Market Roundup
• US Q3 Current Account, -100.6 bln, -116.8 bln forecast, -123.1 bln previous, -124.4 bln revised.
• US Nov Building Permits: Number, 1.298 mln, 1.273 mln forecast, 1.316 mln previous.
• US Nov Building Permits: Change MM, -1.4%, 7.4% previous.
• US Nov Housing Starts Number MM,1.297mln,1.250mln forecast,1.290mln prev,1.256mln revised.
• US Nov Housing Starts MM: Change, 3.3%, 13.7% previous,8.4% revised.
• US Redbook MM w/e, -0.4%, -0.7% previous.
• US Redbook YY w/e, 4.4%, 3.3% previous.
• U.S. House approves biggest tax overhaul in 30 years.
• U.S. tax cuts won't make housing more affordable -analysts.
• U.S. Congress faces tricky path to avoid government shutdown.
• Bitcoin warnings grow more strident as Singapore urges "extreme caution".
• Fed's Kashkari says should wait for inflation before raising rates.
• Saudi boosts spending to record, slows austerity drive in 2018 state budget.
• Brazil's Meirelles sees risk of downgrade before pension vote.
• ECB policymakers talk life after QE as the economy expands.
Looking Ahead - Economic Data (GMT)
• 19 Dec 21:45 New Zealand Q3 Current Account- Qtrly, -4.290 bln forecast, -0.618 bln previous
• 19 Dec 21:45 New Zealand Q3 Current Account- Annual, -6.90 bln forecast, -7.49 bln previous
• 19 Dec 21:45 New Zealand Q3 Current Account Balance to GDP, 2.5% forecast, 2.8% previous
• 19 Dec 21:45 New Zealand Nov Trade- Imports, 5.43 bln previous
• 19 Dec 21:45 New Zealand Nov Trade- Exports, 4.56 bln previous
• 19 Dec 21:45 New Zealand Nov Trade Balance, -871.0 mln previous
• 19 Dec 21:45 New Zealand Nov Trade Balance YY, -2.99 bln previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of Japan holds monetary policy meeting in Tokyo (to December 21).
• 13:00 Bundesbank President Jens Weidmann speaks in Milan about the short and long-term challenges of the Eurozone economy.
• 13:15 Governor of Bank of England, Mark Carney, the deputy governor of the Bank of England, Sam Woods, BOE Members of the Financial Policy Committee, Donald Kohn & Richard Sharp: Treasury Select Committee Hearing on the November Financial Stability Report in London.
• 14:00 Exchange of views of BOE Board member Ignazio Angeloni with the Parliamentary Inquiry Committee on the Banking and Financial System in Rome.
• 21:30 BOE executive director for banking, payments and financial resilience Andrew Hauser: NY Fed Commemoration of Centennial Anniversary of Provision of Account Services to Foreign Central Banks in London
Currency Summaries
EUR/USD is likely to find support at 1.1770 levels and currently trading at 1.1843 levels. The pair has made session high at 1.1847 and hit lows at 1.1802 levels. Euro rose sharply against dollar on Tuesday as dollar declined for the second consecutive day as investors took the view that a major U.S. tax overhaul would be unlikely to boost the economy significantly, with most major currencies trading in tight ranges in a relatively thin market. The Republican-controlled U.S. House of Representatives approved sweeping, debt-financed tax legislation on Tuesday, sending the bill to the Senate, where lawmakers were due to take up the package later in the evening. The biggest overhaul of the U.S. tax system in more than 30 years could be signed into law by President Donald Trump as soon as Wednesday, if both chambers of Congress approve it.Fed policymakers expect the U.S. economy to get a short-term lift from the tax reform, they project growth will then ease back to about 2 percent by 2020 and not rise to around 3 percent as Trump and his administration predict. Traders are shying away from taking big positions ahead of the holiday season, although news that the U.S. tax reform was set to become law helped support some risk appetite. The euro was up 0.5 percent at 1.1842 against the dollar. The dollar, measured against a broad trade-weighted basket of major currencies, was down 0.05 percent.
GBP/USD is supported in the range of 1.3298 levels and currently trading at 1.3383 levels. It reached session high at 1.3384 and dropped to session low at 1.3327 levels. The British pound edged higher against the greenback on Tuesday as investors focused on the scale of the task still ahead for Britain to clinch a deal on leaving the European Union, despite progress in the talks made last week. With thin trading and little economic data to shift interest elsewhere, focus on the next round of Brexit negotiations left the pound little higher against greenback. Sterling showed little reaction to data released earlier in the day showing British employers plan to hire more workers and raise pay more quickly in 2018, but they also fear that Brexit will make the country a less attractive place to do business. Some investors reckon sterling is likely to strengthen in the coming months, reversing this month's losses. But there are still worries about political uncertainty. British Prime Minister Theresa May told parliament her plan on Monday for a Brexit transition period with broadly the same access to EU markets was met with scepticism from pro-Brexit lawmakers fearful of a watered-down EU exit. Last week May's fragility was exposed by the rebellion of 11 largely pro-European Conservative lawmakers in a parliamentary vote on Brexit legislation that led to an embarrassing defeat.
USD/CAD is supported at 1.2800 levels and is trading at 1.2874 levels. It has made session high at 1.2919 and lows at 1.2850 levels. The Canadian dollar dipped to a two-week low against its U.S. counterpart on Tuesday as investors weighed the potential impact of U.S. tax reform. The U.S. dollar declined against a basket of major currencies for a second consecutive day as investors took the view that a major U.S. tax overhaul would be unlikely to boost the economy significantly. But losses for the greenback were pared after data showed that U.S. domestic home construction unexpectedly rose in November to a 13-month peak. Prices of oil, one of Canada's major exports, were supported by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories probably fell for a fifth week. The loonie had fluctuated last week on remarks by Bank of Canada Governor Stephen Poloz and weaker-than-expected domestic manufacturing data. Wholesale trade data for October is due on Wednesday while Canada's inflation report for November and October retail sales data are expected on Thursday, and gross domestic product data for October is due on Friday. The Canadian dollar was last trading at C$1.2874 to the greenback, down 0.2 percent. The currency's strongest level of the session was C$1.2852, while it touched its weakest since Dec. 1 at C$1.2918.
AUD/USD is supported around 0.7636 levels and currently trading at 0.7663 levels. It hit session high at 0.7667 and made session lows at 0.7644 levels. The Australian dollar held near six-week highs against the greenback on Tuesday, as the country's central bank expressed greater confidence about the economic outlook, while greenback suffered losses day as investors viewed that a U.S. tax overhaul would will unlikely to boost US economy. The Australian dollar traded around $0.7661, not far from Friday's $0.7694 which was the highest since early November. The Aussie has been on an uptrend since last week, rising in six of the last seven sessions, helped by strong data at home as well as from China, Australia's top trading partner. Tuesday’s minutes from the Reserve Bank of Australia's (RBA) December meeting showed policymakers were encouraged by that run of better economic data, although weakness in consumer spending was a "significant risk." That, along with subdued inflation and scrooge-like wage growth, is why the RBA is widely expected to hold rates at a record low 1.50 percent for a long while yet. Oil was up slightly towards $64 a barrel, aided by an ongoing North Sea pipeline outage, supply cuts and expectations that U.S. crude inventories had fallen for a fifth week.
Equities Recap
European shares pulled back on Tuesday in a broadly weaker market as a rally inspired by investor optimism about a tax reform in the United States lost its strength.
UK's benchmark FTSE 100 closed up 0.6 percent, FTSEurofirst 300 ended the day down by 0.49 percent, Germany's Dax ended down by 0.71 percent, and France’s CAC finished the day down by 0.75 percent.
Wall Street stocks drifted lower on Tuesday as the U.S. House of Representatives approved a long-awaited bill to overhaul the tax system.
Dow Jones closed down by 0.16 percent, S&P 500 ended down 0.32 percent, Nasdaq finished the day down by 0.45 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday with the benchmark yield hitting a seven-week high as the biggest overhaul of the U.S. tax code in more than 30 years appeared on track to become law by the end of the week.
The benchmark 10-year treasury yield was up 7 basis points to 2.459 percent after hitting its highest since late October.
The two-year yield touched a nine-plus year peak of 1.861 percent, while five-year yield reached 2.230 percent, which was the highest since April 2011.
Commodities Recap
Gold dipped on Tuesday as U.S. Treasury yields rose on an uptick in housing starts for November and even though the dollar fell, a factor that generally supports gold.
Spot gold was down 0.04 percent at $1,260.86 an ounce by 1:49 p.m. EST (1849 GMT), earlier hitting a nearly two-week high of $1,265.20, while U.S. gold futures futures for February delivery settled down $1.30, or 0.1 percent, at $1,264.20 per ounce.
Oil edged up toward $64 a barrel on Tuesday, helped by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories had fallen for the fifth week.
Brent crude settled up 39 cents or 0.6 percent to $63.80 a barrel. U.S. crude settled up 30 cents or 0.5 percent to $56.46.
