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Markets Update: APAC Stocks End Mostly Higher, FX Eyes EUR/USD and USD/JPY, Commodities Back above $70.
Economic Calendar
Global Markets Roundup: 08 Dec 2023
APAC stocks ended mostly higher on Friday, but gains were limited as sentiment remained cautious. The Reserve Bank of India (RBI) kept the Repurchase Rate unchanged at 6.50%, as expected. The Japanese Yen (JPY) remained the key focus in the FX space, with USD/JPY briefly dipping below 144.00. EUR/USD and Cable tested 1.08 and 1.26, respectively. Bunds were marginally softer, while Brent and WTI Crude futures were back above USD 75/bbl and USD 70/bbl, respectively. European equity futures are indicative of a higher open with Euro Stoxx 50 future +0.3% after the cash market closed down 0.2% yesterday.
The ASX 200 closing marginally higher in choppy trade. Weakness in financials and tech was offset by resilience in the commodity-related sectors, including energy, following confirmation of early merger talks between Woodside Energy and Santos to form an AUD 80bln Australian gas giant. The Nikkei 225 underperformed amid pressure from a firmer currency after speculation that the Bank of Japan could exit its negative interest rate policy (NIRP) sooner than thought. Markets are now pricing in a 20% chance the BoJ could lift rates at its December meeting. Meanwhile, a downward revision in Japan's Q3 GDP to a deeper annualised contraction of -2.9% also weighed on the risk tone. The Hang Seng and Shanghai Composite indexes just about shrugged off the early indecision amid a lack of fresh drivers. The downside was cushioned after the People's Bank of China (PBoC) conducted a net liquidity injection for the first time this week.
FX
The US Dollar Index (DXY) traded rangebound as investors awaited the release of upcoming US employment data. The index had tumbled below 104.00 yesterday, as yen strength dominated price action due to increased Bank of Japan (BoJ) exit speculation.
The Euro (EUR) lacked direction, having retreated from its earlier gains, as it found resistance near the 1.0800 level. The British Pound (GBP) was little changed, approaching the 1.2600 level as it attempts to break above its recent highs.
The Japanese Yen (JPY) languished near a sub-144.00 level, having eased from its earlier lows on the back of a weaker-than-expected revision to Japan's GDP. However, BoJ exit speculation continued to weigh on the yen.
AUD and NZD were mixed, reflecting the choppy mood in equity markets and the lack of major catalysts.
The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.1123 vs exp. 7.1427 (prev. 7.1176).
BoC Deputy Governor Gravelle said that the Canadian economy is "roughly in balance," but the central bank is closely monitoring inflation expectations, wage growth, and corporate pricing behavior. He reiterated that Canada remains off a sustainable path to achieving its 2% inflation target.
Fixed Income Markets: 10-Year UST Futures Mixed, Bund Futures Soften
US Treasury yields edged lower ahead of the release of key US employment data. 10-year Treasury futures trickled lower to beneath the 111.00 level but remained within yesterday's parameters.
German Bund futures marginally softened in muted trade, with prices remaining north of 135.00.
10-year JGB futures remained pressured in early trade, but gradually pared losses following dismal Japanese GDP data and with the BoJ present in the market under its scheduled bond-buying operations.
Commodities: Crude Oil Rebounds, Spot Gold Flat, Copper Ekes Out Mild Gains
Crude oil prices found a reprieve from recent selling, with Brent Crude and WTI Crude futures both back above $75/bbl and $70/bbl, respectively. This followed comments from Iraq's oil minister that the country renewed its support for the OPEC+ agreement and commitment to voluntary production cuts.
Spot gold was relatively flat, keeping to within a tight range of $2027-2034 per ounce ahead of the US jobs data.
Copper futures eked mild gains as risk appetite somewhat improved, but upside was capped amid a lack of conviction.
Looking ahead, highlights include German CPI (Final), US NFP, UoM Inflation Expectations Survey, BoE Inflation Attitudes Survey.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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