FTSE –10 points at 7007
DAX –18 points at 11408
CAC –5 points at 4817
Terror attacks across the European continent continue shaking the headlines. Yet the market reaction has been so far limited following Berlin, Zurich and Ankara attacks.
As expected, the Bank of Japan (BoJ) maintained its monetary policy unchanged. The BoJ remained committed to its yield curve control, while upgrading the economic outlook. Yen depreciated, as Nikkei (+0.57%) and Topic (+0.22%) gained.
The USDJPY recovered to 117.82, as the EURJPY took over the 122.00 handle. Although the rally in the US dollar and US yields could come to exhaustion to the year-end, the USDJPY bias remains positive. The possibility of a further rise to 120.00 is still on cards. The critical short-term support is seen at 116.54 (major 38.2% retracement on Dec 8th to Dec 15th rise). There is less conviction in the EURJPY, given that the complex Monte dei Paschi deal dents appetite in euro-crosses.
The EURUSD retreated 0.20% as Asian traders reduce exposure to the single currency on Italian banking turmoil. Italy is now seeking to clear 20 billion euro worth of debt in order to rescue its banks. According to Finance Minister Pier Carlo Padoan, this will be a one-time action and will respect the EU rules. The EURUSD sold off to 1.0381. Further settlement to 1.0300/1.0250 is reasonable before the year-end. Offers remain solid at 1.0485/1.0500 (minor 23.6% retracement on post-European Central Bank and Fed sell-off / optionality).
The AUDUSD hit 0.7240 as the Reserve Bank of Australia (RBA) minutes showed reluctance versus AUD appreciation. The carry appetite remains limited, suggesting that a further slide toward 0.7145 (year low) is possible. The ASX 200 closed the session 0.52% higher.
Chinese stocks diverged negatively. Hang Seng (-0.58%) and Shanghai’s Composite (-0.90%) remained under pressure due to rising CN rates.
Oil and commodities remained soft. The FTSE futures were flat in the overnight session, while the DAX futures were better bid due to cheaper euro.
The FTSE is called 10 points lower at 7007 pence at the open. The DAX is seen 18 points softer at 11408.