Global Markets: 

  • Asian stock markets: Nikkei up 0.50 %, Hang Seng down 1.80 %, ASX lost 2 %
  • Commodities: Gold at $1150 (-2.10 %), Silver at $14.88 (-4.40 %), Crude Oil at $64.42 (-2.60 %)
  • Rates: US 10 year yield at 2.175, UK 10 year yield at 1.926, German 10 year yield at 0.703

News & Data:

  • Japan Capital Spending y/y 5.5 %, Expected: 2.1 %, Previous: 3.0 %
  • China HSBC Manufacturing PMI 50.0, Expected: 50.0, Previous: 50.0
  • China Gov Manufacturing PMI 50.3, Expected: 50.5, Previous: 50.8
  • Australia Business Inventories m/m 0.7 %, Expected: 0.2 %, Previous: 0.9 %
  • Japan Manufacturing PMI 52.0, Expected: 52.1, Previous: 52.1
  • Japan’s Prime Minister Shinzo Abe says if Abenomics continues, can raise sales tax in April 2017
  • New Zealand PM John Key says that dairy price decline is having impact
  • Silver Hit Lowest Levels Since February 2010
  • Crude Oil Prices Hit Fresh Multi-Year Lows
  • Australian 10 Year Yield Falls Back Below 3 %

Markets Overview:

Over the weekend, Swiss voters clearly rejected the Gold initiative (78 % voted against) which would have forced the SNB to hold 20 % of their reserves in the precious metal. As a result, Gold was under pressure in the Asian session, dropping more than $20 from Friday’s closing level. Silver has also been dragged lower, hitting a low of $14.43, which is the lowest level seen since August 2010. Crude Oil was no exemption. WTI opened around $66.20 in Asia and reached a low of nearly $64.00 in the mid-session.

In FX, the reaction to the Swiss vote was muted. EUR/CHF opened slightly higher in Asia, but failed to break above the 1.2040 level. The Australian Dollar was the worst performer in the FX G10 space, driven by lower commodities, especially Gold, Copper and Iron Ore. The lower than expected Chinese Manu PMI added to the negative sentiment and the AUD/USD hit a fresh low of 0.8417. The charts suggest there is no major support now until the 0.8080/0.81 area. In the crosses, fast money names were sellers of AUD/NZD while EUR/AUD attracted demand from leveraged names as it broke above the key 1.47 resistance level. No significant resistance noted until 1.50 and a daily close > 1.47 would likely trigger further buying.

USD/CAD is set to test the current yearly high at 1.1469 as Oil prices continue to drag the Canadian Dollar lower. Offers reported in front of barrier options at 1.15, while bids seen towards 1.1380/85. Key chart support at 1.1350, while to the topside, the next key level after 1.15 is 1.1724.

USD/JPY traded slowly higher in the Asian session, but flows were rather light. The pair briefly touched the 119.00 level, retraced lower and spent the rest of the session consolidating between 118.80 and 118.95. Decent offers reported at 119.40 and heavy in front of the 120.00 level. To the downside,intraday support at 118.60 and then 118.25. After the strong bounce off the 117.20 support area, a 120.00 test ahead of Christmas seems increasingly likely.

EUR/USD bounced off 1.2430 support. 1.24 and 1.2490 are the two key intraday levels to watch for, while the more significant levels are 1.2360 (November double-bottom) and 1.2535 (last week’s high).

The Week Ahead:

Tuesday:

  • UK Construction PMI, expected to decline to 61.2 from 61.4 previously
  • Fed Chair Yellen speaks

Wednesday:

  • Australian GDP, expected at 0.7 % q/q and 3.1 % y/y
  • Chinese Services PMI
  • Swiss GDP
  • Euro Zone & UK Services PMI
  • US ADP Employment Change & ISM Non-Manufacturing PMI; forecasts at 223k and 57.5 respectively
  • Bank of Canada Interest Rate Decision, expected to remain steady at 1.00 %

Thursday:

  • Australia Retail Sales, expected at 0.1 % m/m
  • Bank of England Interest Rate Decision, forecast to be unchanged at 0.50 %
  • ECB Rate Decision, expected to stay unchanged at 0.05 %
  • US Initial Jobless Claims (297k forecast)
  • Canadian Ivey PMI (53.2 expectations)

Friday:

  • Euro Zone GDP (0.2 % q/q, 0.8 % y/y forecast)
  • US NFP, expected at 225k
  • US Unemployment Rate, expected at 5.8 %
  • Canadian Employment Change, expected at 5.3k

Today’s Upcoming Events:

  • 08:00 GMT – Spanish Manufacturing PMI (53.1)
  • 08:45 GMT – Italian Manufacturing PMI (49.5)
  • 08:50 GMT – French Manufacturing PMI (47.6)
  • 08:55 GMT – German Manufacturing PMI (50.0)
  • 09:00 GMT – Euro Zone Manufacturing PMI (50.4)
  • 09:30 GMT – UK Manufacturing PMI (53.1)
  • 15:00 GMT – US ISM Manufacturing PMI (57.9)