Monday 15th December: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei down 1.70 %, Shanghai Composite dropped 0.40 %, Hang Seng declined 1.05 %, ASX fell 0.65 %
• Commodities: Gold at $1218 (-0.35 %), Silver at $16.94 (-0.70 %), Crude Oil at $58.45 (+0.65 %)
• Rates: US 10 year yield at 2.103, UK 10 year yield at 1.804, German 10 year yield at 0.625

News & Data:

• Japan Tankan Large Manufacturers Index 12.0, Expected: 13.0, Previous: 13.0
• Japan Tankan Large Non-Manufacturers Index 16.0, Expected: 12.0, Previous: 13.0
• Japan Tankan All Big Industry CAPEX 8.9 %, Expected: 8.0 %, Previous: 8.6 %
• Australian Budget Gap Widens More Than Forecast on Iron Ore (BBG)
• Abe Faces Challenge to Stoke Economy After Election Victory (BBG)

CFTC Positioning Data:

• EUR net short 136K vs net short 159K prior
• JPY net short 104K vs net short 111K prior
• GBP net short 24K vs net short 31K prior
• AUD net short 45K vs net short 41K prior
• CAD net short 14K vs net short 18K prior
• CHF net short 22K vs net short 23K prior
• NZD net short 2K vs net short 2k prior

Market Update:

The major Asian equity indices are all lower this morning amid negative sentiment. Oil fell to fresh multi-year lows at $56.20, but managed to recover in the later session, hitting a high of $58.86. There was decent selling of Gold and Silver around the Tokyo open, which pushed the precious metals to lows of $1213 and $16.75 respectively.

In FX, price action in USD/JPY remains very choppy and is likely to stay that way into the holidays. Prime Minister Abe scored an election victory, but it was the usual „buy-the-rumor and sell-the-fact“ scenario. The pair opened at 118.65 and quickly dropped to 117.75. There was better demand at the Tokyo open and buying from leveraged names pushed it back above 119.00. USD/JPY is now consolidating around 118.55 going into the European open.

AUD/USD fell to 0.8202 along with commodities, but bounced at the Tokyo open as well. The pair is trading around 0.8245, where it opened yesterday. There is talk of option-related demand ahead of 0.82, while to the topside, intraday resistance seen 0.8295 (Friday’s high) and better selling interest expected in the 0.8340/50 area. USD/CAD reached a fresh high, but the bounce in Oil led to a drop back to 1.1545. Bids noted at 1.1520/25 with trailing stops resting just beneath. Offers into 1.16 with the next significant chart resistance seen at 1.1724.

Upcoming Events:

• 08:15 GMT – Swiss PPI (0.2 % m/m, -1.2 % y/y)
• 13:30 GMT – US NY Empire State Manufacturing (12.5)
• 14:15 GMT – US Industrial Production (0.7 % m/m)
• 14:15 GMT – US Manufacturing Production (0.5 % m/m)
• 15:00 GMT – US NAHB Housing Market Index (58.0)

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