Forex Today: Light trading extends post-Christmas, US data eyed

We had a quiet Asian session today, with the Japanese traders returning from an extended holiday-break, only to come across softer Japan’s CPI figures. While the OZ markets were closed today in observance of Christmas Day. The USD/JPY pair benefited from resurgent USD demand and poor Japanese data, while the Aussie was weighted by falling copper prices. However, Kiwi emerged the weakest in Asia amid subdued oil prices, higher treasury yields and stronger DXY.

In the day ahead, the UK and Canadian markets are closed in observance of Christmas Day and Boxing Day respectively, and hence, low liquidity and minimal volatility is likely to extend today. While NA session may offer some fresh incentives to the markets, with the US consumer confidence, S&P/CS Composite-20 HPI y/y and Richmond Manufacturing Index due on the cards.

Main topics in Asia

ECB: Monte Dei Paschi needs to raise 8.8 billion euros

Reuters reporting headlines from the ECB reported a day before, citing that the Monte Dei Paschi, the world’s oldest bank needs to EUR 8.8 million to fill in a capital shortfall.

Gold shines in post-Christmas trades, eyes $ 1140

Gold remains well bid as most major Asian markets resume trading post-Christmas celebrations, offering some respite to the gold bulls heading into a New Year.

BOJ’s Kuroda sees Japan taking 'big step' toward ending deflation – Nikkei

The Nikkei, a Japanese Daily, reports comments from the BOJ Governor Kuroda delivered during a speech at a meeting of the Japan Business Federation on Monday.

Asian stocks little changed in post-Christmas dull trading

Most major Asian markets, including the Japanese and Chinese, returned to trading after Christmas celebrations, but still lack momentum amid a lack of fundamental drivers and holiday-thinned trades.

Key focus for the day ahead

Market movers for the day – Danske Bank

Analysts at Danske Bank suggest that we have a very thin data calendar in this last week of 2016 with only a few tier 2 key figures scheduled, which are not expected to have significant impact on markets.

EUR/USD on a steady recovery path, back at 1.0450

The EUR/USD pair found just below 10-DMA support, and from there takes on another attempt higher, in a bid to regain 5-DMA barrier located at 1.0449.

Gold: Limited upside into 2017 - BAML

Analysts at Bank of America Merrill Lynch note that the gold has faced strong headwinds after the US presidential election, as rising nominal rates have also pulled up real rates, with the latter generally the most important price driver.

Slightly more dovish FOMC in 2017, for the time being - SocGen

Omair Sharif, Research Analyst at Societe Generale, suggests that the rotation of regional Fed presidents voting in 2017 points to a slightly more dovish lean on the FOMC than in 2016.