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Americas Roundup: Dollar falls after U.S. House reveals tax reform proposal, U.S. equities gain, Gold comes off highs, Oil edges up to near 2-year highs as market tightens-November 3rd 2017

Market Roundup

• U.S. Republicans unveil tax cut bill, but the hard work awaits.

• Trump nominates Jerome Powell to head U.S. Federal Reserve.

• Bank of England takes slow lane after first rate hike since 2007.

• US Initial jobless claims, 229k, 235k forecast, 233k previous 234k revised.

• US Jobless claims 4-wk average, 232.50 k, 239.50k previous 239.75k revised.

• US Continued jobless claims, 1.884 mln, 1.897 mln forecast, 1.893 mln previous 1.899 mln revised.

• US Q3 Labor Costs prelim, 0.5%, 0.5% forecast, 0.2% previous 0.3% revised.

• US Q3 Productivity prelim, 3.0%, 2.4% forecast, 1.5% previous.

• Toronto home sales fall year-on-year, prices down 15.1 pct from peak.

• October was the strongest month for euro zone factories in almost 7 years –PMI.

Looking Ahead - Economic Data (GMT)

• 22:30 Australia Oct AIG Services index, 52.1 previous

• 00:30 Australia Sept Retail sales m/m, 0.4% forecast, -0.6% previous

• 00:30 Australia Q3 Retail trade, 0.0% forecast, 1.5% previous

• 01:45 China Oct Caixin Services PMI, 50.6 previous

Looking Ahead - Events, Other Releases (GMT)

• 16:15 Minneapolis Fed President Neel Kashkari speaks in Washington

• 20:15 ECB's Coeure speaks in Washington

Currency Summaries

EUR/USD is likely to find support at 1.1800 levels and currently trading at 1.1845 levels. The pair has made session high at 1.1889 and hit lows at 1.1830 levels. The euro strengthened against the U.S. dollar on Thursday after Republicans in the U.S. House of Representatives released proposals to overhaul the tax code. The legislation called for slashing the corporate tax rate to 20 percent from 35 percent and reducing the number of tax brackets for individuals, according to a summary document. Analysts said the proposals put forth were both unlikely to gather sufficient support in Congress and unlikely to have significant impact on the U.S. economy. "Massive" tax cuts had been a major campaign promise of U.S. President Donald Trump. Analysts said the proposals put forth were both unlikely to gather sufficient support in Congress and unlikely to have a significant impact on the U.S. economy. "Massive" tax cuts had been a major campaign promise of U.S. President Donald Trump. Cutting taxes would increase spending, drive inflation and U.S. interest rates higher, and make the dollar more attractive. If the tax cuts fail to pass or do not provide incentive for increased spending, they would not support a stronger dollar. The dollar index fell to 94.411, its lowest since Oct. 26. It had earlier risen, almost touching its highest level since mid-July. The euro hit its highest level in a week against the dollar, rising to $1.1687.

GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3054 levels. It reached session high at 1.3273 and dropped to session low at 1.3043 levels. Britain's declined sharply against the dollar on Thursday as investors pushed back their expectations for further monetary tightening after the Bank of England hiked rates for the first time in over a decade. The Bank said it expected only "very gradual" further increases would be needed after this one: two more 25-basis-point hikes over the next three years. The pound initially spiked higher on the news of the hike, climbing to as much as $1.3273, from around $1.3215 beforehand. But it fell almost 2 U.S. cents in the three minutes that followed, with investors focusing on the fact the BoE had not repeated the previous language about markets underestimating the extent of future rises. Instead, Governor Mark Carney said the Bank was broadly on the same page as investors. Sterling continued to slip during afternoon US trading hours, hitting a 3-1/2-week low of $1.3041, 1.5 percent down on the day. Against the euro, sterling suffered its worst one-day drop since a "flash crash" on Oct. 7, 2016, when a sudden plunge briefly shaved off a tenth of the pound's value. It fell as much as 1.8 percent on the day versus the single currency, hitting 89.37pence.

USD/CAD is supported at 1.2778 levels and is trading at 1.2813 levels. It has made session high at 1.2833 and lows at 1.2803 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday, adding to its more stable profile this week as investors awaited President Donald Trump's decision on the next Federal Reserve chair and top-tier domestic data. The loonie has fallen 6 percent since posting a more than two-year high in September at C$1.2063. But analysts say it has found support around C$1.2900, which is near the 50 percent retracement of the currency's rapid appreciation from May to September. The loonie hit its weakest in over three months on Friday at C$1.2916, pressured by data which pointed to slower growth in Canada's economy in the third quarter after a rapid expansion in the first half of the year. Bank of Canada Governor Stephen Poloz said on Wednesday that while monetary policy decisions will have an effect on the Canadian dollar, oil prices will have the biggest long-term impact on the currency. Domestic jobs data for October and September trade data are due on Friday. The Canadian dollar was last trading at C$1.2806 to the greenback, up 0.44 percent. The currency traded in a range of C$1.2802 to C$1.2876.

USD/JPY is supported around 113.32 levels and currently trading at 114.00 levels. It peaked to hit session high at 114.16 and made session lows at 113.52 levels. The Japanese yen strengthened against the dollar on Thursday as the greenback fell broadly on a proposal to overhaul the U.S. tax code. The dollar fell after House Republicans proposed to slash the corporate tax rate to 20 percent from 35 percent and reduce the number of tax brackets for individuals. On the data front, U.S. worker productivity increased at a 3.0 percent annualized rate in the third quarter for its fastest pace in three years, while weekly first-time filings on jobless benefit fell to their lowest in 44-1/2 years. These latest figures supported the view the Fed would raise rates at its Dec. 12-13 policy meeting. Meanwhile, President Donald Trump tapped Fed Governor Jerome Powell to become head of the U.S. central bank, promoting a soft-spoken centrist to replace Janet Yellen when her term expires in February 2018.Powell, appointed to the Fed board in 2012 by then-President Barack Obama, emerged as Trump's choice from a five-person slate of possible nominees that included Yellen as well as others who would have represented a sharp change in monetary policy.

Equities Recap

Declines in health and tech stocks weighed on European shares on Thursday following an outlook cut from Coloplast, as forecast-beating results from Credit Suisse and Danske Bank limited losses.

UK's benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.35 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.1 percent.

The Dow industrials climbed on Thursday while losses in Facebook kept the S&P 500 and the Nasdaq in check as investors assessed the long-awaited tax cut plan unveiled by U.S. President Donald Trump's fellow Republicans.

Dow Jones closed up by 0.34 percent, S&P 500 ended up by 0.02 percent, Nasdaq finished the day down by 0.04percent.

Treasuries Recap

U.S. Treasuries were little changed on Thursday after President Donald Trump nominated Federal Reserve Governor Jerome Powell to head the Federal Reserve, as expected, and prices ended the day higher.

Benchmark 10-year notes gained 7/32 in price to yield 2.35 percent, down from 2.38 percent on Wednesday. The yields are down from 2.48 percent last Friday.

Commodities Recap

Oil prices edged up on Thursday, steadying near two-year highs as the outlook remained upbeat as OPEC-led supply cuts have tightened the market and drained inventories.

Brent crude settled up 13 cents, or 0.2 percent, at $60.62 per barrel. The benchmark hit $61.70 on Wednesday, its highest intraday level since July 2015. The contract is up by more than a third from its 2017-lows in June.
U.S. crude ended 24 cents, or 0.4 percent, higher at $54.54, almost 30 percent above its 2017-lows in June.

Gold prices pared gains after touching a two-week high on Thursday after Republicans in the U.S. House of Representatives unveiled legislation to overhaul the U.S. tax system.

Spot gold was up 0.2 percent at $1,276.79 an ounce by 2:43 p.m. EDT (1843 GMT), after touching $1,284.10, the highest since Oct. 20.U.S. gold futures settled up $0.80, or 0.1 percent, at $1,278.10 per ounce.

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November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

Forecast

Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

Actual

54.6 %

Forecast

Previous

54.6 %

November 27 09:00 UTC 27372737m

ITExport Prices*

Actual

Forecast

Previous

111 %

November 27 09:00 UTC 27372737m

ITImport Prices*

Actual

Forecast

Previous

116.1 %

November 27 14:00 UTC 30373037m

MXTrade Balance, $*

Actual

Forecast

Previous

-1.886 Bln USD

November 27 14:00 UTC 30373037m

MXTrade Balance SA*

Actual

Forecast

Previous

-1.559 Bln USD

November 27 15:30 UTC 31273127m

USDallas Fed mfg bus index

Actual

Forecast

Previous

27.6

November 27 21:00 UTC 34573457m

KRBOK Manufacturing BSI*

Actual

Forecast

Previous

87 Bln BRL

November 28 00:00 UTC 36373637m

BRCentral Govt Balance

Actual

Forecast

Previous

-22.725 Bln BRL

November 28 07:00 UTC 40574057m

DEGDP Growth QQ* Advance

Actual

Forecast

Previous

10.7 %

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