Market Roundup
• US Treasuries rise, dollar falls as Trump gives little policy detail.
• US stocks mixed, Trump says big pharma getting away w/murder; Oil prices continue their ascent.
• BoE's Carney warns UK parliament of 'Jenga'-type Brexit risk.
• Trump says Russia did not try to compromise him, assails spy agencies.
• US to unveil $4.3 billion Volkswagen settlement.
• Germany sees federal budget surplus of EUR 5-7 bln in 2016, Buoyant tax revenues, low borrowing costs.
• UK banking faces "outsize" risks from loss of EU markets, may lose influence to shape global finance rules –Carney.
• MXN hits historic low of 22 pesos/USD as Trump speaks, 22.0440 new all-time low.
• U.S. crude, fuel stockpiles soar amid record high refining – EIA.
• Bitcoin slides as China's central bank launches checks on exchanges, Bitcoin falls to 3-wk low, below USD 800.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Bank Lending YY Dec 2.40%-previous
• 23:50 Japan Current Account NSA JPY* Nov f/c 1500.0b, 1719.9b- previous
• 05:00 Japan Economy Watchers Poll SA* Dec 52.5- previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0450 levels and currently trading at 1.0573 levels. The pair has made session high at 1.0622 and hit lows at 1.0453 levels. Euro rose against the dollar on Wednesday as the dollar declined after U.S. President-elect Donald Trump spoke in his first formal news conference just days before taking office. In his first press briefing as U.S. president-elect, Trump presided over a wide-ranging session that touched on topics such as allegations of Russia spying, Mexico, his business interests, and drug pricing. The greenback, which hit one-week highs against the euro and franc and a three-month high against sterling before the conference, turned negative against those currencies after Trump attacked U.S. intelligence agencies and denounced claims he had been caught in a compromising position in Russia but did not elaborate on his economic policy agenda. The euro rose as much as 0.6 percent against the dollar after the conference to a session high of $1.0622, just below an 11-day high of $1.0626 struck on Tuesday and rising from a one-week low of $1.0455 struck earlier.
GBP/USD is supported in the range of 1.2000 levels and currently trading at 1.2204 levels. It reached session high at 1.2272 and dropped to session low at 1.2030 levels. Sterling surged against the dollar on Wednesday as the dollar weakened after President-elect Donald Trump's remarks. Trump's first news conference since the Nov. 8 election contained no details on tax cuts and infrastructure spending, which were two factors that ignited a five-week global bond market selloff after his surprise presidential win. Sterling initially edged towards a 10-week low against the dollar on Wednesday, kept under pressure by fears that Britain will undergo a "hard" exit from the EU in which access to the single market will play second fiddle to immigration controls. But by early US afternoon trading, sterling rose 0.4 percent to $1.2225.On the data front, British industrial output rebounded in November, helped by a recovery in oil and gas, adding to signs that the economy kept its momentum in late 2016 despite June's shock Brexit vote. Industrial output rose 2.1 percent in November, recovering from a 1.1 percent drop in October and beating expectations for a 0.8 percent jump.
USD/CAD is supported at 1.3100 levels and is trading at 1.3170 levels. It has made session high at 1.3291 and lows at 1.3118 levels. The Canadian dollar strengthened to a four-week high against its U.S. counterpart on Wednesday as oil prices rose and the greenback lost ground against a basket of major currencies following a news conference by U.S. President-elect Donald Trump. Trump denounced unsubstantiated claims he had been caught in a compromising position in Russia and attacked U.S. intelligence agencies over the leak of the information. Canadian domestic data since the beginning of the year has shown a December surge in jobs and the first trade surplus in more than two years in November, while a Bank of Canada survey pointed to improving business conditions. The Canadian dollar was trading at C$1.3174 to the greenback, or 75.91 U.S. cents, stronger than Tuesday's close of C$1.3227, or 75.60 U.S. cents.
AUD/USD is supported around 0.7328 levels and currently trading at 0.7445 levels. It hit session high at 0.7471 and made session lows at 0.7426 levels. The Australian dollar strengthened against US dollar on Wednesday as the greenback reversed course after a news conference held by President-elect Donald Trump disappointed dollar bulls who were expecting a pro-growth message. Investors have been betting Trump will boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and induce the Federal Reserve to raise interest rates at a steady pace. The dollar index, which hit a one-week high before the conference of 102.950, sank to its lowest since Dec. 14 at 101.280 after it had ended. The index pared losses later in afternoon U.S. trading and was last down 0.15 percent at 101.860. The Australian dollar was trading at $0.7361 after popping up to $0.7472, its highest since Dec. 14. It is up 2.5 percent in January so far, having earlier notched three consecutive months of declines.
Equities Recap
European shares ended off highs on Wednesday as pharma stocks turned lower on worries over pricing pressure in the U.S. following remarks by Donald Trump in his first news conference.
UK's benchmark FTSE 100 closed up by 0.2 percentage, the pan-European FTSEurofirst 300 ended the day up by 0.30 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day flat.
U.S. stocks ended higher on Wednesday after a day of choppy trading even as many investors fled drug stocks after President-elect Donald Trump said pharmaceutical companies were "getting away with murder" by charging high prices for drugs.
Dow Jones closed up by 0.48 percent, S&P 500 ended up 0.27 percent, Nasdaq finished the day up by 0.19 percent.
Treasuries Recap
U.S. Treasury debt yields fell on Wednesday with benchmark yields briefly touching the lowest in a month following stellar demand at a 10-year note sale, while President-elect Donald Trump's remarks spurred safe-haven demand for bonds.
The yield on 10-year Treasury notes was down 0.5 basis point at 2.374 percent. It traded as low as 2.329 percent, which was the lowest since Nov. 30, following the 10-year note auction, part of this week's $56 billion in longer-dated government debt supply.
The 30-year bond yield fell to a near two-month low of 2.926 percent before retracing to 2.961 percent, down 1 basis point on the day.
Commodities Recap
Oil prices jumped more than 2.5 percent on Wednesday, their biggest daily rise in more than a month, lifted as the U.S. dollar weakened following a news conference by U.S. President-elect Donald Trump and on news that Saudi Arabia cut exports to Asia.
Brent futures rose $1.46, or 2.7 percent, at $55.10 a barrel, while U.S. West Texas Intermediate crude gained $1.43, or 2.8 percent, to $52.25 per barrel. Both contracts notched their biggest daily percentage gains since Dec. 1.
Gold rose to a seven-week high on Wednesday, turning positive as the dollar dropped and Treasury yields fell after U.S. President-elect Donald Trump spoke in his first formal news conference just days before taking office.
Spot gold was up 0.4 percent at $1,192.61 an ounce by 2:32 p.m. EST (1932 GMT), after a choppy session that traded from $1,176.94 to $1,198.40, the highest since Nov. 23.
U.S. gold futures settled up $11.1, or 0.94 percent, at $1,196.6 per ounce.
