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America’s Roundup: Dollar edges higher after Fed minutes, Wall Street ends lower, Gold dips, Oil rallies even as OPEC+ boosts output, U.S. fuel demand dips-January 6th,2022

Market Roundup

•US Dec ADP Nonfarm Employment Change 807K, 400K forecast,534K previous

•Canada Nov New Housing Price Index (MoM) 0.8%, 0.7% forecast, 0.9% previous

•Canada Nov Building Permits (MoM) 6.8%,  2.3% forecast, 1.3% previous

•Canada Nov New Housing Price Index (MoM) 0.8%,0.5% forecast, 0.9% previous           

•US Dec Markit Composite PMI  57.0, 56.9 previous                            

•US Dec Services PMI 57.6, 57.5 forecast, 58.0 previous

•US Gasoline Inventories 10.128M, 1.775M forecast, -1.458M previous

•US Crude Oil Inventories -2.144M,-3.283M forecast, -3.576M previous

Looking Ahead - Economic Data (GMT) 

•05:00 Japan Dec CPI Tokyo Ex Food and Energy (MoM)  -0.1% previous

•05:00 Japan Dec Tokyo Core CPI (YoY) 0.5% forecast, 0.3% previous

•05:00 Japan  Nov Household Spending (YoY)  1.6% forecast, -0.6% previous

•05:00 Japan  Nov Household Spending (MoM)  1.2% forecast, 3.4% previous

Looking Ahead - Economic events and other releases (GMT)

•No significant events

EUR/USD: The euro initially gained against dollar on Wednesday but gave up ground after minutes released from the Federal Reserve's December meeting showed the U.S. central bank may need to act more quickly in hiking interest rates to combat inflation. According to minutes from the Fed's Dec. 14-15 policy meeting, Fed officials said last month that the U.S. labor market was "very tight" and it might need not just to raise interest rates sooner than expected, but also reduce asset holdings quickly. Fed funds futures have priced in a 80% chance of a rate hike in March following the release of the Fed minutes. Immediate resistance can be seen at 1.1320(5DMA), an upside break can trigger rise towards 1.1334 (23.6%fib).On the downside, immediate support is seen at 1.1303 (38.2%fib), a break below could take the pair towards 1.1277 (50%fib).

GBP/USD: The pound held just shy of a two-month high on Wednesday as investors ramped up expectations that the Bank of England will raise interest rates as early as next month after a surprise hike in December. And growing expectations that Britain will not introduce COVID-19 measures clamping down on economic activity was also boosting the stock market . Prime Minister Boris Johnson on Tuesday said that England could withstand a surge in COVID-19 infections without shutting down the economy as Britain reported another record daily high in cases fuelled by the Omicron variant. Immediate resistance can be seen at 1.3558 (23.6%fib), an upside break can trigger rise towards 1.3593 (Higher BB).On the downside, immediate support is seen at 1.3513(5DMA), a break below could take the pair towards 1.3477(38.2%fib).

USD/CAD: The Canadian dollar on Wednesday weakened against its U.S. counterpart and major peers as minutes of the U.S. Federal Reserve's latest meeting clipped investor sentiment. Canada is a major exporter of oil and other commodities, so the loonie tends to be sensitive to moves in risk appetite. U.S. crude oil futures pared earlier gains but still settled 1.1% higher at $77.85 a barrel. The loonie was trading 0.4% lower at 1.2758 to the greenback, or 78.38 U.S. cents, the biggest decline among G10 currencies. It traded in a range of 1.2692 to 1.2766. 13 at 1.3192. Immediate resistance can be seen at 1.2788 (14 DMA), an upside break can trigger rise towards 1.2805(23.6%fib).On the downside, immediate support is seen at 1.12743(38.2%fib), a break below could take the pair towards 1.2720(5DMA).

USD/JPY: The U.S. dollar rose versus the yen on Wednesday after the release of the U.S. Federal Reserve's December meeting minutes . Fed officials said the "very tight" U.S. labor market might warrant raising rates sooner than expected as well as reducing the bank's overall asset holdings to tame high inflation, minutes of their Dec. 14-15 policy meeting showed. Investors focus turned to  non-farm payrolls numbers expected later this week for a guide to the normalisation timeline. Strong data prints could reinforce the Fed's hawkish bias and further support the dollar. The Japanese yen strengthened 0.07% versus the greenback at 116.06 per dollar. Strong resistance can be seen at 116.23(23.6%fib), an upside break can trigger rise towards 117.00 (Psychological level).On the downside, immediate support is seen at 115.53 (38.2%fib), a break below could take the pair towards 115.18(50%fib).

Equities Recap

European automobile stocks rose more than 2% to a record high on Wednesday as investors turned increasingly bullish on the sector on growing expectations for stronger car sales in 2022.

The UK's benchmark FTSE 100 closed up by 0.16 percent, Germany's Dax ended up by 0.74 percent, and France’s CAC finished the up  by 0.81 percent.

U.S. stocks slid and Treasury yields jumped on Wednesday after meeting minutes released by the Federal Reserve indicated that it might not only raise interest rates sooner than expected but could also reduce its overall asset holdings to tame high inflation.

Dow Jones closed down by 1.07 percent, S&P 500 ended down 1.94 percent, Nasdaq finished the day down  by 3.30 percent.

Commodities Recap

Gold prices slipped on Wednesday erasing earlier gains, as U.S. bond yields jumped after minutes from the last Federal Reserve meeting showed that the U.S. central bank may need to raise interest rates sooner than expected to curb inflation.

Spot gold was last down 0.2% at $1,810.56 per ounce by 15:21 ET (2021 GMT). U.S. gold futures settled 0.6% higher at $1,825.10.

Oil prices rose on Wednesday, extending gains even after OPEC+ producers stuck to an agreed output target rise for February and U.S. fuel inventories surged due to sliding demand as COVID-19 cases spiked.

Brent crude futures ended up 80 cents, or 1%, to $80.80 a barrel. U.S. West Texas Intermediate (WTI) crude futures closed up 86 cents, or 1.1%, to $77.85.

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