Morning brief for December 27

27 December, 2016

Financial markets are still sleeping with Christmas carols. Trading should be thin this week as the market participants are closing out 2016 volatile year. 

EUR/USD slid down to 1.0430 in the early hours of the Asian session as 10-year US Treasury yields extended their gains having partially recovered their yesterday’s losses. Italy is struggling with its banking crisis. ECB told Monte dei Paischi that it needs 8.8 bln euros to plug its capital shortfall. Earlier Italy’s government received the Parliament’s support for the bank’s bailout when private investors had refused to take its losses.

USD/JPY popped up earlier this morning as we got a miss in Japan’s core consumer prices and household spending. The data indicated that Japan’s economy lacks of a significant boost to strike the BoJ’s egregious 2% inflation rate target. Core consumer prices fell at their fastest pace in nearly 4 years showing that fighting deflation is not as easy-peasy as Shinzō Abe thought it would be in 2012. The further movement of the pair should be subdued as the end of 2016 is just several days away. The upper border of Ichimoku cloud on the H4 timeframe is holding the yen’s pace. The pair may rise later today if the US releases will be above market’s expectations.  

GBP/USD made a baby step lower and then glued to the 1.2270 level. The US CB consumer confidence might send the prices a bit lower towards the nearest support at 1.2490.

Aussie and Kiwi retraced on the strengthening of the US dollar. USD/CAD dropped to 1.3470 overnight on the surging oil prices. Brent oil futures jumped to $55.86 on Tuesday as we approach to the actual OPEC and non-OPEC producers’ output cuts.

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