Market Roundup
• US Nov Existing Home Sales % Change, 5.6%, 0.6% forecast, 2.0% previous, 2.4% revised.
• US Nov Existing Home Sales, 5.81 mln, 5.52 mln forecast, 5.48 mln previous, 5.50 mln revised.
• U.S. House approves sweeping tax bill in a win for Trump.
• Canada Oct Wholesale Trade MM, 1.5%, 0.5% forecast, -1.2% previous, -1.1% revised.
• Full Brexit in Jan. 2021 as EU sets transition deadline.
• IMF Lagarde says pre-Brexit warnings vindicated by slower UK growth.
• Bank of England to spare EU banks from costly rules, if Brexit goes well.
• BoE's Carney sees problems with central-bank issued cryptocurrencies.
• EU singles out China as distorted state-run economy.
• Argentina's Macri advances year-end push to cut business costs.
• South Korea says delay in military drills aimed only at ensuring peaceful Olympics.
Looking Ahead - Economic Data (GMT)
• 20 Dec 21:45 New Zealand Q3 GDP Production QQ, 0.5% forecast, 0.8% previous
• 20 Dec 21:45 New Zealand Q3 GDP – Annual-Avg, Prod-Bas, 2.5% forecast, 2.7% previous
• 20 Dec 21:45 New Zealand Q3 GDP - Annual , 2.3% forecast, 2.5% previous
• 20 Dec 21:45 New Zealand Q3 GDP Expenditure QQ, 0.6% forecast, 1.1% previous
• 20 Dec 23:50 Japan Foreign Bond Investment w/e, -487.6 bln previous
• 20 Dec 23:50 Japan Foreign Invest Stock w/e, -84.8 bln previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1807 levels and currently trading at 1.1878 levels. The pair has made session high at 1.1900 and hit lows at 1.1840 levels. Euro rose against the dollar on Wednesday as greenback had limited upside potential given that investors have already factored in a comprehensive U.S. tax bill that is all but certain to be signed into law by President Donald Trump. The U.S. Senate approved the tax bill early Wednesday morning, but had to send it back to the House of Representatives, which had passed it on Tuesday, for another vote due to a procedural foul-up. The outcome is not expected to change. The bill essentially slashes taxes for corporations and the wealthy, while offering mixed, temporary tax relief to working individuals and families. Some analysts were skeptical about the tax bill's supposed positive impact on the U.S. economy. In economic news, U.S. existing home sales increased more than expected in November, hitting their highest level in nearly 11 years, the latest indication that housing was regaining momentum after almost stalling this year. The dollar index fell 0.2 percent to 93.295. That led the euro to rise 0.3 percent versus the dollar to $1.1878.
GBP/USD is supported in the range of 1.3358 levels and currently trading at 1.3393 levels. It reached session high at 1.3418 and dropped to session low at 1.3383 levels. The British pound edged higher against the greenback on Wednesday as investors were cautious about taking on large new positions on the currency ahead of the Christmas holiday and phase two of the Brexit talks next year.With thin trading and little economic data to shift interest elsewhere, focus on the next round of divorce negotiations between Britain and the European Union left the pound unable to break outside of the ranges it has traded in over the past two weeks despite some progress in Brexit talks. The European Union wants a transition period after Brexit to end no later than the last day of 2020, according to the European Commission's negotiating directives agreed on Wednesday. Prime Minister Theresa May last week secured a deal to move negotiations to the next stage, so that post-Brexit trade and a transition arrangement can be discussed. Sterling edged up 0.2 percent on the day to $1.3388.
USD/CAD is supported at 1.2808 levels and is trading at 1.2833 levels. It has made session high at 1.2863 and lows at 1.2815 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday after domestic data showed wholesale trade rose more than expected in October, which could bode well for economic growth at the start of the fourth quarter. The value of Canadian wholesale trade jumped by more than expected in October on increased purchases of machinery and equipment, as well as household goods, data from Statistics Canada showed on Wednesday. The 1.5 percent increase topped economists' forecasts for a gain of 0.5 percent and offset September's 1.1 percent decline. Removing the effects of price changes, volumes were up 1.2 percent in October. The report boded well for the economy at the start of the fourth quarter. Still, Canada is expected see slower economic growth in the second half of the year after setting a blistering pace in the first half. Oil prices firmed modestly, supported by a larger-than-expected drop in U.S. inventories and a continued outage in the North Sea Forties pipeline system. The Canadian dollar was last trading at C$1.2828 to the greenback, up 0.2 percent.
USD/JPY is supported around 112.83 levels and currently trading at 113.38 levels. It peaked to hit session high at 113.38 and made session lows at 113.07 levels. The U.S. dollar rose against the Japanese yen on Wednesday as investors dumped safe-haven assets on optimism that U.S. tax overhaul will help boost growth. The Republican-controlled U.S. House of Representatives gave final approval to the biggest overhaul of the U.S. tax code in 30 years, sending a sweeping $1.5 trillion bill to President Donald Trump for his signature. Many investors expect that tax cuts will help spur investment and spending that will, in turn, boost the economy and increase stubbornly low inflation. The dollar rose to one-week highs against the yen and was last trading at 113.42 yen, up 0.2 percent. Looking ahead, the market will be paying attention to the core Personal Consumption Expenditures index reported on Friday, which measures price changes in consumer goods and services. The Federal Reserve's favored gauge of inflation will come as levels have moderated for much for this year. Continued weakness could complicate the central bank's deliberations about raising rates in 2018.
Equities Recap
European shares dropped on Wednesday, extending their decline from the previous session as currency dynamics took hold of the stock market.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.73 percent, Germany's Dax ended down by 1.2 percent, France’s CAC finished the day down by 0.6 percent.
Wall Street's main indexes were little changed on Wednesday, taking a breather after a month-long rally as both houses of Congress approved a tax overhaul in a long-anticipated vote.
Dow Jones closed down by 0.10 percent, S&P 500 ended down by 0.07 percent, Nasdaq finished the day down by 0.03 percent.
Treasuries Recap
U.S. Treasury yields rose to nine-month highs on Wednesday on optimism a U.S. tax overhaul will help boost growth and as economic data improve.
Benchmark 10-year notes were down 8/32 in price to yield 2.480 percent, up from 2.463 percent on Monday. The yields earlier rose to 2.497 percent, the highest since March 21.
Commodities Recap
Gold prices rose on Wednesday for a fourth straight session to reach a two-week high as U.S. data showing solid home sales but a fall in mortgage applications pushed the dollar to a two-week low.
Spot gold was up 0.3 percent at $1,265.26 an ounce by 1:53 p.m. EST (1853 GMT), after rising to $1,267.81, the highest since Dec. 6.U.S. gold futures settled up 0.4 percent at $1,269.60.
Crude prices firmed on Wednesday, supported by a larger-than-expected drop in U.S. inventories and the continued outage of the North Sea Forties pipeline system.
West Texas Intermediate crude futures were up 38 cents at $57.95 a barrel as of 12:47 p.m. EST (1747 GMT), while Brent crude was up 41 cents at $64.22 a barrel.
