Market Roundup
- USD/CNH at 6.6170 +0.3% and +1.0% up from today’s low.
- EUR/GBP again peaks at 0.7607, matches Thursday’s levels.
- Light crude down 5.6%, Brent 4.5% lower, 13-year lows.
- DAX down 1%, SSEC closed down 3.51%, Nikkei off 0.5%.
- US stock futures off sharply-S&P-Dow down 1.7%, NASDQ -2.0%.
- Near 7-year low for Taiwan dollar vs USD 33.802.
- Hang Seng down 4.6% for week-Low close since Sept 2012.
- Trump says would tax Chinese goods to stop currency devaluation.
- EU’s Juncker – without Schengen freedom zone EUR ccy pointless.
- Euro zone November Trade Balance E23.6bln surplus vs E24.1bln previous.
- UK November Construction Output -1.1% y/y vs +1.0% previous.
- Lipper – Investors pull $9 bln from stocks funds week-ended January 13.
- Japan PM Abe – Hopes BoJ continues on present course to achieve target.
- BoJ Kuroda – No plans to ease policy now.
- Japan PM Abe advisor – BoJ doesn’t need to ease policy in January.
- New Zealand December food prices index -0.8% m/m, -1.3% y/y.
Economic Data Ahead
- (0830 ET/1330 GMT) U.S. retail sales probably remained flat in December after rising 0.2 percent in November, as a drop in purchases of automobiles and receipts at service stations offset gains in other categories. The core retail sales are seen rising 0.4 percent after increasing 0.5 percent in November.
- (0830 ET/1330 GMT) The U.S. Producer Price Index is expected to show a 1.0 percent drop in December compared with a 1.1 percent decline in the prior month.
- (0900 ET/1400 GMT The industry group for Canadian real estate agents will release existing home sales data for December.
- (0915 ET/1415 GMT) U.S. industrial production likely fell 0.2 pct in December after dropping a 0.6 pct in November.
- (1000 ET/1500 GMT) U.S. Business inventories are expected to drop 0.1 pct in November after staying flat in the previous month.
- (1300 ET/1800 GMT) Baker Hughes US Oil Rig Count.
Key Events Ahead
- (1110 ET/1610 GMT) Federal Reserve Bank of San Francisco President John Williams gives opening remarks before the Bay Area Council Economic Institute 9th Annual Forecast Conference in California.
- (1300 ET/1800 GMT) Federal Reserve Bank of Dallas President Robert Kaplan participates in a session before the Dallas Assembly Luncheon.
FX Recap
USD: The U.S. dollar was weaker against the euro and the yen, helping push the dollar index down 0.18 percent to 98.895.EUR/USD: The pair was rising on Friday and managed to jump above the $1.09 mark, although further gains will be hard for bulls as the pair has failed many times above $1.09 this week. The first estimate for euro area (EA19) exports of goods to the rest of the world in November 2015 was €173.5 billion, an increase of 6% compared with November 2014 (€163.6 bn). Imports from the rest of the world stood at €149.9 bn, a rise of 5% compared with November 2014 (€143.5 bn). As a result, the euro area recorded a €23.6 bn surplus in trade in goods with the rest of the world in November 2015, compared with +€20.1 bn in November 2014. It made intraday high at 1.0917 and low at 1.0854 levels. The minor resistance is around 1.0950 and any break above 1.09500 will take the pair to next level 1.1000. On the lower side major support is around 1.0800 and break below targets 1.0710/1.0670 level.USD/JPY: The pair was trading 0.6% lower on Friday as selling offers prevailed and it was seen around ¥117.33 during the London session, nearer to the current swing low of ¥116.70. Moreover, Friday’s speech by Bank of Japan Governor Kuroda added to the yen’s strength as well. Governor Kuroda spoke today in parliament and kept to the same script, stating that the inflation trend in Japan was ‘improving steadily’ and that the BOJ has ‘no plans at the moment’ for additional monetary easing. Pair made intraday high at 118.27 and low at 117.23 levels. Major resistance is seen at 120.67 and support is seen at 116.54 levels.GBP/USD: Sterling touched a 5-1/2 year low against the dollar, putting it on track for its third straight week of losses, as investors increasingly worrying about UK’s economic outlook and pushed back chances of a rate hike to early 2017. It fell 0.5 percent to $1.4337, its weakest since May 2010, having lost more than 6 percent in the past six months with traders saying more losses were likely near term. The euro rose 0.7 percent to 75 pence, not far from a one-year high of 76.06 pence hit on Thursday. Construction output decreased 0.5% on a month-on-month basis in November, following a rise of 0.2% a month before. This pushed the annual rate of growth 1.1% below zero – the lowest since May 2013. Pair made intraday high at 1.4427 and low at 1.4330 levels. Initial support is seen at 1.4281 and resistance is seen around 1.4750 levels.NZD/USD: The New Zealand dollar struggled at $0.6458, having touched a 3-month trough of $0.6420 on Thursday. It was on track with a 1.3 percent weekly loss, its third consecutive weekly decline. Commodity currencies such as the Kiwi and the Aussie dollar have been hit hard as both nation’s economies are strongly linked to China, and any signs of a slowdown in the world’s number two economy will also play out in the antipodean economies. It made intraday high at 0.6491 and low at 0.6390 levels. Initial support is seen at 0.6383 and resistance at 0.6896 levels.AUD/USD: The Australian dollar fell to a 7-year low at $0.6880, having touched a 4-month trough of $0.6910 on Thursday. It briefly popped back above 70 cents but was unable to hold gains. Undermining risk sentiment was renewed weakness in Chinese equities. Major support was found at $0.6892 and a break below will take it to lows unseen since early 2009. For the week, the Aussie was on track for a tiny weekly gain of 0.1 percent, but fared better against the yen, euro and pound with a bounce of at least 1 percent. Aussie data on Friday showed a 1.8% rise in home loans on a monthly basis, smashing the forecast of a 0.5% decline. Pair made intraday high at 0.7001 levels and low around 0.6864 levels. Initial support is seen at 0.6841 and resistance at 0.7050 levels.USD/CAD: The Canadian dollar slipped to C$1.4521 against its U.S. counterpart, its lowest level since early 2003. Canadian new housing prices rose as expected in November, mainly pushed up by active markets in the most populated city of Toronto and western Vancouver. The New Housing Price Index (NHPI) increased 0.2% during the eleventh month of 2015, after climbing 0.3% in October, Statistics Canada said on Thursday. Pair made intraday high at 1.4568 and low at 1.4343 levels. Initial resistance is seen at 1.4655 and support at 1.4334 levels.
Equities Recap
European and Asian shares were hit on Friday as oil prices slid back below $30, keeping alive concerns about global growth. European stocks dropped more than 1 percent, heading back towards Thursday’s 13-month lows, while Asian shares touched 3-1/2 year lows. Britain’s FTSE 100 was down 0.1 pct, France’s CAC 40 fell 0.3 pct and Germany’s DAX lost 0.2 pct.Tokyo’s Nikkei closed down 0.54 pct at 17,147.11, the Shanghai Composite Index lost 3.5 percent on the day, posted a 9 percent loss for the week. While the CSI300 was down 3.2 percent and dropped 7.2 percent for the week. HK’s Hang Seng Index ended down 1.5 pct at 19,520.77 points.
Commodities Recap
Oil prices were under fresh selling pressure as the prospect of additional Iranian supply loomed over the market. Brent crude fell 3 percent to $29.86, on track for a weekly loss of more than 10 percent. U.S. crude slid almost 5 percent to $29.75, and was set for a weekly dip of 10 percent.
Gold prices edged higher on Friday, after dropping for the past four out of five sessions, as falling Asian stock markets underpinned the precious metal although gains were capped by expectations of another U.S. interest rate increase. Spot gold added 0.6 percent to $1,083.76 an ounce, while U.S. gold futures gained nearly 1 percent to $1,083.9. Spot gold is down 1.86 percent this week, most since the week ending Nov. 6.
Treasuries Recap
The yields on U.S. 10-year Treasury stood at 2.087 pct vs U.S. close of 2.098 pct on Thursday.The German yield curve bear steepened with yield up to the 10-yr tenor barely changed (up to 0.6 bps higher) while the 30-yr yield increased by 2.9 bps.UK Gilts opened 29 ticks higher than the settlement of 118.75, as predicted, as core fixed income markets reacted to another poor session from Chinese equities. Buyers initially respected yesterday’s highs on March Gilts of 119.35, but soft November Construction Output Volume data, which the ONS has said will lower growth forecasts, saw screens post new highs of 119.37. 10-year cash yields have followed the same script.Australian government bond futures retreated from multi-month peaks, with the 3-year bond contract down 3 ticks at 98.050. The 10-year contract lost 4 ticks to 97.2850, while the 20-year contract was steady at 96.7900. New Zealand government bonds were unchanged.
The material has been provided by InstaForex Company – www.instaforex.com