Market Roundup
- EUR/USD climbs out of 1.0960 hole to reach 1.0992 but good offers to 1.1000.
- USD/JPY offering up bullish techs but has to fight broadly softer USD.
- DXY little changed from Monday at 98.002.
- DAX rebounds to 200HMA at 10818 and clear above 10754 daily cloud top.
- Large China copper smelters to cut spot metal sales by up to 200,000T in Q1 2016 – Source.
- Saudi ARAMCO’s Falih-S.Arabia has more capacity vs others to wait until market balances.
- Saudi burning through oil reserves at unsustainable rate- Telegraph.
- UK Chancellor-must raise taxes to hit deficit target- Times.
- PBOC sets yuan mid-point at 6.4864 / dollar vs last close 6.4880.
- China c.bank sets yuan mid-point at a 4-1/2 year low.
Economic Data Ahead
- (0730 ET/1230 GMT) Brazil’s central bank will release its monthly report on the federal budget. The primary budget deficit is likely to have increased to 14 billion reais in November from a gap of 11.53 billion in October.
- (0830 T/1330 GMT) U.S. Census Bureau releases its goods trade balance for the month of November, a deficit of $58.41B was recorded in October.
- (0900 ET/1400 GMT) The annualized U.S. single-family home prices in October likely rose at a slower pace than in September, analysts expect the S&P/Case Shiller composite index of 20 metropolitan areas to have risen 5.4 percent in October from a year earlier, compared with 5.5 percent in September.
- (1000 ET/1500 GMT) The U.S. Consumer Confidence Index for December is projected to rise to 93.8, after posting 90.4 last month, the lowest reading since September 2014.
Key Events AheadNo Major Events ScheduledFX BeatUSD: The dollar fell 0.1 percent against a basket of major currencies but strengthened around 0.2 percent against the yuan in offshore trading, to 6.5800 yuan. It was flat at 120.37 yen, close to a 2-month low of 120.05 touched last week as weaker oil sapped risk appetite. EUR/USD: The euro inched higher 0.1 percent to $1.0980 and declined till 1.09584 and was trading around 1.09677. The pair’s major resistance is around 1.1000 and any break above 1.100 will take the pair to 1.1060/1.1090 level. On the downside minor support is around 1.0950 and break below targets 1.0920/1.0880. USD/JPY: The pair has recovered after making a low of 120.09 and was trading around 120.42. Short term trend is still weak as long as resistance 121.50 holds. On the higher side any break above121.50 targets 122/122.25. The major support is at 120 and break below targets 119.25/118.60.GBP/USD: Sterling rose 0.1 percent to $1.4891, close to a 8-1/2-month low of $1.4806 hit earlier in the month. It has broken 1.4850 and declined till 1.4840 at the time of writing, and facing resistance around 1.4950 and break above targets 1.5010/1.5060. On the lower side major support is around 1.4850 and break below targets 1.4800/1.4720 level. Overall bullish invalidation is only above 1.5100.USD/CHF: The pair is trading in narrow range around 0.9950-0.9850, and resistance is at 0.9950, break above targets 1/1.0030 level. On the lower side support is at 0.9850 and break below will drag the pair down till 0.9820/0.9780 is possible. Overall bullish invalidation is only below 0.9780.AUD/USD: The Australian dollar edged off highs in thin year-end trade. It was pinned at $0.7258, having run out of steam when it met heavy resistance at $0.7295 last week. Strong support was found near $0.7210. The Aussie is consolidating in narrow range between 0.72805 and 0.7255 for the past two trading sessions. The resistance is around 0.7285 and any break above 0.7285 will take the pair till 0.7335/0.7380. On the lower side minor support is around 0.7240 and any break below will target 0.7200/0.7170. Short term weakness is only below 0.7150. The Aussie rose 1.4 percent last week but was down 11 percent so far this year. Against its Canadian dollar, it held its own at C$1.0081, not far from a recent 16-month peak of C$1.0108.NZD/USD: The New Zealand dollar inched up to 2-month hights buoyed by a hunt for yield, it crawled up to $0.6866, its highest since mid-October, and looked on track for an increase of nearly three cents this month. The kiwi has shed 12 percent so far this year.EUR/SEK: Swedish crown touched a 9-month high against the euro as investors bet that the country’s economy would continue to improve and Riksbank would hold off from cutting interest rates further for the time being. It rose 0.3 percent against the euro to trade at 9.1500 crowns, its strongest since mid-March. Equities RecapAs oil prices stabilized above 11-year lows, European shares and euro zone bond yields climbed with the pan-European FTSEurofirst 300 index inching higher 0.9 pct and the Euro STOXX 50 index gaining 1.3 pct. UK’s blue-chip FTSE 100 index climbed 0.4 pct, starting for the first time since the Christmas break. France’s CAC rose 0.7 pct and Germany’s DAX went up 0.8 pct.Tokyo’s Nikkei average ended up 0.58 pct at 18,982.23. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 pct. China’s blue-chip CSI300 index climbed 0.9 pct, while the Shanghai Composite Index ended up with same gains. HK’S Hang Seng Index finished up 0.4 pct at 21,999.62 points.Commodities RecapOil prices stabilized above 11-year lows on the prospects for lower temperatures on both sides of the Atlantic but under pressure from slowing global demand and abundant supplies, with Saudi Arabia signalling no change to its oil policies and Iran preparing to increase exports. WTI futures rose 21 cents at $37.02 per barrel, after falling more than 3 percent on Monday. Brent stood at $36.82 per barrel, up 20 cents.Gold inched higher in response to a softer dollar and more stable oil prices, but it is heading for its third consecutive year of losses on prospects of rising U.S. interest rates. Spot gold rose 0.3 percent to $1,071.80 an ounce by 1001 GMT, after losing 0.6 percent in the previous session. Treasuries RecapUS 10 year Treasury yields stood at 2.2392 pct, rising 0.014 pct.German 10-year Bund yields went up 2 bps to 0.58 pct and most other bond yields in the single currency region rose 1-3 bps. Spanish bond yields plunged down as differences between political parties made an anti-austerity leftist coalition look increasingly unlikely.UK Gilts started 30 ticks higher than the Christmas Eve close of 117.10, as expected, with the market playing catch up with gains in other core markets.New Zealand government bonds shed a tad, pushing yields 0.5bp higher across the curve. Australian government bond futures edged up to 8-week highs, with the 3-year bond contract rising 5 touches at 97.990. The 10-year contract gained 6 ticks to 97.2250, while the 20-year contract were unchanged at 96.7300.
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