Market Roundup
- EUR/USD lower ahead of ECB. Plays 1.0637 to 1.0582.
- Sterling near 7 month low after 2nd poor PMI survey.
- GBP/USD tests 1.5034 from 1.5081. 1.4994 was Monday’s base.
- DXY holds firm. Off Mon’s 100.31 peak but plays 99.803 to 100.15.
- UK Nov Markit/CIPS Construction PMI 55.3 vs prev 58.8. 58.2 expected.
- EZ Nov Inflation, flash 0.1% y/y vs previous 0.1%. 0.2% expected.
- EZ Oct Producer prices -0.3% m/m, -3.1% y/y vs previous -0.4%/-3.2% revised. -0.4%/-3.2% expected.
- Small euro zone firms worry about lack of customers, not funding – ECB.
- Cameron seeks UK parliament backing for bombing Islamic State in Syria.
- China’s cabinet says will maintain floating exchange rate.
Economic Data Ahead
- (0815 ET/1315 GMT) Investors watch out for data, including the ADP National Employment Report and revised figures for productivity and labor costs for clues regarding the health of the U.S. economy. Private employers are expected to have added 190,000 jobs in November against 182,000 in October.
- (0830 ET/1330 GMT) Economists forecast labor productivity will be revised up at a 2.2 percent annual pace from the 1.6 percent rate the government reported in November. Labor costs likely to be revised to 1.1 percent from 1.4 pct.
- (1000 ET/1500 GMT) The Bank of Canada is widely expected to hold interest rates at 0.50 percent . The bank slashed its rates twice this year to offset the shock to the economy from a drop in oil prices, but it is expected to keep rates where they are for some time as it lets the simulative effects of lower borrowing costs take hold.
- (1400 ET/1900 GMT) The Federal Reserve issues its so-called Beige Book, a compendium of anecdotes on the health of the economy drawn from the central bank’s sources across the nation.
Key Events Ahead
- (0810 ET/1310 GMT) Top Fed officials, including the Federal Reserve Bank of Atlanta President Dennis Lockhart, will speak before the Broward Workshop.
- (0830 ET/1330 GMT) Fed Yellen gives welcome remarks before the National College Fed Challenge Finals.
- (0845 ET/1345 GMT) FedTrade Operation 30-year Ginnie Mae (max $1.050 bn).
- (0900 ET/1400 GMT) The Federal Reserve Board Governor Daniel Tarullo will give opening remarks before the Economic Growth and Regulatory Paperwork Reduction Act Outreach Meeting.
- (1010 ET/1510 GMT) Philadelphia Fed President Patrick Harker will give welcome remarks before “Bridging the Gap: Promising Approaches and Emerging Practices for Addressing Youth Unemployment” forum.
- (1225 ET/1725 GMT) Investors will watch out for clues regarding the Fed’s decision when Chair Janet Yellen speaks on the economic outlook before the Economic Club of Washington.
- (1540 ET/2040 GMT) San Francisco Fed President John Williams will speak on the economic outlook before a meeting of Portland community leaders.
FX BeatUSD: The euro’s drop helped the dollar to recover ground lost after data showed U.S. manufacturing contracted in November for the first time in three years. The dollar index roe to 99.878, after retreating from a 8 1/2-month high of 100.310 set on Monday. The index set a 12-year peak of 100.390 in March. Against the yen, the dollar rose to 123.08 yen, moving back toward Monday’s high of 123.34. EUR/USD: The euro dropped to trade just above a 7 1/2-month low against the dollar, as long-term investors raised their bets against the single currency before an ECB meeting that is expected to ease monetary policy further. It turned negative against the yen after Eurozone inflation data. The euro was down 0.1 percent at $1.0622, with Monday’s 7 1/2-month trough of $1.0557 in sight. It slightly recovered till 1.06320 at the time of writing and declined from that level. Major intraday resistance is around 1.06400 (trend line joining 1.08290 and 1.07630) and break above targets 1.0690 (Nov 25th high)/1.0720. On the downside watch out 1.0550 (trend line joining 1.05660 and 1.05585) for further weakness and break below targets 1.0500 /1.04600.USD/JPY: The pair is consolidating in narrow range between 122.25 and 123.75. It is currently trading at 123.13. Intraday trend is slightly bullish as long as support 122.60 holds. On the higher side minor resistance is around 123.60 and any break above targets 124.15/125. Its minor support is at 122.60 and break below targets 122.4/122.20.GBP/USD: Sterling dropped to day’s lows against both the euro and dollar on Wednesday after a survey showed British construction sector was weaker-than-expected, falling to its lowest since April. By 0937 GMT, sterling was dropped 0.3 percent on the day at $1.5040, having traded as low as $1.5034. It was around 0.2 percent lower against the euro at 70.63 pence. The pair has broken major intraday support 1.5050 and confirms minor weakness, a decline till 1.5000 is possible. On the higher side major resistance is around 1.5105 and break above targets 1.5130/1.5160.USD/CHF: The pair has declined till 1.0248 at the time of writing and slightly recovered from that level. It is currently trading at 1.02636. Intraday support is around 1.02400 (trend line joining 0.99885 and 1.0140) and break below will drag the pair till 1.0200/1.0140. Overall bullish invalidation is only below 1.0140. Major resistance is around 1.03280 and break above targets 1.03500/1.0400.AUD/USD: The Australian dollar traded near 7-week highs on Wednesday after data showed solid economic growth last quarter, supporting views that interest rates will not be cut in the near term. It climbed as far as $0.7345, having surged a full cent on Tuesday. It was last at $0.73278, having risen 1.6 percent in three sessions. The pair’s major resistance is around 0.7380 and break below targets 0.7420/0.7460. On the lower side minor support is around 0.7280 and any break below will target 0.7230/0.7170. Short term bullish invalidation is only below 0.7170. The currency touched a 5-month peak against the euro and pound, while it powered to its highest since August on the yen.NZD/USD: The New Zealand dollar rose to a 1-month peak of $0.6690, buoyed by rising global dairy prices. It was last at $0.6664.Equities RecapGlobal stock markets were not smooth on Wednesday after weakness in U.S. economic data, European stocks were trading at a 3-month high on ECB stimulus hopes.European FTSEurofirst 300 opened slightly higher but extended gains after Eurozone inflation data, traded up 0.5 pct. Britain’s FTSE 100 was up 0.3 percent to 6,417.84. Germany’s DAX added 0.4 percent and France’s CAC 40 edged up 0.2 percent.Tokyo’s Nikkei average closed down 0.37 pct at 19,938.13, China’s CSI300 Index ended up 3.6 pct at 3,721.95 points, HK’s Hang Seng Index closed up 0.4 pct at 22,479.69 points and Shanghai Composite Index finished up 2.3 pct at 3,536.91 points.Commodities RecapOil prices dropped as a rise in U.S. inventories added to a deep global glut, while investors discounted any possibility of the OPEC would do anything to cut production at this week’s meeting. Brent crude slipped 52 cents at $43.92 a barrel, falling for a 5th consecutive session. U.S. crude was down 41 cents at $41.44 a barrel.Gold retreated, snapping two days of gains, as USD rose against the EUR ahead of expected further stimulus from ECB on Thursday, and U.S. payrolls data later in the week. Spot gold fell 0.3 pct at $1,066.70 an ounce.Treasuries RecapUS 10-year Treasury yeilds stood at 2.1518 with a slight drop of 0.066% from that of previous day. The 2-year yields stood at 0.93 were eyeing a return to their recent 5-1/2 year highs.10-year German yields dropped 4 basis points to 0.44 percent. 2-year yields stayed just off a -0.43 percent low hit on Tuesday.JGB prices closed the day marginally mixed, with super-long JGBs slightly weaker. Yields on the current 20-yr, 30-yr, and 40-yr JGBs ended the afternoon session at their intraday highs of 1.065% (+0.5bp), 1.39% (+1.5bp), and 1.535% (+1bp), respectively, as shown above, against their intraday lows of 1.05% (-1bp), 1.375% (flat) and 1.525% (flat), respectively.British 10-year government bond yields slipped half a basis point after the construction PMI, bottoming out at 1.754 percent — their lowest level since Oct. 15. UK Gilts started 13 ticks lower than the settlement of 118.33, as expected as core markets scaled back some of yesterday’s rally. This lifted 10-year cash away from support from yesterday’s lows at 1.763%.New Zealand government bonds gained, dragging yields down 4.5 basis points. Australian government bond futures were mixed as the yield curve flattened. The 3-year bond contract was flat at 97.890, while the 10-year contract earned 4 ticks to 97.1700. The 20-year contract added 4.5 ticks to 96.6850.
The material has been provided by InstaForex Company – www.instaforex.com