Market Roundup
• US Dec Rich Fed Comp. Index, 20, previous 30.
• US Dec Rich Fed, Services Index, 25, previous 30.
• US Dec Rich Fed Mfg Shipments, 24, previous 33.
• US Dec Dallas Fed Mfg Bus Index, 29.70, previous 19.40.
• US Oct CaseShiller 20 YY, 6.4%, forecast 6.3%, previous 6.2%.
• Bitcoin recoups some losses after its worst week since 2013.
• Sudan to devalue pound currency to 18 per dollar in January –minister.
• Mexico peso stays under pressure despite currency hedge auctions.
• Attack on Libyan crude pipeline cuts output by up to 100,000 bpd.
• U.S. sanctions two North Korean officials over missile program .
• Brazil central gov't posts unexpected primary surplus in Nov.
Looking Ahead - Economic Data (GMT)
• No significant events
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1808 levels and currently trading at 1.1885 levels. The pair has made session high at 1.1877 and hit lows at 1.1844 levels. The euro was little changed against the greenback on Tuesday as Asian and European financial markets remained closed after Monday's Christmas holiday. The single currency gave up some ground last week after Catalan separatists won a regional election, deepening Spain's political crisis in a sharp rebuke to Prime Minister Mariano Rajoy and European Union leaders who backed him. Catalonia's separatists look set to regain power in the wealthy Spanish region after local elections on Thursday, deepening the nation's political crisis in a sharp rebuke to Prime Minister Mariano Rajoy and European Union leaders who backed him. With nearly all votes counted, separatist parties won a slim majority in Catalan parliament, a result that promises to prolong political tensions which have damaged Spain's economy and prompted a business exodus from the region. Many markets around the world, including in parts of Europe and Asia, were shut on Tuesday after the Christmas Day holiday, and trading volumes were light. The dollar index, tracking the U.S. unit against a basket of major currencies, fell 0.1 percent, with the euro down 0.03 percent to $1.1865.
GBP/USD is supported in the range of 1.3328 levels and currently trading at 1.3387 levels. It reached session high at 1.3338 and dropped to session low at 1.3344 levels. Sterling slightly firmed against the dollar on Tuesday as traders used the quiet holiday period to take profits on the dollar's recent gains, while worries over geopolitical risks reduced appetite for U.S. dollar. The United States on Tuesday announced sanctions on two North Korean officials for their roles in developing the country's ballistic missiles. Tensions have been rising over the programs, which the Asian nation is pursuing in defiance of years of U.N. Security Council resolutions. Russian Foreign Minister Sergei Lavrov told U.S. Secretary of State Rex Tillerson that "Washington's aggressive rhetoric" had heightened tension on the Korean peninsula and was unacceptable. The greenback is expected to be supported into early 2018 in the aftermath of the biggest overhaul of the U.S. tax code in 30 years which became law last week. The consensus among analysts was a drop in corporate tax rates would spur business investments, bolstering the U.S. economy and the dollar even though the tax plan would add $1.5 trillion to the national debt in 10 years.
USD/CAD is supported at 1.2650 levels and is trading at 1.2689 levels. It has made session high at 1.2718 and lows at 1.2683 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose and the greenback slipped in holiday-thinned market. The dollar index, which tracks the greenback against a basket of six major rivals, edged down 0.1 percent to 93.273. Oil traded above $65 a barrel on Tuesday, within sight of its highest since mid-2015, supported by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts. Armed men blew up a pipeline pumping crude oil to the port of Es Sider on Tuesday, cutting Libya's output by up to 100,000 barrels per day (bpd), according to military and energy sources. The state-run National Oil Corporation (NOC) said in a statement that output had been reduced by 70,000 to 100,000 bpd. The cause of the blast was unclear, it added. The Canadian dollar was trading at C$1.2693 to the greenback, up 0.27 percent. The currency's strongest level of the session was C$1.27683, while it touched its weakest at C$1.2717.
USD/JPY is supported around 112.82 levels and currently trading at 113.16 levels. It peaked to hit session high at 113.27 and made session lows at 113.10levels. The U.S. dollar dipped against the yen on Tuesday as upbeat Japanese economic data boosted Japanese yen across the board. Japan's core consumer prices rose for the 11th straight month, up 0.9 percent year-on-year, and household spending jumped in November. Japan's households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its 2 percent target. But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other central banks seek an end to crisis-mode policies. Minutes of the BOJ's October rate review showed that while most central bank policymakers saw no need to ramp up stimulus, they agreed on the need to sustain "powerful" easing for the time being. The Japanese yen strengthened 0.05 percent versus the greenback to 113.21 per dollar. It was last trading at 113.15 in the late US session.
Equities Recap
U.S. stocks dipped on Tuesday as Apple and shares of its parts suppliers weakened on a report of soft iPhone X demand, which pulled technology shares lower.
Dow Jones closed down by 0.04 percent, S&P 500 ended down 0.11 percent, Nasdaq finished the day down by 0.34 percent.
Treasuries Recap
Two-year U.S. Treasury yields rose to their highest levels in nine years on Tuesday as investors focused on new supply being sold into light trading conditions this week, and on large increases in issuance expected in 2018.
Two-year Treasury yields were last 1.908 percent, up from 1.895 percent on Friday. The yields rose as high as 1.916 percent in overnight trading, the highest since Oct. 14, 2008.
Five-year note yields rose as high as 2.263 percent, the highest since April 12, 2011.
Commodities Recap
Gold prices edged up on Tuesday to a more than three-week high on support from a weaker dollar and chart signals, as palladium touched the highest level since February 2001 on supply worries
Spot gold was up 0.69 percent at $1,283.6801 per ounce by 1:52 p.m. EST (1852 GMT) after reaching its highest level since Dec. 1 at $1,283.72.
U.S. gold futures for February delivery settled up $8.70, or 0.68 percent, at $1,287.50 per ounce. Prices are on track for a second straight annual gain.
Oil prices soared to two-and-a-half year highs in light trading volume on Tuesday, boosted by news of an explosion on a Libyan crude pipeline as well as voluntary OPEC-led supply cuts.
Brent crude, the international benchmark for oil prices, rose $1.78, or 2.7 percent, to $67.03 a barrel by 2:06 p.m. EST (1906 GMT). Front-month prices hit a session high of $67.05 a barrel, their highest since May 2015.
U.S. crude climbed $1.47, or 2.5 percent, to $59.94 a barrel after touching a session high of $59.98, the highest since June 2015.
