Market Roundup
• Fed turns to Trump agenda with rate hike nearly in the bag.
• Oil demand to grow more swiftly, too early to assess global output cut-IEA.
• Brazil's Goldfajn says slower inflation makes room for lower rates.
• Trump taps Exxon's Tillerson as top U.S. diplomat, lawmakers uneasy.
• Italian bonds yields hit one-month low on bank clean-up efforts.
• Brazil's Senate passes main text of 20-year spending cap.
• Brazil's Temer, Trump agree to form bilateral growth agenda.
Looking Ahead - Economic Data (GMT)
• 23:30 Auralia Consumer Sentiment Dec-1.10% -previous
• 23:50 Japan Tankan Big Manufacturing Index Q4 10 forecast 6 -previous
• 23:50 Japan Tankan Big Non-
Manufacturing Index Q4 19 forecast 18 –previous
• 23:50 Japan Tankan All Big Capex Q4 6.10% forecast 6.30% -previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0550 levels and currently trading at 1.0621 levels. The pair has made session high at 1.0670 and hit lows at 1.0611 levels. Euro declined against the dollar on Tuesday as the dollar strengthened across the board on uncertainty over whether the U.S. Federal Reserve would signal a slow or fast pace of interest rate increases at the end of a closely-watched policy meeting. The Fed is widely expected to hike interest rates on Wednesday. It is less clear, however, if the central bank will indicate a more cautious pace of rate increases given a recent surge in Treasury yields and gains in the dollar or a faster pace on greater confidence that U.S. economic growth will accelerate. The U.S. dollar index was last down 0.06 percent at 100.970. The dollar was up 0.23 percent against the yen at 115.11 yen after hitting a 10-month high of 116.12 yen on Monday. The euro was down against the dollar at $1.0622 after briefly touching a five-day high of $1.0653.
GBP/USD is supported in the range of 1.2655 levels and currently trading at 1.2660 levels. It reached session high at 1.2727 and dropped to session low at 1.2655 levels. Sterling declined against the U.S. dollar on Tuesday as the dollar firmed across the board as focus shifted to U.S. Federal Reserve and Bank of England policy statements over the next two days but traders said the pound would continue to struggle to break through resistance above $1.27 which has held for the past fortnight. British inflation hit a more than two-year high last month, pushed up more expensive clothing and the impact of June's Brexit vote on the prices paid by consumers for technology goods. Consumer prices rose 1.2 percent compared with a year ago, the Office for National Statistics said, and above economists' expectation for a 1.1 percent annual rise. That pushed sterling initially to as high as $1.2723 in the European trade but sellers stepped in and pushed it back to $1.2680 in the US session.
USD/CAD is supported at 1.3060 levels and is trading at 1.3125 levels. It has made session high at 1.3129 and lows at 1.3101 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday higher oil prices supported oil co-related Canadian dollar. Oil prices edged higher in choppy trading, a day after surging to an 18-month high on Monday after the world's top crude producers agreed to the first joint output cut since 2001.U.S. crude prices were up 0.66 percent at $53.18 a barrel, supported by strong demand in Asia and supply cuts by Abu Dhabi, Kuwait, and Qatar as part of production curbs organized by the Organization of the Petroleum Exporting Countries and other exporters. The loonie has rebounded 3.7 percent from an eight-month low of C$1.3589 in mid-November. Higher prices for oil have offset raised investor expectations for Fed rate increases and a more uncertain trade environment for Canada since the U.S. election. The Canadian dollar was last trading at C$1.3129 to the greenback, or 76.28 U.S. cents, stronger than Monday's close of C$1.3134, or 76.14 U.S. cents.
AUD/USD is supported around 0.7472 levels and currently trading at 0.7499 levels. It hit session high at 0.7524 and made session lows at 0.7485 levels. The Australian dollar declined slightly against US dollar on Tuesday after greenback found buying interest ahead of a two-day meeting of the U.S. Federal Reserve that is expected to deliver the second interest rate rise in a decade. The Fed meeting starts later on Tuesday and markets have priced in a nearly 100 percent chance of a quarter of a percentage point increase. The Australian dollar slipped to hit low $0.7486. It was last trading at $0.7501.The Aussie has lost about 1.5 percent of its value since Donald Trump won the U.S. presidential election last week, on speculation his policies could reignite inflation and with it drive up interest rates. Investors will be looking for clues on how the central bank will deal with inflation that could emanate from the policies of U.S. President-elect Donald Trump and economic growth expectations.
Equities Recap
European shares rose on Tuesday, helped by a rally in Italy's biggest bank UniCredit on plans to bolster its balance sheet, while takeover speculation allowed Mediaset to make its best one-day gain ever.
UK's benchmark FTSE 100 closed up by 1.3 percent, the pan-European FTSEurofirst 300 provisionally closes up by 1.12 percent, Germany's Dax ended up by 1 percent, France’s CAC finished the day up by 1 percent.
U.S. stocks racked up new all-time highs on Tuesday and the Dow Jones industrial average ended fewer than 100 points away from the 20,000 mark as a post-election rally showed no signs of fatigue.
Dow Jones closed up by 0.57 percent, S&P 500 ended up by 0.65 percent, Nasdaq finished the day up by 0.95 percent.
Treasuries Recap
Shorter-dated U.S. Treasury yields rose to their highest levels of the year on Tuesday, with 2-year notes touching over 6-year highs, ahead of an expected increase in U.S.
overnight interest rates at Wednesday's Federal Open Market Committee meeting.
Benchmark U.S. 10-year note prices fell 1/32, while the yield rose to 2.482 percent. On Monday, the yield hit 2.528 percent, its highest level since Sept. 29, 2014.
U.S. 30-year bonds rose 15/32. The yield was 3.138 percent, compared with 3.162 percent on Monday.
U.S. two-year notes fell 2/32 in price to yield 1.174 percent.
Commodities Recap
Gold edged lower on Tuesday, losing its lustre ahead of a two-day meeting of the U.S. Federal Reserve that is expected to deliver the second interest rate rise in a decade.
Spot gold slipped by 0.6 percent to $1,155.65 an ounce by 2:47 p.m. EST (1947 GMT), near Monday's 10-month low of $1,151.34 on Monday.
U.S. gold futures settled 0.6 percent lower at $1,159 per ounce.
Oil prices edged off earlier gains to end Tuesday nearly unchanged, as the support from OPEC's plan to limit production were undercut by an energy watchdog's assessment of how much those nations are currently producing.
U.S. crude futures, which hit a high of $53.41 a barrel in early trading, settled up just 15 cents to $52.98 a barrel, losing ground late in the session.Brent crude ended up three cents to $55.72 a barrel.
