Market Roundup
• US Nov Pending Sales Change MM, 0.2%, -0.4% forecast, 3.5% previous.
• US Nov Pending Homes Index, 109.5, 109.3 previous.
• US Dec Consumer Confidence, 122.1, 128.0 forecast, 128.6 revised , 129.5 previous.
• US w/e Redbook MM, 0.1%, -0.4% previous.
• US w/e Redbook YY, 5.7%, 4.4% previous.
• US Dec Texas Serv Sect Outlook, 18.1, 20.4 previous.
• US Dec Dallas Fed Services Revenues, 24.4, 24.4 previous.
• Tillerson, Lavrov agree to continue North Korea diplomacy -U.S. State Dept.
• Mexico central bank sees 'adverse environment' for peso in 2018 – paper.
• Support slides for Merkel serving full term as coalition talks beckon.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan w/e Foreign Bond Investment, 51.0 bln previous
• 23:50 Japan w/e Foreign Invest JP Stock, -622.5 bln previous
• 23:50 Japan Nov Industrial output prelim mm, 0.5% forecast, 0.5% previous
• 23:50 Japan Dec IP Forecast 1 Mth Ahead, 2.8% previous
• 23:50 Japan Jan IP Forecast 2 Mth Ahead, 3.5% previous
• 23:50 Japan Nov Retail Sales YY, 1.2% forecast, -0.2% previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 BoJ to release summary of opinions from board members at its Dec. 20-21 policy meeting
Currency Summaries
EUR/USD is likely to find support at 1.1841 levels and currently trading at 1.1896 levels. The pair has made session high at 1.1910 and hit lows at 1.1882 levels. Euro strengthened against the dollar on Wednesday as the dollar eased as traders bet improved global growth would spur major central banks to begin reducing monetary stimulus in 2018. Traders shifted their attention on Wednesday to major central banks whether they would trim bond purchases or start raising interest rates next year. Trading volumes were thin, as many traders and investors stayed away from the market after Monday's Christmas holiday and before next Monday's New Year's Day holiday. The dollar index which measures greenback against six currencies was down 0.2 percent at 93.02 after slipping to its lowest since Dec. 1 earlier on Wednesday. While the single currency reached a 3-1/2 week high on Wednesday at $1.1904.The dollar index has fallen 9.0 percent this year, putting it on track for its steepest annual decline since 2003 when it posted a 14.7 percent drop.
GBP/USD is supported in the range of 1.3329 levels and currently trading at 1.3398 levels. It reached session high at 1.3420 and dropped to session low at 1.3386 levels. Sterling edged higher against the dollar on Wednesday as geopolitical concerns centring on North Korea, and receding expectations that U.S. interest rates would be raised quickly weakened greenback across the board. The United States announced sanctions on two North Korean officials behind their country's ballistic missile program on Tuesday after the U.N. Security Council unanimously imposed new sanctions on North Korea last week. On the data front, U.S. pending home sales edge higher in November. The National Association of Realtors said on Wednesday its pending home sales index rose to a reading of 109.5, up 0.2 percent from October. Economists polled had forecast pending home sales falling 0.4 percent last month. The housing sector has regained some momentum recently after treading water for much of the year because of a lack of inventory which has driven up prices, and both labor and land shortages. Trading volumes remained muted in the holiday-shortened week between Christmas and New Year. Trading on Tuesday marked the thinnest volume of the year for a full session.
USD/CAD is supported at 1.2618 levels and is trading at 1.2642 levels. It has made session high at 1.2667 and lows at 1.2626 levels. The Canadian dollar strengthened to hit a three-week high against its U.S. counterpart on Wednesday as Canadian dollar was supported by weaker dollar and recent rally in oil prices. The price of U.S. crude oil was down 0.43 percent at $59.71 a barrel after reaching a near two-and-a-half year high in the previous session on supply outages in Libya and the North Sea. Data before the Christmas break showed that domestic economic growth stalled in October. It offset inflation, trade and retail sales data from earlier last week that had made a January interest rate hike by the Bank of Canada a 50-50 call. Still, Canada's economy faces a number of potential headwinds, including renegotiation of the North American Free Trade Agreement. Officials from Canada, the United States and Mexico will meet in Montreal Jan. 23-28 for talks on thorny subjects such as autos, dispute settlement and an expiry clause. The Canadian dollar was last trading at C$1.2640 to the greenback, up 0.4 percent. The currency's weakest level of the session was C$1.2694, while it touched its strongest since Dec. 5 at C$1.2624.
AUD/USD is supported around 0.7742 levels and currently trading at 0.7774 levels. It hit session high at 0.7778 and made session lows at 0.7761 levels. The Australian dollar rose hit two months high against US dollar on Wednesday as Australian dollar was boosted by higher commodity prices. Copper prices rocketed to multi-year highs, pushing the MSCI world equity index, which tracks shares in 47 countries, up 0.30 percent. The metal, used in construction and machinery, is seen as a proxy for global growth. The commodity-driven currency nudged up to $0.7734, a level not seen since late October. The Aussie has been on an uptrend in the past of couple of weeks and is seen ending the year about 7 percent higher after losses in each of the past four years. Trade was light across the board as many market participants were on holiday. Wednesday’s gains came as U.S. crude touched $60 a barrel overnight after fighters blew up a pipeline pumping crude oil to the port of Es Sider. Australia is a major exporter of natural gas, metals and iron ore, so higher prices for these commodities boost national income. However, the Aussie's rally was limited as oil gave back some of its early gains.
Equities Recap
Strength in commodities boosted European benchmarks though tech stocks fell on Wednesday as the region emerged from a two-day trading holiday and investors reacted to reports demand for Apple's new iPhone X was weaker than expected.
UK's benchmark FTSE 100 closed up by 0.34 percent, the pan-European FTSEurofirst 300 ended the day up by 0.06 percent, Germany's Dax ended up by 0.05 percent, France’s CAC finished the day up by 0.13 percent.
U.S. stocks were little changed on Wednesday, as gains in the technology sector offset losses in energy and helped keep major indexes nearly flat.
Dow Jones closed up by 0.10 percent, S&P 500 ended up 0.06 percent, Nasdaq finished the day up by 0.03 percent.
Treasuries Recap
U.S. Treasuries prices gained on Wednesday as investors rebalanced portfolios before year-end, though the Treasury Department saw weak demand for a $34 billion sale of five-year notes.
Benchmark 10-year notes gained 15/32 in price to yield 2.413 percent, down from 2.237 percent late on Tuesday.
Commodities Recap
Gold rose for an eighth straight session on Wednesday as a weaker U.S. dollar encouraged investors to buy, and palladium hit another near 17-year peak on expectations of strong demand and short supplies.
Spot gold was up 0.37 percent at $1,287.98 per ounce by 2:32 p.m. EST (1932 GMT) after touching its highest in almost a month at $1,288.50 an ounce.
The most active U.S. gold futures for February delivery settled up 0.3 percent at $1,291.40 per ounce.
Oil prices dipped on Wednesday after hitting a near two-and-a-half year high in the previous session as a rally fuelled by supply outages in Libya and the North Sea ran out of momentum.
Brent crude futures dropped to $66.38 a barrel, down 0.9 percent, or 64 cents, at 1933 GMT after breaking through $67 for the first time since May 2015 the previous day.
U.S. West Texas Intermediate (WTI) crude futures were at $59.64 a barrel, down 34 cents from their last settlement. WTI broke through $60 a barrel for the first time since June 2015 in the previous session.
