Market Roundup
• Trump says he would be proud to shut down the government for border security.
• White House expects China to cut car tariffs after trade call -auto exec.
• White House delays new farm aid payments on China trade deal hopes –sources.
• After May asks for help, Germany's Merkel says no more Brexit negotiations.
• New Brexit vote will be before Jan. 21 - UK PM May's spokesman.
• Macron's concessions set to blow out French deficit .
• Germany cuts GDP growth forecast for 2018, sees up to 1.6 pct.
• US Nov PPI Final Demand YY, 2.5%, 2.5% forecast, 2.9% previous.
• US Nov PPI Final Demand MM, 0.1%, 0.0% forecast, 0.6% previous.
• US Nov PPI exFood/Energy YY, 2.7%, 2.5% forecast, 2.6% previous.
• US Nov PPI exFood/Energy MM, 0.3%, 0.1% forecast, 0.5% previous.
• US Nov PPI ex Food/Energy/Tr YY, 2.8%, 2.8% forecast.
• US Nov PPI ex Food/Energy/Tr MM, 0.3%, 0.2% previous.
• US Nov NFIB Business Optimism Index, 104.80, 107.40 previous.
• US 8 Dec, w/e Redbook MM, -0.5%, 0.8% previous.
• US 8 Dec, w/e Redbook YY, 6.6%, 7.0%.
Looking Ahead - Economic Data (GMT)
• Dec 11 23:30 Australia Dec Consumer Sentiment, 2.8% previous
• Dec 11 23:50 Japan Nov Corp Goods Price MM, -0.1% forecast, 0.3% previous
• Dec 11 23:50 Japan Nov Corp Goods Price YY, 2.4% forecast, 2.9% previous
• Dec 11 23:50 Japan Oct Machinery Orders MM, 10.5% forecast, -18.3% previous
• Dec 11 23:50 Japan Oct Machinery Orders YY, 5.9% forecast, -7.0% previous
Looking Ahead - Events, Other Releases (GMT)
• Dec 12 16:55 German Economy Minister Peter Altmaier speaks in Berlin
• Dec 12 08:00 Bank of Spain Governor Hernandez de Cos to open banking conference in Madrid
• Dec 12 13:30 ECB Member of the Supervisory Board Pentti Hakkarainen speaks in Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1318 levels. The pair has made session high at 1.1398 and hit lows at 1.1304 levels. The euro slipped lower against the U.S. dollar on Tuesday as dollar strengthened as China and the United States laid out a plan on the next stage of their trade talks to avert a trade war between the world's two biggest economies. White House officials and China's commerce ministry said Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer spoke on a telephone call on Tuesday, but offered no details what they discussed. Still the call was seen as a step to ratchet down trade tension between Beijing and Washington, soothing worries about an all-out trade war between the two nations that would hurt global economic growth. An index that tracks the greenback against six major peers was up 0.18 percent at 97.396. Earlier Tuesday, it touched 97.545, which was the highest since Nov. 28. The euro was 0.26 percent lower at $1.1318 and down 0.24 percent at 128.44 yen. Investors were also focused on the European Central Bank's economic assessment of the euro zone, due on Thursday.
GBP/USD is supported in the range of 1.2400 levels and currently trading at 1.2483 levels. It reached session high at 1.2611 and dropped to session low at 1.2480 levels. Britain's pound declined sharply against the dollar on Tuesday after a report that colleagues of Prime Minister Theresa May believed they had sufficient numbers to mount a no-confidence vote in her leadership. The pound fell to a new 20-month low of $1.2477, down more than half a percent on the day, after earlier trading above $1.26. A stronger dollar also weighed on the British currency. Sterling weakness on Tuesday follows May's decision on Monday to delay a parliamentary vote on her Brexit deal. That spooked investors and sent the pound tumbling 2-1/2 cents to its lowest level since April 2017. It traded as high as $1.2638 earlier on Tuesday, benefiting from dollar weakness. The European Union has ruled out renegotiating the divorce treaty. May's spokeswoman said the British parliament would vote on a deal before Jan. 21. If there was no satisfactory deal by then, parliament would be given a debate on the issue.
USD/CAD is supported at 1.3292 levels and is trading at 1.3392 levels. It has made session high at 1.3420 and lows at 1.3376 levels. The Canadian dollar edged higher against its U.S. counterpart on Tuesday as oil prices and stocks rose amid hopes of an easing in the China-U.S. trade war. Stocks rose after a report China is moving to cut import tariffs on American-made cars was interpreted by the market as a sign China is ready to make concessions on trade, offsetting heightened uncertainty over Brexit. Canada is a major exporter of commodities, including oil, and runs a current account deficit so its economy could benefit from an improved outlook for the global flow of trade or capital. The price of oil recouped much of the previous day's hefty losses as a modest show of strength in global stocks, a slightly weaker U.S. dollar and an unplanned supply outage in OPEC member Libya lent support. The Canadian dollar was last trading 0.1 percent higher at 1.3392 to the greenback. The currency traded in a range of 1.3379 to 1.3421.Last Thursday, the currency touched its weakest level in nearly 18 months at 1.3445 after the Bank of Canada suggested the pace of future interest rate hikes could be more gradual.
USD/JPY is supported around 112.17 levels and currently trading at 113.40 levels. It peaked to hit session high at 113.46 and made session lows at 113.19 levels. The U.S. dollar strengthened against the yen on Tuesday as greenback strengthened amid positive developments in trade negotiations between the United States and China. U.S. data showing an unexpected rise in producer prices last month also supported greenback. China and the United States discussed a road map for the next stage of their trade talks during a telephone call between Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin, and U.S. Trade Representative Robert Lighthizer. U.S. producer prices unexpectedly rose in November as rising costs for services offset a sharp decline in energy products, but momentum in wholesale inflation appears to be slowing. The Labor Department said on Tuesday its producer price index for final demand edged up 0.1 percent last month after jumping 0.6 percent in October. In the 12 months through November, the PPI rose 2.5 percent, slowing from October's 2.9 percent surge. Economists polled had forecast the PPI to be unchanged in November and rise 2.5 percent on a year-on-year basis.
Equities Recap
European shares rose on Tuesday as optimism over the China-U.S. trade dispute helped them recover from the two-year lows hit in the previous session on a burst of political risk and worries over slowing global growth.
UK's benchmark FTSE 100 ended the day up by 1.90 percent, the pan-European FTSEurofirst 300 ended the day up by 1.77 percent, Germany's Dax ended up by 1.90 percent, France’s CAC finished the day up by 1.71 percent.
The S&P 500 and Dow ended a volatile session down slightly on Tuesday as investor optimism over China-U.S. trade talks was offset by U.S. President Donald.
Dow Jones closed down by 0.21 percent, S&P 500 ended down by 0.03 percent, Nasdaq finished the day up by 0.17 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday, as equities bounced amid positive developments in trade negotiations between the United States and China.
In late trading, U.S. 10-year note yields edged up to 2.888 percent from 2.856 percent late on Monday. U.S. 30-year bond yields also gained to 3.133 percent from 3.129 percent on Monday.
On the short end of the curve, U.S. 2-year yields inched up to 2.780 percent, compared with Monday's 2.727 percent.
Commodities Recap
Gold held steady near a five-month peak on Tuesday as expectations for fewer interest rate hikes by the U.S. Federal Reserve next year supported the non-yielding precious metal.
Spot gold was little changed at $1,243.34 per ounce as of 1:53 p.m. EST (1853 GMT). It touched its highest level since July 11 at $1,250.55 in the prior session. U.S. gold futures settled down $2.20, or 0.18 percent, at $1,247.20 per ounce.
Oil futures edged higher on Tuesday after paring most of their gains as stock markets turned negative on worries about a possible U.S. government shutdown.
Brent futures ended just 23 cents, or 0.4 percent, higher at $60.20 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 65 cents, or 1.3 percent, to $51.65.
