bonds closed higher as investors’ risk appetite faded after reports of a 6.3 magnitude earthquake off the North Island. The yield on the benchmark 10-year bond fell 2 basis points to 3 percent, the yield on 7-year note also ended 2 basis points lower to 2.73 percent and the yield on short-term 2-year note slid 2 basis points to 2.09 percent.
The Australian government bonds strengthened following a recovery in the United States Treasury prices. The yield on the benchmark 10-year Treasury note fell more than 3 basis points to 2.67 percent, the yield on 15-year note dipped 4-1/2 basis points to 3.06 percent and the yield on short-term 2-year slid 1-1/2 basis points to 1.80 percent.
