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Americas Roundup: Dollar weakens on U.S. tax reform worries, U.S. Treasury yields edge higher, Gold gains, Oil settles lower as U.S. crude output up, China imports down-November 9th 2017


Market Roundup

• U.S. Senate still on track to release tax bill Thursday –aide.

• U.S. Speaker Ryan opens door to delayed corporate tax rate cut.

• Trump warns 'rogue regime' N.Korea of grave danger.

• U.S. Commerce Secretary says Trump-Xi talks will address trade imbalances.

• CBO revises deficit estimate from Obamacare individual mandate repeal.

• German advisers want tighter ECB policy, longer Brexit talks.

• Greece's Tsipras says debt relief discussion to follow the review.

• EU to sign joint defence pact in show of post-Brexit unity.

• U.S. MBA Mortgage Application, 0.0%, -2.6% previous.

• U.S. MBA 30-yr Mortgage rate, 4.18%, 4.22% previous.

• CA Oct Housing starts annualized, 222.8k, 210.0k forecast, 217.1k prev 219.3k revised.

• CA Sept Building permits m/m, 3.8%, -0.2% forecast, -5.5% previous -5.1% revised.

• IMF, BOJ member say Japan needs to keep stimulus running.

Looking Ahead - Economic Data (GMT)

• 20:00 New Zealand Central bank Interest rate, 1.75% forecast, 1.75% previous

• 23:50 Japan Sept Current account NSA (JPY), 2375.4 bln forecast, 2380.4 bln previous

• 23:50 Japan Sept Machinery orders m/m, -1.8% forecast, 3.4% previous

• 23:50 Japan Sept Machinery orders y/y, 1.9% forecast, 4.4% previous

• 00:30 Australia Sept Housing Finance, 3.0% forecast, 1.0% previous

• 01:30 China Oct PPI y/y, 6.6% forecast, 6.9% previous

• 01:30 China Oct CPI y/y, 1.8% forecast, 1.6% previous

• 01:30 China Oct CPI m/m, 0.2% forecast, 0.5% previous

Looking Ahead - Events, Other Releases (GMT)

• 08:00 ECB's Daniele Nouy speaks in Brussels

• 13:00 ECB's Benoit Coeure speaks in Lyon, France

• 13:15 ECB's Yves Mersch speaks in Vienna

• 13:45 ECB's Vice President Vitor Constancio speaks in Rome

Currency Summaries

EUR/USD is likely to find support at 1.1552 levels and currently trading at 1.1594 levels. The pair has made session high at 1.1604 and hit lows at 1.1578 levels. Euro inched higher against the dollar on Wednesday as the dollar was pressured by worries over possible delays to President Donald Trump's tax reform plans. The Washington Post, citing unidentified sources, reported on Tuesday that Senate Republican leaders are considering a one-year delay in the implementation of a major corporate tax cut to comply with Senate rules. Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency. Senate Republicans are expected to unveil their own tax bill at the end of the week, and early indications suggest it could differ significantly from legislation proposed in the House of Representatives. The dollar index, which tracks the greenback against six major currencies, was down 0.03 percent at 94.88. On Monday, the Federal Reserve Bank of New York confirmed that William Dudley, among the most influential monetary policymakers throughout the financial crisis and its aftermath, expects to retire by mid-2018.That raised another question over leadership at the central bank, less than a week after Trump chose a new Fed chief.

GBP/USD is supported in the range of 1.3081 levels and currently trading at 1.3109 levels. It reached session high at 1.3114 and dropped to session low at 1.3083 levels. Sterling declined against the dollar on Wednesday as Political turmoil in Westminster and growing doubts over Prime Minister Theresa May's ability to deliver a good Brexit deal weighed on sterling. A string of political scandals, leading to fears that May could be on track to lose a second minister from her cabinet in the space of just one week, have added to the currency's troubles. The pound fell 0.6 percent to $1.3096, inching closer to the one-month low of $1.3040 hit on Friday. Against the euro, it was trading 0.4 percent lower, at 88.34 pence. Uncertainty over the progress of Brexit talks and the weak picture for the British economy despite a historic rate hike last week have kept investors frosty towards the pound. The pound sold off last week after the Bank of England raised interest rates for the first time in over a decade but pushed back investors' expectations for further rate hikes. The central bank told investors to expect just two more hikes in the next three years, adding that even these plans were dependent on the outcome of negotiations over Britain's departure from the European Union. Sterling also took a hit from falling bond yields as the gilt yield curve flattened to its lowest level in more than a year.

USD/CAD is supported at 1.2691 levels and is trading at 1.2720 levels. It has made session high at 1.2744 and lows at 1.2714 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday, adding to its gains after comments by Bank of Canada Governor Stephen Poloz the day before which were less dovish than investors had expected. In a speech and news conference, Poloz maintained a neutral tone on the next interest rate move, repeating the bank's message that it was monitoring wage growth and inflation, as well as economic capacity to see how the economy was adjusting to rate hikes in July and September. Prices of oil, one of Canada's major exports, eased as Chinese crude imports fell to a one-year low, but losses were partly offset by investor caution over rising political tensions in the Middle East. On the data front, Canadian seasonally adjusted housing starts were 222,771 in October, increasing from a revised 219,293 units in September. In separate domestic housing data, the value of building permits rose by 3.8 percent in September from August, the first increase in three months. The Canadian dollar was trading at C$1.2720 to the greenback, or 78.58 U.S. cents, up 0.4 percent. The currency traded in a range of C$1.2720 to C$1.2777. It has recovered from a 3-1/2 month low at C$1.2916 less than two weeks ago.

AUD/USD is supported around 0.7642 levels and currently trading at 0.7683 levels. It hit session high at 0.7685 and made session lows at 0.7666 levels. The Australian dollar held near four-month lows on Wednesday on expectations that local interest rates will stay at record lows for a long time yet. The Aussie dollar also came under some pressure after data from China showed imports of crude oil, copper and iron ore fell in October from the previous month. China is Australia's No.1 trading partner. The Aussie often traded as a liquid proxy for China plays, slipped to $0.7641 to head closer to October's low of $0.7622, which was the weakest level since July.However, it recovered to be up 0.1 percent at $0.7676 as greenback retreated on expectations of possible delays in long-awaited U.S. tax reforms. The Aussie has lost about 5 percent of its value since early September when it rose to a near 2-1/2 year peak of $0.8124 with the country's central bank determined to hold rates at 1.50 percent even as other policymakers have begun tightening.On Tuesday, the Reserve Bank of Australia (RBA) once again stood pat on rates after last easing in August 2016 as it remains cautious about lukewarm inflation.

Equities Recap

Financial shares weighed on European indexes on Wednesday amid doubts over U.S. tax reform plans and the "Trumpflation" trade and concerns over some European lenders' earnings and over non-performing loans in Italy.

UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.03 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day down by 0.2 percent.

Wall Street closed at a record high on Wednesday as Apple's market capitalization climbed above the $900 billion mark and videogame makers rallied.

Dow Jones closed up by 0.02 percent, S&P 500 ended up 0.14 percent, Nasdaq finished the day up by 0.31 percent.

Treasuries Recap 

U.S. Treasury yields edged higher on Wednesday with the yield curve close to its flattest level in a decade, as investors reduced their existing bond holdings to make room for this week's government and corporate bond supply.

The 30-year bond yield hovered at a near six-week low reached on Tuesday. It was up 1.6 basis point at 2.786 percent in late U.S. trading. The two-year yield increased 1.6 basis points to 1.645 percent.

Commodities Recap

Gold rose on Wednesday, hovering near a three-week high as the dollar retreated on expectations of possible delays in long-awaited U.S. tax reforms, while palladium hit its highest since 2001.

Spot gold was up 0.6 percent at $1,283.20 an ounce by 2:00 p.m. EST (1900 GMT). U.S. gold futures for December delivery settled up $7.90, or 0.6 percent, at $1,283.70 per ounce.

Oil prices settled slightly lower on Wednesday after U.S. government data showed rising domestic crude production, a surprise build in U.S. stockpiles and a decline in monthly Chinese crude imports, a triple blow that was offset somewhat by rising tensions in the Middle East.

Brent futures fell 20 cents, or 0.3 percent, to settle at $63.49 a barrel, while U.S. West Texas Intermediate crude fell 39 cents, or 0.7 percent, to settle at $56.81 per barrel.


 

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November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

Forecast

Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

Actual

54.6 %

Forecast

Previous

54.6 %

November 27 09:00 UTC 29592959m

ITExport Prices*

Actual

Forecast

Previous

111 %

November 27 09:00 UTC 29592959m

ITImport Prices*

Actual

Forecast

Previous

116.1 %

November 27 14:00 UTC 32593259m

MXTrade Balance, $*

Actual

Forecast

Previous

-1.886 Bln USD

November 27 14:00 UTC 32593259m

MXTrade Balance SA*

Actual

Forecast

Previous

-1.559 Bln USD

November 27 15:30 UTC 33493349m

USDallas Fed mfg bus index

Actual

Forecast

Previous

27.6

November 27 21:00 UTC 36793679m

KRBOK Manufacturing BSI*

Actual

Forecast

Previous

87 Bln BRL

November 28 00:00 UTC 38593859m

BRCentral Govt Balance

Actual

Forecast

Previous

-22.725 Bln BRL

November 28 07:00 UTC 42794279m

DEGDP Growth QQ* Advance

Actual

Forecast

Previous

10.7 %

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