Market Roundup
• Fed lifts rates, now sees 'some further' hikes ahead.
• Fed's Powell says nothing will deter the Fed from doing what we think is the right thing to do.
• Powell says most of his fed colleagues expect economy to perform well in coming year.
• We've reached the bottom end of range of committee estimates for neutral rate, Powell says.
• US 20 Dec Funds Target Rate, 2.25-2.5%, 2.25-2.5% forecast, 2-2.25% previous.
• US Nov Existing Home Sales, 5.32 mln, 5.20 mln forecast, 5.22 mln previous.
• US Nov Exist. Home Sales % Chg, 1.9%, -0.6% forecast, 1.4% previous.
• US Q3 Current Account, -124.8 bln, -124.3 bln forecast, -101.5 bln previous, -101.2 bln revised.
• US 14 Dec, w/e Mortgage Market Index, 325.9, 346.0 previous.
• Canada Nov CPI Inflation YY, 1.7%, 1.8% forecast, 2.4% previous.
• Canada Nov CPI BoC Core YY Nov, 1.5%, 1.6% previous.
• EU says bulk of UK financial sector would be cut off by no-deal Brexit.
• Italy and markets cheer budget deal with EU, but doubts persist.
Looking Ahead - Economic Data (GMT)
• 19 Dec 23:50 Japan 15 Dec, w/e Foreign Bond Investment JPY, 1,241.4 bln previous
• 19 Dec 23:50 Japan 15 Dec, w/e Foreign Invest JP Stock JPY, -446.6 bln previous
• 20 Dec 00:30 Japan Nov Employment, 20.0k forecast, 32.8k previous
• 20 Dec 00:30 Japan Nov Full Time Employment, 42.3k previous
• 20 Dec 00:30 Japan Nov Participation Rate, 65.6% forecast, 65.6% previous
• 20 Dec 00:30 Japan Nov Unemployment Rate, 5.0% forecast, 5.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 02:30 Bank of Japan's Haruhiko Kuroda speaks to reporters at the end of the central bank policy meeting in Tokyo
• 08:30 Swedish Central Bank announces interest rate decision
• 10:00 Riksbank's Stefan Ingves and Jesper Hansson participate in a press conference in Brunkebergstorg
• 12:00 Bank of England publishes summary and minutes of the Monetary Policy Committee meeting in London
Currency Summaries
EUR/USD: The euro gave up earlier ground against the U.S. dollar on Wednesday after the Federal Reserve's guidance on its tightening cycle was less dovish than expected, even though it forecast fewer interest rate hikes than it had in September. The Fed raised interest rates, as expected, while citing the impact of ongoing market volatility and potential slowdowns around the world. The euro earlier hit one-week high versus the dollar before paring gains after the Fed's decision. The euro was up 0.19 percent at $1.1381. The dollar index, which measures the greenback against six major currencies, was 0.2 percent lower at 96.940. Immediate resistance can be seen at 1.1437 (Daily High), an upside break can trigger rise towards 1.1490 (100DMA).On the downside, immediate support is seen at 1.1364 (21 DMA), a break below could take the pair towards 1.1302 (Lower Bollinger Bands).
GBP/USD: The British pound declined against the dollar on Wednesday, as stronger dollar and Brexit concerns weighed on British pound. The U.S. currency was bolstered after the U.S. Federal Reserve raised interest rates and noted that some more rate hikes would be needed next year. The central bank said, the U.S. economy has been growing at a strong rate and the job market has continued to improve. Economic forecasts released on Wednesday showed policymakers expect two rate hikes next year.The British currency slid to as low as $1.2607, down 0.15 percent on the day. Immediate resistance can be seen at 1.2708 (21 DMA), an upside break can trigger rise towards 1.2858 (50 DMA).On the downside, immediate support is seen at 1.2580 (23.6% retracement level), a break below could take the pair towards 1.2527 (Dec 14th Low).
USD/CAD: The Canadian dollar weakened to a 1-1/2-year low against the greenback on Wednesday, as Canadian dollar was weighed down by weaker-than-expected domestic inflation data and stronger greenback. The loonie lost ground even as the price of oil recovered somewhat from a sharp selloff during the previous session. U.S. crude oil futures settled 2.1 percent higher at $47.20 a barrel. The Canadian dollar was last trading 0.1 percent lower at 1.3488 to the greenback. The currency touched its weakest level since June 2017, at 1.3507. Immediate resistance can be seen at 1.3550 (23.6% retracement level), an upside break can trigger rise towards 1.3600 (Psychological Level).On the downside, immediate support is seen at 1.3391 (9 DMA), a break below could take the pair towards 1.3326 (21DMA).
USD/JPY: The dollar edged lower against the Japanese yen on Wednesday after the U.S. Federal Reserve disappointed investors when it issued a less aggressive outlook for rate hikes in 2019 than many had expected. The U.S. central bank raised interest rates and noted that "some" further gradual rate hikes would be needed, a subtle change that suggested it was preparing to stop raising borrowing costs. The dollar was 0.04 lower versus the Japanese yen at 112.43. Strong resistance can be seen at 113.04(9 DMA), an upside break can trigger rise towards 113.95 (Higher Bollinger Bands).On the downside, immediate support is seen at 112.05 (Daily Low), a break below could take the pair towards 111.60 (23.6% retracement level).
Equities Recap
European shares rose cautiously on Wednesday with gains in most sectors lifting the market amid speculation the U.S. Federal Reserve will signal a dovish stance towards monetary policy.
UK's benchmark FTSE 100 closed up by 1.23 percent, the pan-European FTSEurofirst 300 ended the day up by 0.46 percent, Germany's Dax ended up by 0.40 percent, France’s CAC finished the day up by 0.65 percent.
U.S. stocks declined sharply on Wednesday after the Federal Reserve's forecast of fewer interest-rate increases in 2019 fell short of investors' hopes of a more dovish monetary policy.
Dow Jones closed down by 1.49 percent, S&P 500 ended down by 1.56 percent, Nasdaq finished the day down by 2.19 percent.
Treasuries Recap
U.S. benchmark Treasury yields fell to more than eight-month lows on Wednesday after the Federal Reserve lowered projections for rate hikes next year and Fed Chair Jerome Powell said that balance sheet reduction is on autopilot.
Benchmark 10-year yields fell as low as 2.75 percent, the lowest since April 4. The yields have fallen from a seven-year high of 3.261 percent on Oct. 9.
Two-year note yields, which are the most sensitive to interest rate increases, declined as low as 2.62 percent, the lowest since Aug. 24.
Commodities Recap
Gold prices fell on Wednesday, giving up earlier gains as the dollar recovered after the U.S. Federal Reserve raised interest rates and noted that "some" rate hikes would be needed next year, a more aggressive stance than many expected.
Gold fell 0.48 percent $1,242.83 at (2200 GMT). The session high of $1,258.03 was its highest since July 10.U.S. gold futures fell 0.5 percent to $1,247.50 an ounce.
Oil prices rose on Wednesday, recovering somewhat from a sharp selloff during the previous session, after U.S. data showed strong demand for refined products.
Brent crude futures rose 98 cents to settle at $57.24 a barrel, a 1.74 percent gain. The front-month U.S. light crude contract which expires on Wednesday, gained 96 cents to settle at $47.20 a barrel, a 2.08 percent gain. The second-month contract settled at $48.17 a barrel.
