Global Markets:
- Asian stock markets: Nikkei down 1.70 %, Shanghai Composite closed due to suspension of trading, Hang Seng declined 2.55 %, and ASX 200 fell 2.00 %
- Commodities: Gold at $1097.50 (+0.50 %), Silver at $14.08 (+0.70 %), WTI Oil at $33.10 (-2.50 %), Brent Oil at $33.40 (-2.80 %)
- Rates: US 10 year yield at 2.16, UK 10 year yield at 1.80, German 10 year yield at 0.51
News & Data:
- Australia Trade Balance (Nov): AUD -2906mln (exp AUD -2985mln prev AUD -3305mln)
- Australia Building Approvals (MoM) Nov: -12.7% (exp -3.0% prev 3.9%)
- Australia Building Approvals (YoY) Nov: -8.4% (exp 3.9% prev 12.3%)
- PBoC Fixes Yuan Reference Rate at 6.5646 (prev 6.5314)
- PBoC Largest Weekly Injection via Open Market Ops since February — RTRS
- China Stocks Halted For Rest of Day after CSI 300 Tumbles 7% — BBG
- Fonterra Says It Had Record Export Volumes in December — BBG
- CFETS: 2016 Yuan Mechanism to Continue To Be Market Based
- CFETS: Yuan Has Conditions to Keep Stable against Basket
- CFETS: China Has Ample FX Reserves
- CFETS: China Has No Need to Support Exports with Weak Yuan — BBG
Markets Update:
The Euro recovered overnight as the US Dollar came under pressure. EUR/USD retested the 1.0710 support level in yesterday’s NY session and was able to bounce from there. It eventually rallied to 1.08 and extended gains in Asia, reaching a high of 1.0825. GBP/USD was unable to follow the Euro and remained caught in a 1.4600-40 range. It was able to remain above 1.46, but a break lower seems just a matter of time given negative techs across all timeframes. GBP sentiment has been increasingly negative after somewhat dovish comments from the Bank of England and general worries about a potential Brexit.
USD/JPY price action also looks increasingly bearish, with the pair breaking below 118 support overnight and posting a low of 117.65. Minor support can be expected at 117.50, but the major area to watch is 116.85/117.00.
Meanwhile, the commodity currencies remain under pressure. AUD/USD extended losses in the Asian session, falling to 0.7025, while NZD/USD declined to 0.6610. USD/CAD momentum remains strong and the pair reached a fresh multi-year high of 1.4120 overnight.
Upcoming Events:
- 07:00 GMT – German Factory Orders
- 07:00 GMT – German Retail Sales
- 10:00 GMT – Euro Zone Retail Sales
- 10:00 GMT – Euro Zone Consumer Confidence
- 13:30 GMT – US Initial Jobless Claims
- 15:00 GMT – Canadian Ivey PMI
