Market Roundup
• PM May pledges to quit before next UK election as she fights leadership challenge.
• Nearly 200 Conservative lawmakers indicate support for PM May -Reuters tally.
• EU working on Brexit assurances for May, if she wins confidence vote.
• Macron to plead deficit slippage essential for reforms plan.
• Italy lowers deficit target, EU sees progress on budget row.
• Beijing eases back on "Made in China 2025" amid trade talks with U.S.
• US Nov Core CPI MM, SA, 0.2%, 0.2% forecast, 0.2% previous.
• US Nov Core CPI YY, NSA, 2.2%, 2.2% forecast, 2.1% previous.
• US Nov CPI Index, NSA, 252.038, 252.055 forecast, 252.885 previous.
• US Nov Core CPI Index, SA, 259.48, 258.94 previous.
• US Nov CPI MM, SA, 0.0%, 0.0% forecast, 0.3% previous.
• US Nov CPI YY, NSA, 2.2%, 2.2% forecast, 2.5% previous.
• US Nov Real Weekly Earnings MM, -0.1%, 0.3% forecast, 0.1% previous.
• US 7 Dec, w/e MBA Mortgage Applications, 1.6%, 2.0% previous.
• US 7 Dec, w/e Mortgage Market Index, 346.0, 340.5 previous.
• US 7 Dec, w/e MBA 30-Yr Mortgage Rate, 4.96%, 5.08% previous.
• CA Q3 Capacity Utilization, 82.6%, 85.7% forecast, 85.5% previous, 84.1% revised.
• Mexico minister vows tighter budget to send markets 'great signal'.
• OPEC offsets Iran oil loss, sees lower 2019 demand.
Looking Ahead - Economic Data (GMT)
• Dec 12 21:45 New Zealand Nov Food Price Index, -0.6% previous
• Dec 12 23:50 Japan 8 Dec, w/e Foreign Bond Investment, 1,053.5 bln
• Dec 12 23:50 Japan 8 Dec, w/e Foreign Invest JP Stock, -137.9 bln
• Dec 13 00:00 New Zealand Feb OBEGAL Forecast NZD, 3.14 bln
• Dec 13 00:00 New Zealand Feb Net Debt Forecast, 20.8% previous
• Dec 13 00:00 New Zealand Feb Budget Cash Balance NZD, -1.26 bln
Looking Ahead - Events, Other Releases (GMT)
• Dec 13 08:00 Riksbank executive board meeting in Stockholm
• Dec 13 09:00 End of the year news conference of the Swiss National Bank in Bern
• Dec 13 09:30 Norway Central Bank holds Announcement of the Executive Board's interest rate decision and publication of Monetary Policy followed by press conference in Oslo
• Dec 13 12:45 ECB Governing Council meeting, followed by interest rate announcement in Frankfurt
• Dec 13 13:30 ECB President Mario Draghi and Vice President Luis de Guindos to hold news conference after interest rate decision in Frankfurt
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Wednesday after data showed U.S. consumer prices were unchanged in November. The Labor Department said on Wednesday that last month's flat reading in its Consumer Price Index followed a 0.3 percent increase in October. It was the weakest reading in eight months-, backing expectations that the Federal Reserve could slow the pace of interest rate hikes next year.An index that tracks the greenback against the euro, yen, sterling and three currencies was last trading at 0.49 percent lower at 96.98. It touched a near one-month high of 97.545 on Tuesday.¬ The euro was up 0.43 percent at $1.1364.Immediate resistance can be seen at 1.1390 (38.2% retracement level), an upside break can trigger rise towards 1.1443 (Dec 10th high).On the downside, immediate support is seen at 1.1324 (61.8% retracement level), a break below could take the pair towards 1.1302 (Lower Bollinger Bands).
GPB/USD: The pound pulled back from session highs against dollar on Wednesday after Britain's Prime Minister Theresa May survived a no-confidence vote but by a smaller margin than many in the market had expected. May had needed 159 votes for a simple majority to win the vote and she gained 200, but 117 of her lawmakers said she was no longer the right leader to implement Britain's exit from the European Union. Sterling jumped as high as $1.2672 as the result came in but then fell to $1.2605, up 1 percent on the day after the number of lawmakers that had voted against May was announced. Immediate resistance can be seen at 1.2690 (10 DMA), an upside break can trigger rise towards 1.2759 (Dec 10th High).On the downside, immediate support is seen at 1.2558(23.6% retracement level), a break below could take the pair towards 1.2471 (Daily Low).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday, boosted by higher oil prices and investor optimism over trade negotiations between the United States and China.U.S. President Donald Trump, in an interview, said that trade talks with Beijing were underway by telephone, with more meetings likely between U.S. and Chinese officials. Trump's comments fueled optimism over trade negotiations between the United States and China. The Canadian dollar was last trading at 0.18 percent higher at 1.3365 to the greenback. The currency traded in a range of 1.3315 to 1.3398.Immediate resistance can be seen at 1.3400 (Psychological Level), an upside break can trigger rise towards 1.3424 (Higher Bollinger Bands).On the downside, immediate support is seen at 1.3325 (9 DMA), a break below could take the pair towards 1.3275 (20 DMA).
USD/JPY: The U.S. dollar weakened against the yen on Wednesday after data showed U.S. consumer prices were unchanged in November, supporting the view that underlying inflation remained firm, but not enough to push the Federal Reserve to take a more aggressive stance. The latest CPI report supported the view the Federal Reserve would raise short-term interest rates by a quarter point to 2.25-2.50 percent at its upcoming two-day policy meeting. The dollar was 0.14 lower versus the Japanese yen at 113.63. The yen touched a six-week low of 114.20 on Monday. Strong resistance can be seen at 114.00 (Psychological level), an upside break can trigger rise towards 114.54 (Oct 3rd high).On the downside, immediate support is seen at 113.00 (50DMA), a break below could take the pair towards 112.30 (100 DMA).A break of the latter then targets the 2018 low.
Equities Recap
European shares rallied on Wednesday after U.S. President Donald Trump sounded upbeat about a trade deal with China and optimism grew that Italy could reach a compromise with the European Commission over its disputed 2019 budget.
The UK's benchmark FTSE 100 closed up by 1.16 percent, FTSEurofirst 300 ended the day up by 1.79 percent, Germany's Dax ended up by 1.57 percent, and France’s CAC finished the up by 2.27 percent.
U.S. stocks were up 1 percent on Wednesday afternoon, though well below their session highs, as investors were hopeful about U.S.-China trade relations after the latest comments from both sides and eyed some reassuring signs in British politics.
Dow Jones closed up by 0.67 percent, S&P 500 ended up 0.56 percent, Nasdaq finished the day up by 0.99 percent.
Treasuries Recap
U.S. Treasury yields climbed on Wednesday on signs of progress in U.S.-China trade discussions and easing tensions on Britain's exit from the European Union after UK Prime Minister Theresa May looked to have garnered enough support to survive a no-confidence vote.
U.S. 10-year note yields rose to 2.902 percent, from 2.881 percent late on Tuesday.U.S. 30-year bond yields were also up at 3.142 percent, from 3.128 percent on Tuesday.
Commodities Recap
Gold prices edged higher on Wednesday as the dollar slipped and expectations for the number of U.S. interest rate hikes next year dimmed, increasing the appeal of non-interest yielding bullion.
Spot gold was up 0.1 percent at $1,244.40 per ounce as of 1:41 p.m. EST (1841 GMT). U.S. gold futures settled up $2.80, or 0.22 percent, at $1,250.
Oil ended lower on Wednesday after reports that Iran's oil minister said divisions exist within the Organization of the Petroleum Exporting Countries, leading futures to give up earlier gains on OPEC-led production curbs and export cuts from Libya.
Brent crude futures settled at $60.15 a barrel, down 5 cents on the day, while U.S. crude was down 50 cents at $51.15 a barrel.
