Market Roundup
• US Nov CPI m/m +0.2% as forecast; y/y 1.7% as forecast; Core CPI y/y 2.1% forecast was 2.2%.
• US Q3 Current Account -113.0billion, forecast -111.6billion, prior revised to -118.3billion from -119.9billion.
• US Dec NY Fed Mfg 9.0, forecast 4.0 and prior 1.5.
• US Dec Philly Fed Business Index 21.5, forecast 9.0 and prior 7.5.
• US Dec Markit Mfg PMI flash 54.2, prior 54.1.
• US NAHB Housing Mkt index 70, forecast 63 and prior 63.
• Mexico Central Bank raises benchmark interest rate to 5.75% from 5.25%.
• Mexico Central Bank: Balance of risks to inflation has deteriorated further; Balance of risks to growth have deteriorated further.
• Brazil Dec IGP-IO inflation index +0.2% last +0.06%.
• Brazil Oct IBC-BR Economic Activity index -0.48% last +0.15%.
• Brazil consumer confidence -2.8%, National Confederation of Industry.
• Peru Oct GDP -0.3%, Y/Y +2.12%, Sep-Nov unemployment rate 5.8%.
• Canadian manufacturing sales -0.8%, last +0.3%, forecast +0.4%.
• ECB’s Draghi says concerns over the availability of collateral have risen- BBG.
• BoE vote 9-0 to keep bank rate at 0.25% in Dec; Reiterates that there are limits to the extent to which above-target inflation can be tolerated.
• Germany’s two-year government bond yield hits fresh record low of minus 0.78%- Tradeweb.
• ECB: MDA trigger capital level 8.3% in 2016 vs. 10.2% in 2015; ECB chart shows 5 EZ banks under MDA trigger level in 2016.
• Brazil prosecutors charge ex-President Lula with more alleged corruption charges.
• BoC Ploz: Need to incorporate backup in yields in next forecast; Have plenty of ability to adopt an independent monetary policy to achieve inflation target; New Measures on housing are ‘pretty much guaranteed to work’; How far bond yields rise is question that remains, has been orderly so far.
• Japan’s FSA probing banks’ interest-rate risk management as yields surge post-US election- Sources.
Looking Ahead - Economic Data (GMT)
• 02:00 New Zealand RBNZ Nov Offshore holdings, no forecast prior 61.0%
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0362 levels and currently trading at 1.0414 levels. The pair has made session high at 1.0448 and hit lows at 1.0362 levels. Euro declined against the dollar on Thursday as the dollar extended its gains from a day earlier when the Federal Reserve hiked U.S. interest rates and signaled increases would follow at a faster pace next year. The Fed's rate rise of 25 basis points to 0.5-0.75 percent was well-flagged, but investors were spooked when the "dot plots" of members' projections showed a median of three hikes next year, up from two previously. The dollar's gains, which included a roughly 14-year high against the euro, came a day after the Fed raised interest rates for the first time in a year and signaled it was likely to hike three more times in 2017, up from the two increases forecast at the central bank's September meeting. The dollar index, which measures the greenback against a basket of six major rivals, jumped as much as 1.5 percent to a roughly 14-year high of 103.320. It was on track for its biggest daily percentage gain in nearly six months. The euro was down 1.08 percent at $1.0421 after falling as much as 1.3 percent to $1.0396, its lowest since early January 2003.
GBP/USD is supported in the range of 1.2357 levels and currently trading at 1.2424 levels. It reached session high at 1.2498 and dropped to session low at 1.2375 levels. Sterling declined against the dollar on Thursday as sterling came under selling pressure as the greenback was boosted by expectations for more interest rate hikes next year. The Federal Reserve on Wednesday upped its forecasts for rate rises next year from two to three quarter-point moves, leading to a wave of dollar buying in U.S. time that tumbled into the morning session in Europe. The pound has been strong over the past six weeks, registering its best month in eight years in November and threatening to break back towards $1.30 for the first time since the start of September. Sterling was trading last trading at $1.2423, it was 1.3 percent lower against the dollar, having also been hit after the Bank of England's own decision to keep interest rates on hold.
USD/CAD is supported at 1.3275 levels and is trading at 1.3344 levels. It has made session high at 1.3417 and lows at 1.3335 levels. The Canadian dollar declined against its U.S. counterpart on Thursday as Canadian dollar was pressured by broader gains for the greenback, lower oil prices, and weaker-than-expected domestic manufacturing data. Canadian manufacturing sales unexpectedly fell by 0.8 percent in October from September on widespread weakness, indicating fourth-quarter growth could be sluggish, Statistics Canada data showed. Oil tumbled early as the dollar rallied near a 14-year high against a basket of other currencies the day after the Federal Reserve raised U.S. interest rates for the first time in a year. The Fed also hinted rates in 2017 could rise more quickly than investors had anticipated. A stronger greenback pressures demand for dollar-denominated crude, making barrels more expensive for users of other currencies. The Canadian dollar was last trading at C$1.3373 to the greenback, or 74.78 U.S. cents, weaker than Wednesday's close of C$1.3274, or 75.34 U.S.
USD/JPY is supported around 117.54 levels and currently trading at 118.10 levels. It peaked to hit session high at 118.63 and made session lows at 117.60 levels. The U.S. dollar rose sharply against the yen on Thursday as the greenback was boosted by the prospect of more interest rate increases by the Federal Reserve next year. The Fed's policy-setting committee, which raised rates by a quarter point on Wednesday, said it anticipates three more rate increases in 2017, one more than what was forecasted at the September meeting. The Fed was more hawkish than expected, which re-started the dollar rally on Thursday. The dollar was last up 1.14 percent against the yen at 118.35 yen after rising as much as 1.4 percent to 118.66 yen, its highest level since early February. On the data front, U.S. consumer prices moderated in November, but the underlying trend continued to point to firming inflation pressures amid rising rents, which could support more interest rate increases from the Federal Reserve next year. The Labor Department said on Thursday its Consumer Price Index rose 0.2 percent last month as gasoline price increases slowed and food costs remained soft. The CPI advanced 0.4 percent in October.
Equities Recap
European shares rose on Thursday, helped by gains in global banks after the Federal Reserve raised U.S. interest rates while growing corporate deal activity underpinned year-end optimism.
UK's benchmark FTSE 100 closed up by 0.7 percent, FTSEurofirst 300 ended the day up by 1 .02 percent, Germany's Dax ended up by 1.2 percent, France’s CAC finished the day up by 1.2 percent.
U.S. stocks rose on Thursday, led by gains in bank shares, a day after the Federal Reserve raised interest rates for the second time in nearly a decade.
Dow Jones closed up by 0.30 percent, S&P 500 ended up 0.39 percent, Nasdaq finished the day up by 0.37 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday, boosted by the prospect of more interest rate increases by the Federal Reserve next year, although those on long-dated bonds came off their highs after fairly tame consumer inflation data for November.
In late trading, 10-year prices were down 19/32, yielding 2.594 percent, up 7 basis points from levels late on Wednesday.
U.S. 30-year bond yield prices were down 6/32, yielding 3.155 percent, up from 3.146 percent late Wednesday.
Commodities Recap
Gold fell more than 1 percent to a 10-1/2-month low on Thursday after the Federal Reserve sounded an unexpectedly hawkish note on U.S. interest rates, sparking a surge in Treasury yields and sending the dollar to a 14-year high.
Spot gold hit a 10-1/2 month low of $1,126.48 an ounce, and was down 1.3 percent at $1,129.47 an ounce by 1455 GMT. U.S. gold futures for February delivery were $32.70, or 2.8 percent, lower at $1,131.00.
Oil settled little changed on Thursday after sliding to its lowest level in a week in volatile trade, but a surging dollar did not pressure prices below technical support levels as OPEC members told customers they would cut crude supplies.
Brent futures for February delivery gained 12 cents, or 0.2 percent, to settle at $54.02 per barrel, while U.S. crude lost 14 cents, or 0.3 percent, to settle at $50.90, its lowest close in a week.
