Market Roundup
- Oil at highest in 3 months on U.S.-China trade deal hopes
- Johnson scores landslide British election win
- Banks to push for new EU access plan after UK election
- ECB's De Guindos says larger banks in euro zone should consolidate transnationally
- BOJ seen holding fire as trade war fears ease
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Commerce Department is expected to report that retail sales edged up 0.5 percent in November after advancing 0.3 percent in October. While excluding autos, retail sales are likely to have gained 0.4 percent, after surging 0.2 percent in the previous month.
- (0830 ET/1330 GMT) The U.S. Labor Department publishes import and export prices index for the month of November. The import prices are likely to have gained 0.2 percent after easing 0.5 percent in October, while exports are expected to have edged up 0.1 percent after decreasing 0.1 percent in the prior month.
- (1000 ET/1500 GMT) The U.S. Commerce Department is expected to report that business inventories rose 0.2 percent in October, after staying flat in September.
- (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count.
Key Events Ahead
- (1100 ET/1600 GMT) Federal Reserve Bank of New York President John C. Williams' speech
- (1300 ET/1700 GMT) European Central Bank Vice-president Luis De Guindos
FX Beat
DXY: The dollar index steadied near a 5-1/2 month low recorded in the previous session, as investors awaited November U.S. retail sales data, due later in the day for further cues on the strength of the economy. The greenback against a basket of currencies traded 0.1 percent up at 96.81, having touched a low of 96.59 on Thursday, its lowest since July 1.
EUR/USD: The euro advanced to a 4-month peak after the European Central Bank’s Vice-president Luis de Guindos stated that larger banks in the eurozone should consolidate transnationally, while for smaller lenders domestic-level mergers are a reasonable way to reduce costs. The European currency traded 0.5 percent up at 1.1178, having touched a high of 1.1199 earlier, its highest since August 13. Immediate resistance is located at 1.1213, a break above targets 1.1228. On the downside, support is seen at 1.1083, a break below could drag it below 1.1059.
USD/JPY: The dollar jumped to a near 2-week peak as risk sentiment improved after sources said U.S. negotiators were offering to cut existing tariffs on Chinese goods by as much as 50 percent and suspend new tariffs scheduled to go into effect on Sunday. The major was trading 0.4 percent up at 109.66, having hit a high of 109.70 earlier, its highest since Dec. 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. retail sales, business inventories, import and export price index and Fed Williams speech. Immediate resistance is located at 109.77, a break above targets 109.92. On the downside, support is seen at 108.83, a break below could take it near at 108.63.
GBP/USD: Sterling rallied above the 1.3500 handle to touch a 1-1/2 year peak after Britain’s Prime Minister Boris Johnson won a resounding election victory that will allow him to take the UK out of the European Union by the end of January. The major traded 1.7 percent up at 1.3384, having hit a high of 1.3514 earlier, it’s highest since May 2018. Investors’ attention will remain on the development surrounding the general elections, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3569, a break above could take it near 1.3608. On the downside, support is seen at 1.3107, a break below targets 1.3050. Against the euro, the pound was trading 1.1 percent up at 83.56 pence, having hit a high of 82.75 earlier, it’s highest since July 2016.
USD/CHF: The Swiss franc jumped to a 3-1/2 month high after the Swiss government took a downbeat view of creating a central bank digital currency for public use, saying it could destabilize the financial system. The major trades 0.2 percent down at 0.9827, having touched a low of 0.9805 earlier, it’s lowest since September 5. On the higher side, near-term resistance is around 0.9882 (10-DMA) and any break above will take the pair to the next level till 0.9910 (21-DMA). The near-term support is around 0.9791, and any close below that level will drag it till 0.9775.
Equities Recap
European shares rallied as the likelihood of an orderly Brexit after a landslide election victory for Prime Minister Boris Johnson boosted investor sentiment.
The pan-European STOXX 600 index surged 1.7 percent at 414.58 points, while the FTSEurofirst 300 rallied 1.5 percent to 1,616.81 points.
Britain's FTSE 100 trades 1.9 percent up at 7,411.90 points, while mid-cap FTSE 250 gained 4.3 to 21,695.29 points.
Germany's DAX surged 1.5 percent at 13,420.05 points; France's CAC 40 trades 1.3 percent higher at 5,961.43 points.
Commodities Recap
Crude oil prices rallied to a 3-month high as the United States and China moved closer to a resolution to their 18-month trade war that raised doubts about global demand for crude. International benchmark Brent crude was trading 1.3 percent up at $65.13 per barrel by 1034 GMT, having hit a high of $65.17 earlier, its highest since September 20. U.S. West Texas Intermediate was trading 1.1 percent up at $59.83 a barrel, after rising as high as $59.88 on earlier, its highest since September 17.
Gold prices steadied as appetite for riskier assets improved following reports of a breakthrough in U.S.-China trade negotiations. Spot gold was trading 0.1 percent up at $1,470.99 per ounce by 1047 GMT, having touched a high of $1486.62 on Thursday, its highest since November 7. U.S. gold futures were up 0.1 percent at $1,474.40.
Treasuries Recap
The Eurozone bond yields rose sharply after the U.S. and China appeared close to a trade deal. Most 10-year bond yields were up four to five basis points in early trade. The German 10-year government bond yield briefly touched a 6-month high at -0.217 percent, up 5 bps on the day.
The Japanese government bond prices eased, with benchmark 10-year JGB futures were down 0.14 point at 152.25. The 10-year JGB yield rose 0.5 basis point to minus 0.020 percent, but stayed below nine-month high of zero percent touched earlier this week. The 20-year JGB yield rose 1 basis point to 0.300 percent, while the 30-year yield rose 1.5 basis points to 0.445 percent. The two-year JGB yield rose 0.5 basis point to minus 0.125 percent and the five-year yield was flat at minus 0.130 percent.
