Market Roundup
- GBP/USD plays 1.5056 into 1.4983 ahead of soft UK wage data.
- BoE Carney – Committed to infl tgt, eyes macro-prudential policy – FT
- Germany Dec PMI manufacturing – flash 53.0 vs 53.0 exp, previous 52.9.
- Germany Dec PMI services – flash 55.4 vs 55.5 expected, previous 55.6.
- EZ Dec PMI mfg – flash 53.1 vs 52.8 expected, previous 52.8.
- EZ Dec PMI serv – flash 53.9 vs 54.1 exp, prev 54.2.
- UK Oct ILO unemployment – 5.2% vs 5.3% expected, previous 5.3%.
- UK Oct average weekly earnings – +2.4% vs +2.5% expected, previous +3.0%.
- EZ Nov inflation – final m/m -0.1% vs -0.2% expected. y/y +0.2% vs +0.1% expected.
- EZ Oct Trade balance – EUR 24.1bln vs 21.5bln.
- Swiss Dec ZEW investor sentiment index – 16.0 vs 0.0 previous.
- BoJ polling firms’ wage plans as oil price slide threatens CPI target.
- Japan Dec flash mfg PMI 52.5, Nov 52.6
- Sources – China ready to moderate sharp offshore yuan falls.
- China PBOC Fan Gang – Econ faces headwinds amid adj – Sec Times
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. housing starts likely rebounded to 1.135 mln in November, pointing to steady momentum in the housing market. Groundbreaking stood at 1.060 million units in October. Building permits are expected to have fallen to a 1.150 million-unit pace from 1.161 million units in October.
- (0915 ET/1415 GMT) U.S. industrial production is likely to have dropped 0.1 pct for the third straight month in November, raising concerns about the robustness of Q4 economic growth. Capacity utilization likely at 77.4 pct in November, while manufacturing output probably rose 0.1 pct after gaining 0.4 pct in October.
- (0945 ET/1445 GMT) Financial firm Markit is set to release its U.S. manufacturing PMI Flash for Dec, which is expected to have fallen slightly to 52.6 from 52.8 in previous month.
- (1030 ET/1530 GMT) EIA Crude Oil Stocks Change (Dec 11), consensus -1.850M, previous -3.568M.
- (1400 ET/1900 GMT) The U.S. Federal Reserve’s Federal Open Market Committee is set to conclude a two-day meeting and announce its decision on interest rates. The first first rate hike since 2006 is largely priced in, as traders see an 83-percent chance the central bank will lift its targeted rate range to 0.25 percent to 0.50 percent from the current zero to 0.25 percent range, according to CME Group’s FedWatch program.
- (1400 ET/1900 GMT) Argentina is due to release November consumer inflation data.
Key Events Ahead
- (0900 ET/1400 GMT) Swiss National Bank releases quarterly bulletin for Q4.
- (1400 ET/1900 GMT) FOMC Statement and Summary of Economic Projections.
- (1430 ET/1930 GMT) Fed Chair Janet Yellen issues monetary policy statement and convenes a press conference.
FX BeatUSD: The dollar slipped back from a near one-week high versus a basket of other major currencies with limited losses ahead of an expected Federal Reserve’s rate hike later in the day. It was less than 0.1 percent lower at 98.174. Against the euro it was flat at $1.0936, having also hit its highest in a week. Against the yen, the green inched up 0.1 percent to 121.71 yen. EUR/USD: The euro has declined till 1.0947 after making a high of 1.10596. It was trading in narrow range and further direction can be seen only after Fed meeting. Overall bullishness can be seen above the 1.1100 level. On break above 1.1100 will take the pair till 1.11385/1.1178. On the lower side slight weakness can be seen below 1.0900 and below that a decline till 1.08300/1.0760 cannot be ruled out.USD/JPY: The pair is facing strong resistance around 122.25 and any bullishness can be seen only above that level. On the higher side any break above targets 123/123.65. Minor support is at 121.60 and break below targets 121/120.50.GBP/USD: Sterling touched an 8-day low against the dollar after data showed UK earnings increased at the slowest pace since the start of the year in the three months to October, even as strong job creation pushed down the jobless rate. It dropped to $1.4983 after the data, the lowest since Dec. 8 and down from $1.5003 ahead of the release, before recovering to $1.5001, still down 0.3 percent on the day. On the lower side major support is around 1.5000 and break below targets 1.4980/1.4950/1.4910 level. It is facing minor resistance around 1.5060 and break above will take the pair to next level around 1.5100/1.5160. Further bullishness is only above 1.5250. Against the euro, the pound hit an intraday trough of 72.98 pence.USD/CHF: The pair has recovered till 0.99246 after making a low of 0.9786 and is currently trading around 0.98980. Intraday resistance is around 0.9930 and break higher will take the pair to next level around 0.9957/0.9975. Overall bearish invalidation is only above 1.00350 level. On the other hand minor support is around 0.9820 and break below will drag down the pair further lower till 09798 (61.8% retracement of 0.9476 and 1.03280) /0.9766.AUD/USD: The Australian dollar was a touch lower at $0.7191, having shed 0.7 percent on Tuesday. RBA Governor Glenn Stevens said in an interview with the Financial Review that he expected the currency could weaken further in sympathy with falling commodity prices. Aussie has retreated after making a high of 0.7283. Short term trend is still weak as long as resistance 0.7285. The pair’s major intraday resistance is around 0.7280 and break above targets 7300/0.7350. On the lower side major support is around 0.7150 and any break below will target 0.7100/0.7050. NZD/USD: New Zealand dollar was sidelined on Wednesday with investors reluctant to take big bets before a likely rate hike in U.S. interest rates. The Kiwi edged up to $0.6759, having climbed to a seven-week high the previous day. It broke key resistance between $0.6800 and $0.6825 on Tuesday, but could not sustain this level after a rally in the U.S. dollar.Equities RecapShares and bond markets climbed and the dollar slipped, as investors geared up for expected first rate hike in almost a decade from U.S. Fed. European shares were steady with the sharp gains on the previous trading day, as the new data reflected signs of slow pick up in bloc’s confidence, Britain’s FTSE 100 rose 0.3 pct, Germany’s DAX inched higher 0.3 pct, France’s CAC 40 was up 0.2 pct in early trades.Tokyo’s Nikkei rose 2.5 pct, reversing from 2-month low struck the day before as the risk sentiment showed ups and downs before the most anticipated Fed’s rate hike. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 2 pct. China’s CSI300 Index ended down 0.2 pct at 3,685.44 points, Shanghai Composite Index closed up 0.2 pct at 3,516.19 points and HK’s Hang Seng Index finished up 2.0 pct at 21,701.21 points. Australian shares earned 2.2 pct.Commodities RecapCrude oil slipped back in early European trading, which were the other main obsession for investors in weeks off-late, because of the pressure it lays on oil-producing countries and global inflation. WTI dropped 60 cents to $36.77 per barrel and Brent fell 80 cents at $37.65, heading back towards 7-year lows.Gold climbed to $1065 per troy ounce in Asia overnight as expectations that U.S. Fed will announce its first interest rate hike in nearly a decade were tempered by anticipations that it will hint a slow pace of future hikes. Spot gold rose 0.5 pct at $1,065.40 an ounce, while U.S. gold futures for February delivery went up $3.10 an ounce at $1,064.70.Treasuries Recap US Treasury yields went up modestly ahead of US Fed’s rate decision and post the stable US consumer data, which reinforced the case for a rise. 10-year yields stood at 2.2711 pct, rising by 0.005 pct. However, it is different in Europe, German bund yields dropped along with other Eurozone bond yields.JGB prices closed the day marginally mixed, with 20-yr tenor moderately stronger. Earlier, there were sell-offs in the 10-yr JGBs by several banks in secondary market, as the benchmark 10-yr JGB yield broke below the 0.30% level. UK Gilts started 11 ticks higher than the close, as expected, as the core markets consolidated ahead of the FOMC tonight.New Zealand government bonds lost, pushing yields as much as 4.5 bps higher. Australian government bond futures eased, with 3-year bond contract losing 3 ticks at 97.840. The 10-year contract dropped 4.5 ticks to 97.0650, while the 20-year contract shed 5 ticks to 96.5750.
The material has been provided by InstaForex Company – www.instaforex.com