Market Roundup
• OPEC agrees first output cut since 2008, Saudis to take "big hit"; Saudis ready to cut output by 0.5 million bpd .
• Iran says Russia would cut once OPEC reaches deal; Brent crude jumps 8 percent to above USD 50/barrel.
• Oil jumps on OPEC deal; bond rout resumes, Oil roars ahead on OPEC deal to cut output to 32.5 million bpd.
• US private jobs +216k from revised 119k , consumer spending +0.3% support Fed rate hike.
• US Chicago PMI57.6 v forex 52, 50.6 previous.
• Atlanta Fed’s GDPNow cuts Q4 forecast from 3.6% (Nov 23) to 2.4%.
• Fed’s Mester: Favors raising US rates,not yet behind curve on policy but warns against over-heating economy.
• Fed's Kaplan supports removing accommodation, advocates further rate hikes in ‘17, nods to Trump policie.
• Upbeat data, Mnuchin comment on LT issuance and higher rates, spark bond market selloff.
• Euro Zone inflation +0.6% hits 31-mos high before ECB meeting; highest since April 2014.
• Euro Zone bond yields fall after ECB soothes nerves over Italy.
• Trump's Treasury pick Mnuchin targets taxes, trade reforms to achieve 3-4% economic growth.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Terms of Trade QQ* Q3 -2.1%- previous
• 21:45 New Zealand Terms of Trade - Exp Vol* Q3 10.2%- previous
• 21:45 New Zealand Terms of Trade - Imports* Q3 0.2%- previous
• 21:45 New Zealand Terms of Trade - Exports* Q3 -1.9%- previous
• 22:30 Australia AIG Manufacturing Index Nov 50.9- previous
• 23:50 Japan Foreign Bond Investment w/e -260.6b- previous
• 23:50 Japan Foreign Invest JP Stock w/e 461.7b- previous
• 23:50 Japan Bus Capex (MOF) YY* Q3 3.1%- previous
• 00:30 Australia Capital Expenditure* Q3 forecast -2.5%, -5.4%-previous
• 00:30 Japan Nikkei Mfg PMI Nov 51.10- previous
• 01:00 China NBS Non-Mfg PMI* Nov 54.00- previous
• 01:00 China NBS Manufacturing PMI* Nov forecast 51, 51.2- previous
• 01:45 China Caixin Mfg PMI Final Nov forecast 50.8, 51.2- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan Asian Development Bank Institute holds a conference on negative interest rates in Tokyo (to Dec. 2). Speakers include Asia Development Bank President Takehiko Nakao, University of Rochester Professor Narayana Kocherlakota, Deputy Governor of the Sveriges Riksbank Cecilia Skingsley, Research Department of the International Monetary Fund Deputy Division Chief Luc Laeven, European Central Bank member Sayuri Shirai, Bank of Thailand Governor Veerathai Santiprabhob.
Currency Summaries
EUR/USD is likely to find support at 1.0550 levels and currently trading at 1.0597 levels. The pair has made session high at 1.0654 and hit lows at 1.0550 levels. The euro declined against dollar on Wednesday as dollar gained strength after upbeat U.S. economic data and higher U.S. Treasury yields buoyed the dollar, further cementing the case for a rate hike by the end of this month. U.S. private employers stepped up hiring in November much more than expected and consumer spending increased last month, giving more ammunition to the Federal Reserve for an interest rate increase. The ADP National Employment Report showed that private payrolls increased by 216,000 jobs this month, well above economists' expectations for a gain of 165,000 jobs. In a separate report, the Commerce Department said consumer spending, which accounts for about 70 percent of U.S. economic activity, increased 0.3 percent after an upwardly revised 0.7 percent gain in September. Spending in September was previously reported to have risen 0.5 percent. The euro fell about 0.8 percent against the dollar to a session low of $1.0554. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.8 percent at 101.690.
GBP/USD is supported in the range of 1.2410 levels and currently trading at 1.2511 levels. It reached session high at 1.2522 and dropped to session low at 1.2427 levels. Sterling rose against the dollar on Wednesday as investors bought pound as a deal to cut OPEC oil output strengthened the pound against the dollar. British pound initially had declined in the early US session after the release of upbeat US economic data, but reversed course after the confirmation of OPEC's first curbs on output in eight years. The pound has gained 1.7 percent against the dollar in November, breaking a losing run that dates back to April and the lead-up to Britain's surprise vote to leave the European Union on June 23.However, the British pound is likely to bear the brunt of this lack of political transparency, while further uncertainty over the UK's eventual degree of access to the EU single market could see the emergence of new unaccounted risks. Meanwhile, a regular survey by market research firm GfK on Wednesday showed confidence among British consumers fell in November to its lowest level since just after the vote in June.
USD/CAD is supported at 1.3350 levels and is trading at 1.3431 levels. It has made session high at 1.3462 and lows at 1.3355 levels. The Canadian dollar strengthened against its firmer U.S. counterpart on Wednesday as oil prices jumped on a deal by major producers to cut output and domestic data showed the Canadian economy grew at the fastest pace in more than two years. The Organization of the Petroleum Exporting Countries agreed its first output limiting deal in eight years in an effort to deal with global supply overhang, however the debates continued in Vienna on the exact size of each member's cuts. Canada's economy grew in the third quarter at an annualized 3.5 percent pace as it benefited from a rebound in oil exports, while stronger-than-expected growth for September suggested the fourth quarter could slow less than anticipated. U.S. crude prices settled more than 9 percent higher at $49.44 a barrel as the Organization of the Petroleum Exporting Countries agreed to curb production for the first time since 2008 in a bid to support prices. The Canadian dollar was last trading at C$1.3430 to the greenback, or 74.47 U.S. cents, slightly stronger than Tuesday's close of C$1.3437, or 74.42 U.S. cents.
USD/JPY is supported around 113.22 levels and currently trading at 114.38 levels. It peaked to hit session high at 114.58 and made session lows at 113.30 levels. The U.S. dollar rose sharply against the yen on Wednesday as surge in oil prices pushed U.S. Treasury yields higher, while strong private payrolls data boosted dollar reinforcing expectations that Federal Reserve will raise interest rates by the end of this month. The gains in oil prices boosted views of higher inflation, which in turn sent U.S. Treasury yields higher given the negative impact of inflation on bond prices. The higher Treasury yields fueled demand for the dollar relative to currencies such as the euro and yen, whose government bond yields are still low-to-negative. The dollar rose about 1.7 percent against the yen to 114.43, its highest level since early March. The dollar was last on track to gain about 9 percent against the yen in November to mark its strongest monthly performance since August 1995. The dollar also hit a roughly 10-month high against the Swiss franc of 1.0204 francs.
Equities Recap
European shares hit a three-week high on Wednesday, ending the month in positive territory, with energy stocks racing higher as oil prices jumped after a deal to curb global oversupply.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.54 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day up by 0.7 percent.
U.S. stocks edged lower on Wednesday as declines in technology more than offset a rally in the energy sector, but major indexes posted solid gains for the month on the back of a rally following the U.S. presidential election.
Dow Jones closed up by 0.7 percent, S&P 500 ended down 0.23 percent, Nasdaq finished the day down by 1.02 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday as the Organization of the Petroleum Exporting Countries (OPEC) agreed to its first output cuts since 2008, sending oil prices more than 8 percent higher and boosting expectations of higher inflation.
Benchmark 10-year notes dropped 17/32 in price to yield 2.36 percent, up from 2.30 percent on Tuesday.
Thirty-year bonds, which are most sensitive to inflation eroding their value, tumbled 1-1/12 in price to yield 3.02 percent, up from 2.95 percent on Tuesday.
Commodities Recap
Gold fell to nearly a 10-month low on Wednesday, adding to its deepest monthly price declines in more than three years as strong U.S. economic data and higher U.S. Treasury yields buoyed the dollar, further cementing the case for a December rate increase.
Spot gold was down 1.2 percent at $1,174.44 an ounce by 2:40 p.m. EST (1940 GMT), after falling to $1,170.35, the lowest since Feb. 8. U.S. gold futures settled down 1.4 percent at $1,170.80 per ounce.
Oil soared more than 10 percent on Wednesday to over $50 a barrel and its highest in a month as some of the world's largest producers agreed to curb production for the first time since 2008 in a bid to support prices.
U.S. West Texas Intermediate crude futures for January delivery settled up $4.21 to $49.44 a barrel, a 9.6 percent gain. They earlier rose 10 percent, the largest one-day move since February.
Brent crude futures for January delivery settled up $4.09 a barrel or 8.82 percent at $50.47 a barrel. The contract expires Wednesday, and the February contract rose 8.9 percent to $51.51
