Market Roundup
• Trump pressures Fed before meeting, warns against 'another mistake’.
• Dollar recovers from one-week low as caution grows ahead of Fed meeting.
• US Nov Housing Starts, 1.256 mln,1.225 mln forecast, 1.228 mln forecast, 1.217 mln revised.
• US Nov House Starts MM: Change, 3.2%, 1.5% previous.
• US Nov Building Permits, 1.328 mln, 1.259 mln forecast, 1.265 mln previous.
• US Nov Build Permits: Change MM, 5.0%, -0.4% previous.
• US 15 Dec, w/e Redbook MM, -0.3%, -0.5% previous.
• US 15 Dec, w/e Redbook YY, 7.1%, 6.6% previous.
• CA Oct Manufacturing Sales MM, -0.1%, 0.4% forecast, 0.2% previous.
• British government to activate full 'no-deal' Brexit preparations.
• Italy strikes deal with EU commission over budget - ministry spokeswoman.
• Saudi 2019 budget boosts spending in bid to spur sluggish economy.
• Oil dives on fears of glut, global economic slowdown.
• Judge blasts Trump ex-adviser Flynn, delays sentencing in Russia probe.
Looking Ahead - Economic Data (GMT)
• Dec 18 23:50 Japan Nov Exports YY, 1.8% forecast, 8.2% previous
• Dec 18 23:50 Japan Nov Imports YY, 11.5% forecast, 19.9% previous
• Dec 18 23:50 Japan Nov Trade Balance Total Yen, -600.3 bln forecast, -449.3 bln previous, -450.1 bln revised.
Looking Ahead - Events, Other Releases (GMT)
• 08:00 Riksbank holds executive board meeting, monetary policy meeting No. 6 in Stockholm
• 19:00 U.S. Fed’s FOMC announces its decision on interest rates followed by statement in Washington D.C.
• 19:30 U.S. Federal Reserve chairperson holds a news conference in Washington D.C.
Currency Summaries
EUR/USD: The euro strengthened against dollar on Tuesday as traders pared greenback holdings before the Federal Reserve’s highly anticipated interest rate decision. Markets will scrutinise the Fed's two-day policy meeting, which starts Tuesday, for its sense of how the economy is holding up amid a U.S.-China trade conflict and global financial market volatility. The euro was up 0.13 percent at $1.1363. An index that tracks the dollar versus a basket of six major currencies was down 0.16 at 96.99. Immediate resistance can be seen at 1.1390 (50DMA), an upside break can trigger rise towards 1.1443 (Dec 10th high).On the downside, immediate support is seen at 1.1265 (61.8% retracement level), a break below could take the pair towards 1.1200 (Psychological levels).
GBP/USD: The pound strengthened against greenback on Tuesday as a weaker dollar and confirmation Prime Minister Theresa May will seek parliamentary approval for her much-criticised Brexit deal in mid-January supported British pound. May faces an uphill battle in convincing her lawmakers to back her deal she postponed a previous planned vote in parliament after allies warned her she faced a rout. The pound edged up 0.3 percent to $1.2637 after earlier hitting as high as $1.2704.Immediate resistance can be seen at 1.2703 (Daily High), an upside break can trigger rise towards 1.2759 (Dec 10th High).On the downside, immediate support is seen at 1.2615 (23.6% Retracement level), a break below could take the pair towards 1.2516 (Lower Bollinger Bands).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Tuesday as oil prices fell, while nervous investors awaited indications whether the Federal Reserve will be able to raise interest rates. Markets will scrutinise the Fed's two-day policy meeting, for its sense of how the U.S. economy is holding up amid a U.S.-China trade conflict and global financial market volatility. The price of oil, one of Canada's major exports, fell to its lowest since September of last year after reports of swelling inventories and forecasts of record U.S. and Russian output combined with a sharp sell-off in stock markets as the outlook for global growth deteriorated. The Canadian dollar was last trading down 0.43 percent at 1.3465 to the greenback. The loonie, traded in a range of 1.3392 to 1.3492. Immediate resistance can be seen at 1.3500 (Higher Bollinger Bands), an upside break can trigger rise towards 1.3500 (Psychological level).On the downside, immediate support is seen at 1.3548 (23.6 Retracement Level).
USD/JPY: The dollar weakened against the Japanese yen on Tuesday as investors unwound long bets on greenback, anticipating that the Federal Reserve could slow the pace of U.S. interest rate hikes after this week's policy meeting. The Fed will announce its rate decision after its two-day meeting ends on Wednesday. The dollar index was marginally lower at 96.99 after losing 0.4 percent on Monday, as some investors speculated growth worries could prompt the U.S. Fed to signal a pause to its monetary tightening cycle at this week's meeting. Strong resistance can be seen at 112.97 (50 DMA), an upside break can trigger rise towards 113.52 (December 18th high).On the downside, immediate support is seen at 112.29 (100 DMA), a break below could take the pair towards 111.81 (Oct 29th low).
Equities Recap
European shares remained stuck in a "Santa Crash" on Tuesday in a fourth straight session of losses, dragged down by poor economic data and lower oil prices.
UK's benchmark FTSE 100 closed down by 0.71 percent, the pan-European FTSEurofirst 300 ended the day up by 0.04 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.7 percent.
The benchmark S&P 500 stock index ended little changed in a choppy trading session on Tuesday as the possibility of a partial U.S. government shutdown raised investor jitters ahead of a highly anticipated meeting of the Federal Reserve.
Dow Jones closed up by 0.35 percent, S&P 500 ended flat, Nasdaq finished the day up by 0.46 percent.
Treasuries Recap
U.S. Treasury prices gained on Tuesday a day before the Federal Reserve’s highly anticipated interest rate decision from its two-day meeting is announced.
Benchmark 10-year notes gained 9/32 in price to yield 2.826 percent, after earlier dropping to 2.821 percent, the lowest level since Aug. 27. The yields have fallen from a seven-year high of 3.261 percent on Oct. 9.
Commodities Recap
Gold firmed near a one-week high on Tuesday as investors cast doubts over the pace of interest rate hikes next year by the U.S. Federal Reserve which kicked off its two-day meeting earlier in the day.
Spot gold rose 0.31 percent to $1,249.36 per ounce at (2155 GMT), having earlier touched its highest level since Dec. 10 at $1,250.27, just short of a five-month peak of $1,250.55 hit last week.U.S. gold futures settled up little changed at $1,253.60.
Oil prices tumbled more than 5 percent on Tuesday, falling for the third straight session as the market grappled with reports that U.S. supply would continue to surge even if demand weakens as global growth deteriorates, which many expect.
U.S. crude oil fell $3.64, or 7.3 percent, to settle at $46.24 a barrel, the weakest since August, 2017. The session low was $46.11 a barrel.
Global benchmark Brent lost $3.35, or 5.62 percent, to settle at $56.26 a barrel. During the session, Brent hit a 14-month low of $56.16.
