Market Roundup
• US Dec NAHB Housing Market Index, 74, 70 forecast, 70 prev, 69 revised.
• Canada Oct Securities Cdns C$ MM, 16.49 bln, 2.41 bln previous, 1.75 bln revised.
• Canada Oct Securities Foreign C$ MM, 20.81 bln, 16.81 bln previous, 16.69 bln revised.
• Exchange giant CME's bitcoin futures get tepid take-up in debut.
• Trump strategy document singles out Russia as bad actor globally.
• Fed's Kashkari says voted against rate rise on inflation, yield curve worries.
• Eurosceptics baulk as May pitches status quo Brexit transition.
• Portuguese bond rally dims after Fitch upgrade morning fever pitch.
• Chile's Pinera gets a strong mandate for the presidency; markets cheer.
• South African rand hits nine-month high as Ramaphosa wins ANC leadership.
• UK factories enjoy another three-decade high for orders – CBI.
Looking Ahead - Economic Data (GMT)
• 18 Dec 21:00 New Zealand Q4 Westpac Consumer Survey, 112.4 previous
• 19 Dec 00:00 New Zealand Dec NBNZ Business Outlook, -39.3% previous
• 19 Dec 00:00 New Zealand Dec NBNZ Own Activity, 6.5% previous
Looking Ahead - Events, Other Releases (GMT)
• 09:00 Estonia Central bank Gov. and ECB Governing Council member Ardo Hansson
will speak on Estonia's economy in Tallinn.
• 12:00 Slovakia central bank Gov. Jozef Makuch holds a news conference in Bratislava
• 18:10 Fed’s Neel Kashkari participates in an event hosted by Lambda Alpha
International-Minnesota Chapter in Roseville, Minnesota.
Currency Summaries
EUR/USD is likely to find support at 1.1738 levels and currently trading at 1.1781 levels. The pair has made session high at 1.1773 and hit lows at 1.1783 levels. Euro strengthened against dollar on Monday as the dollar eased as concerns grew on whether a proposed U.S. tax reform program would have a major impact on economic growth, after the bill moved another step closer to passage over the weekend. The U.S. currency had edged higher after Republicans on the House-Senate negotiating committee on Friday put the finishing touches to a sweeping tax overhaul that involves large cuts in levies on corporations. But it slid on Monday on some uncertainty that the bill would indeed be pushed through, and with some doubts creeping in over the pro-growth effect the tax reforms would have. Top Republicans are confident Congress will now pass the tax bill this week, with a Senate vote as early as Tuesday and President Donald Trump aiming to sign the bill by week's end. The dollar fell 0.4 percent to 93.568 against a basket of major currencies. The euro benefited from the dollar's weakness, gaining 0.3 percent to $1.1781.
GBP/USD is supported in the range of 1.3298 levels and currently trading at 1.3378 levels. It reached session high at 1.3417 and dropped to session low at 1.3375 levels. Sterling strengthened against the dollar recovering from two-week losing streak on Monday as traders capitalised on the dollar's broad weakness to adjust their positions. Investors sold the dollar ahead of a vote in U.S. Congress this week on a tax overhaul, which some traders argue will not have a major positive impact on U.S. economic growth.That dollar weakness helped the pound, along with results from a survey that showed British factories matched a three-decade high for orders this month. Sterling rose 0.63 percent against the dollar to $1.3416 on Monday, snapping a two-week falling streak that has seen it lose nearly 2 percent so far this month. The greenback dipped against a basket of major currencies amid doubt whether a proposed U.S. tax overhaul program would have a major impact on economic growth, after the bill moved another step closer to ratification over the weekend. Leading Republicans said they expected Congress to vote as early as Tuesday on the bill, which would become the biggest U.S. tax code overhaul in more than three decades if approved. President Donald Trump is aiming to sign the plan into law at the end of the week.
USD/CAD is supported at 1.2810 levels and is trading at 1.2871 levels. It has made session high at 1.2880 and lows at 1.2837 levels. The Canadian dollar was little changed against its U.S. counterpart on Monday as loonie traded in a narrow range ahead of domestic data later in the week that could help guide expectations for the interest rate outlook. The loonie dipped 0.1 percent last week after being pressured on Friday by weaker-than-expected domestic manufacturing data. The currency also fluctuated last week on remarks by Bank of Canada Governor Stephen Poloz. Poloz worried about the potential to slip into a "deflationary scenario" if interest rates are raised too fast to deal with financial imbalances, in an interview with The Globe and Mail that was published on Saturday. Still, the central bank is leaving the door open to further rate hikes in early 2018, making it clear that a number of uncertainties that could derail the economy, such as North America Free Trade Agreement (NAFTA) renegotiation, are a reason for caution but not inaction. The Canadian dollar was nearly unchanged at C$1.2859 to the greenback. The currency traded in a range of C$1.2843 to C$1.2881. Canada's inflation report for November and October retail sales data are due on Thursday, while gross domestic product data for October is due on Friday.
AUD/USD is supported around 0.7632 levels and currently trading at 0.7663 levels. It hit session high at 0.7678 and made session lows at 0.7659 levels. The Australian dollar rose to hit a six-week high against US dollar on Monday as Australian dollar was boosted after the country's government predicted its budget deficit would shrink faster than previously expected. The Australian dollar was up 0.2 percent at $0.7668, within striking distance of Friday's high of $0.7694 a level not seen since early November. In Monday's mid-year budget update, Treasurer Scott Morrison said the deficit for the year to June 2018 was now likely to be around A$23.6 billion ($18.05 billion). That was down from A$29.4 billion predicted in the May budget and amounted to 1.3 percent of Australia's annual gross domestic product (GDP).The deficit was projected to shrink to A$20.5 billion in 2018/19 and A$2.6 billion the year after, before turning into a A$10.2 billion surplus in 2020/21. The improved outlook means Australia's pristine AAA rating will remain intact as S&P Global Ratings, which has the country on negative watch, has sounded less concerned in recent months. The Aussie also gained as concerns grew over whether proposed U.S. tax reform would have a major impact on economic growth.
Equities Recap
European shares rose on Monday, buoyed by a flurry of year-end M&A and expectations that a U.S. bill lowering corporate taxes could soon pass.
UK's benchmark FTSE 100 closed up by 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 1.19 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 1.4 percent.
U.S. stocks traded at record highs on Monday afternoon as the Republican tax plan, which is set to cut corporate tax rates, moved closer to passage.
Dow Jones closed up by 0.58 percent, S&P 500 ended up 0.55 percent, Nasdaq finished the day up by 0.87 percent.
Treasuries Recap
The margin between U.S. shorter-dated and longer-dated Treasury yields widened on Monday from its slimmest in a decade as traders booked profits on curve-flattening positions tied to the view the Federal Reserve would raise interest rates further.
In late trading, the two-year Treasury yield was down 0.8 basis point at 1.832 percent after hitting a nine-year peak of 1.857 percent earlier.
The spread between five-year and 30-year yields hit 51.9 basis points, a level not seen since October 2007, before steepening to 57.5 basis points. It ended at 53.3 basis points on Friday.
Commodities Recap
Gold edged higher on Monday as uncertainty over U.S. tax legislation weighed on the dollar, while an analyst said bullion might face renewed headwinds early next year. Platinum rose 2 percent as investors recovered short positions.
Spot gold was up 0.53 percent at $1,261.87 an ounce by 1:40 p.m. EST (1840 GMT) after hitting $1,263.98, its highest since Dec. 6.
U.S. gold futures for February delivery settled up $8, or 0.6 percent, at $1,265.50 per ounce.
Oil prices edged higher on Monday, supported by a North Sea pipeline outage and a workers' strike in the Nigerian energy industry.
Brent crude futures, the international benchmark, were up 27 cents at $63.50 a barrel at 11:45 a.m. EST (1645 GMT).U.S. crude futures rose 14 cents to $57.44.
