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Americas Roundup: Dollar falls from 14-year high against euro, Oil rises 2 pct amid expected draw in U.S. crude inventories, Gold hits near 4-week high –January 5th, 2017

Market Roundup

•    Fed minutes: Policymakers generally agreed to continue to closely monitor inflation, global economic & financial developments.

•    Fed minutes: Several policymakers said a further rise in USD might continue to weigh on inflation.

•    USD dips after ‘wait & see’ Fed minutes, US 10 & 30-yr yields dip.

•    Euro Zone Dec Inflation, Flash y/y 1.1% v 1.0% forecast, 0.6% previous; Prices rose at fastest rate since 2011.

•    ISM NY Biz Conditions 63.8 v 52.5 previous.

•    French consumer confidence at nine-year high in Dec –INSEE.

•    France's Le Pen proposes return to ECU-style system to replace euro.

•    Gold hits near 4-week high as dollar retreats, demand surges; Copper rises as well.

•    China steps in to support yuan again as Trump inauguration nears.

Looking Ahead - Economic Data (GMT)

•    22:30 Australia AIG Services Index Dec 51.1-previous

•    01:45 China Caixin Services PMI Dec 53.1- previous

Looking Ahead - Events, Other Releases (GMT)

•    No significant events

Currency Summaries

EUR/USD is likely to find support at 1.0405 levels and currently trading at 1.0455 levels. The pair has made session high at 1.0463 and hit lows at 1.0442 levels. Euro inched against the dollar on Wednesday as investors were cautious about increasing bets on the greenback before getting fresh clues on the U.S. economy and the minutes of the last Federal Reserve monetary policy meeting struck a more uncertain tone than the market expected. The dollar retreated from a 14-year high against a basket of currencies, briefly hitting a session low. The euro climbed 0.7 percent to $1.0489, boosted by data showing euro zone prices rose more quickly than expected in December and surveys suggesting business growth reached its highest in more than five years. The push higher in euro zone bond yields helped the euro rise to more than one cent above its Tuesday trough of $1.0340, the lowest in 14 years. However, the currency was still well below a three-week high of $1.07 touched last week and more than 6percent lower than two months ago. The dollar has climbed almost 6 percent since Donald Trump was elected U.S. president eight weeks ago, on expectations that his administration will introduce reflationary measures backed by large fiscal spending and prompt the Federal Reserve to follow through with a series of interest rate hikes.

GBP/USD is supported in the range of 1.2200 levels and currently trading at 1.2279 levels. It reached session high at 1.2282 and dropped to session low at 1.2243 levels. Britain's pound rose against the dollar on Wednesday as upbeat business and consumer data, and a pause in the U.S. currency's upward march, pulled the pound up from a two-month low. The early departure of Britain's ambassador to the European Union on Tuesday, and the prickly tone of his resignation letter, added to concerns of a rocky period ahead for sterling as Britain prepares to launch formal talks on leaving the bloc. But economic data remains stronger than many economists expected after June's Brexit vote, and construction and consumer credit data on Wednesday both beat forecasts, sending sterling up as high as $1.2306. British consumer borrowing picked up pace to grow at its fastest rate in more than 11 years in November, and the mortgage market retained solid momentum, Bank of England figures showed on Wednesday. Consumer credit in November alone jumped by 1.926 billion pounds well ahead of forecasts to push the annual growth rate in borrowing of 10.8 percent, a rate not seen since October 2005.

USD/CAD is supported at 1.3475 levels and is trading at 1.3566 levels. It has made session high at 1.3568 and lows at 1.3530 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as loonie strengthened after upbeat global economic data. A batch of reports from Europe showed that French consumer confidence hit a nine-year high, business activity across the euro zone rose at the fastest pace in more than five years and inflation in the euro zone is its highest in over three years. This followed similarly upbeat reports this week on U.S., British, Chinese and Japanese business activity. The U.S. dollar edged down from a 14-year high against a basket of currencies and the prices of oil, one of Canada's major exports, rose on expectations that U.S. crude inventories are falling and signs that oil producers will stick to agreed output cuts that took effect this week. The Canadian dollar was trading at C$1.3302 to the greenback, or 75.10 U.S. cents, much stronger than Tuesday's close of C$1.3433, or 74.44 U.S. cents.

AUD/USD is supported around 0.7262 levels and currently trading at 0.7297 levels. It hit session high at 0.7333 and made session lows at 0.7264 levels. The Australian dollar surged higher against US dollar after the minutes of the last Federal Reserve monetary policy meeting struck a more uncertain tone than the market expected. The minutes of the Dec. 13-14 meeting showed many were considering faster interest rate increases as the economy could grow at a quicker pace because of fiscal stimulus under President-elect Donald Trump's administration. At the same time, the minutes also spelled out the downside risks which could limit economic growth such as trade barriers and the dollar's rise. The Australian dollar added 0.15 percent to $0.7283, edging away from a seven-month trough of $0.7163 hit last week. The dollar, which rose to its highest in 14 years against the euro and a basket of major currencies on Tuesday, touched a session low of 102.39 following the release of the Fed minutes, before recovering some ground. The dollar index which measures the greenback against a basket of six major rivals was down 0.47 percent to 102.72, having hit a peak of 103.82 on Tuesday.

Equities Recap

European shares edged down from a one-year high on Wednesday, with retailers in focus after standout faller Next cut its profit guidance and cautioned on future trade.

UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day down by 0.16 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.1 percent.

Wall Street held onto gains on Wednesday after minutes from the Fed's December meeting showed policymakers were concerned that quicker economic growth under President-elect Donald Trump could require faster interest-rate increases.

Dow Jones closed up by 0.29 percent, S&P 500 ended up 0.56 percent, Nasdaq finished the day up by 0.87 percent.

Treasuries Recap 

U.S. Treasury debt yields drifted lower on Wednesday after the minutes of the last Federal Reserve monetary policy meeting struck a more uncertain tone than the market expected.

In late trading, the U.S. 10-year note was up 4/32 in price to yield 2.437 percent, compared with 2.454 percent late on Tuesday.

U.S. 30-year bond prices were up 9/32, yielding 3.035 percent, down from Tuesday's 3.05 percent. Yields hit their lowest level since Dec. 8, at 3.028 percent.

U.S. two-year note yields were at 1.218 percent, compared with 1.226 percent on Tuesday. The yield was at 1.234 percent before the Fed minutes.

Commodities Recap

Gold rose to the highest in nearly four weeks on Wednesday as the dollar edged back from a 14-year peak and physical demand from major consumers China and India increased.

Spot gold climbed to its highest since Dec. 9 at $1,167.83 an ounce and was up 0.2 percent at $1,161.2 by 2:49 p.m. EST (1949 GMT). U.S. gold futures settled up 0.3 percent at $1,165.30.

Oil prices rose nearly 2 percent on Wednesday on expectations U.S. crude inventories have dropped and on signs that the world's top oil exporters will stick to agreed output cuts that took effect this week.

Global benchmark Brent crude futures rose 99 cents, or 1.8 percent, to settle at $56.46 a barrel. U.S. West Texas Intermediate crude futures gained 93 cents to end at $53.26 a barrel, also a 1.8 percent gain.
 

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March 27 08:00 UTC Released

DEIfo Expectations*

Actual

105.7

Forecast

104.3

Previous

104.0

March 27 08:00 UTC Released

DEIfo Business Climate*

Actual

112.3 %

Forecast

111.0 %

Previous

111.0 %

March 27 09:00 UTC 2626m

TRLoans to Non-Fin

Actual

Forecast

Previous

2.3 %

March 27 11:30 UTC 176176m

TRLoans to Non-Fin

Actual

Forecast

Previous

75.4 %

March 27 11:30 UTC 176176m

MXManufacturing Confidence*

Actual

Forecast

Previous

105.3 %

March 27 11:30 UTC 176176m

TRManufacturing Confidence*

Actual

Forecast

Previous

105.3 %

March 27 13:00 UTC 266266m

MXManufacturing Confidence*

Actual

Forecast

Previous

2.10 %

March 27 13:00 UTC 266266m

MXIGAE Econ Activity MM

Actual

Forecast

Previous

-3.294 %

March 27 13:00 UTC 266266m

MXIGAE Econ Activity MM

Actual

Forecast

Previous

0.40 %

March 27 13:00 UTC 266266m

KRTrade Balance SA*

Actual

Forecast

Previous

-0.783 bln $

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