Market Roundup
- Eurozone Oct 2018 industrial production yy increase to 1.2 % (forecast 0.7 %) vs previous 0.8 % (revised from 0.9 %)
- Eurozone Oct 2018 industrial production mm increase to 0.2 % (forecast 0.2 %) vs previous -0.6 % (revised from -0.3 %)
- Brexit: DUP's foster says still confident Britain will leave EU on March 29
- UK trade minister Liam Fox says he thinks UK PM May will win no-confidence vote- BBC
- Brexit: DUP's foster says question of whether dup would support Labour party in government doesn't arise
- Brexit: Former UK Brexit Minister Davis says much of May's future will depend on what path she sets out in speech to lawmakers later
- Brexit: Former UK Brexit Minister David says EU likes to negotiate at last minute, extending article 50 would be counterproductive
- European Commission spokesman says Juncker intensifying contacts with EU leaders over Brexit ahead of summit
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. consumer price index likely to stay flat in November after posting a rise of 0.3 percent in October, while in the 12 months through November, the CPI is expected to increase 2.2 percent. Excluding food and energy, the core CPI probably rose 0.2 percent, matching the gain in the previous month.
- (0830 ET/1330 GMT) Canada's releases industrial capacity utilization data for the third quarter. The indicator stood at 85.5 percent in the previous quarter.
- (1100 ET/1600 GMT) The Energy Information Administration (EIA) reports its Crude Oil Stocks for the week ending December 7.
- (1400 ET/1900 GMT) The U.S. reports its monthly budget statement for the month of November. The government is likely to show the budget deficit widened to $188 billion from $100 billion in the previous month.
Key Events Ahead
- N/A The Brazilian central bank will meet to set its benchmark Selic rate and is expected to hold interest rates steady at 6.5 percent
- (0830 ET/1330 GMT) ECB's Pentti Hakkarainen speaks at the inaugural meeting of the International Quality Network organized by the ECB in Frankfurt
- (1155 ET/1655 GMT) German's Peter Altmaier speaks about the importance of sustainability for businesses and viniculture, Berlin
FX Beat
DXY: The dollar index eased after President Donald Trump in an interview with Reuters stated that it would be a mistake if the Fed hikes interest rates when it meets next week, as it is expected to do. The greenback against a basket of currencies trades 0.1 percent down at 97.38, having touched a high of 97.55 on Tuesday, its highest since Nov. 13. FxWirePro's Hourly Dollar Strength Index stood at 39.21 (Neutral) by 1000 GMT.
EUR/USD: The euro steadied after falling to a near 2-week low in the previous session, after data showed Eurozone industrial output surged in October, boosted by a sharp increase in the production of capital goods and despite a drop in energy output. The European currency traded 0.2 percent down at 1.1333, having touched a high of 1.1442 on Monday, its highest since Nov. 20. FxWirePro's Hourly Euro Strength Index stood at 14.68 (Neutral) by 1000 GMT. Immediate resistance is located at 1.1401 (November 29 High), a break above targets 1.1455 (November 2 High). On the downside, support is seen at 1.1305 (November 30 Low), a break below could drag it till 1.1267 (November 28 Low).
USD/JPY: The dollar rallied to an over 1-week peak on reports that China was considering cutting import tariffs on American-made cars to 15 percent from the current 40 percent. However, concerns that U.S. interest rates may be nearing a peak limited upside. The major was trading 0.1 percent up at 113.42, having hit a low of 112.23 on Monday, its lowest since October 29. FxWirePro's Hourly Yen Strength Index stood at -114.18 (Highly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. consumer price index and monthly budget statement. Immediate resistance is located at 113.66 (December 4 High), a break above targets 114.03 (November 28 High). On the downside, support is seen at 112.66 (October 23 Low), a break below could take it lower 112.08 (October 24 Low).
GBP/USD: Sterling bounced back from a 20-month low touched in the prior session after Britain's Justice Minister stated that the government would have to delay Article 50, if Prime Minister Theresa May lost a no-confidence vote. The major traded 0.4 percent up at 1.2535, having hit a low of 1.2480 on Tuesday; it’s lowest since mid-April 2017. FxWirePro's Hourly Sterling Strength Index stood at -89.34 (Slightly Bearish) 1000 GMT. Immediate resistance is located at 1.2600, a break above could take it near 1.2664. On the downside, support is seen at 1.2460, a break below targets 1.2405. Against the euro, the pound was trading 0.2 percent up at 90.42 pence, having hit a low of 90.87 on Monday, it’s lowest since August 29.
USD/CHF: The Swiss franc fell to a 3-day low, as the greenback surged on expectations the Federal Reserve will tighten at its policy meeting next week. The major trades 0.2 percent up at 0.9946, having touched a low of 0.9863 on Tuesday; it’s lowest since Oct. 16. FxWirePro's Hourly Swiss Franc Strength Index stood at -11.92 (Neutral) by 1000 GMT. On the higher side, near-term resistance is around 0.9955 (Oct. 5 High) and any break above will take the pair to next level till 0.9980 (Nov. 23 High). The near-term support is around 0.9847 (Oct. 15 Low), and any close below that level will drag it till 0.9800.
Equities Recap
European shares surged, as sentiment towards the U.S. China trade dispute improved, while sterling rebounded after British minister raised prospects of Article 50 delay.
The pan-European STOXX 600 index gained 1.0 percent at 347.60 points, while the FTSEurofirst 300 index rallied 1.1 percent to 1,373.76 points.
Britain's FTSE 100 trades 1.1 percent up at 6,779.98 points, while mid-cap FTSE 250 rose 0.7 to 17,777.28 points.
Germany's DAX surged 1.1 percent at 10,897.13 points; France's CAC 40 trades 1.7 percent higher at 4,886.29 points.
Commodities Recap
Crude oil prices rallied over 1 percent, boosted by an industry report showing a decline in U.S. crude inventories, a cut in Libyan exports and an OPEC-led deal to cut output. International benchmark Brent crude was trading 1.8 percent up at $61.20 per barrel by 1039 GMT, having hit a high of $63.67 on Friday, its highest since November 22. U.S. West Texas Intermediate was trading 1.3 percent up at $52.60 a barrel, after rising as high as $54.20 on Friday, its highest since the December 5.
Gold prices surged, underpinned by expectations of fewer rate hikes by the U.S. Federal Reserve next year. Spot gold was 0.2 percent up at $1,244.66 per ounce at 1040 GMT, having touched a high of $1,250.46 on Monday, its highest level since July 11. U.S. gold futures rose 0.1 percent to $1,249.4 per ounce.
Treasuries Recap
The U.S. Treasuries traded mixed during late afternoon session amid a ray of hope that trade tensions with China will start to decelerate over the coming months, owing to renewed talks between the leaders of the two countries. The yield on the benchmark 10-year Treasuries rose nearly 1 basis point to 2.888 percent, the super-long 30-year bond yields also surged 1 basis point to 3.140 percent while the yield on the short-term 2-year remained nearly 1 basis point lower at 2.766 percent.
The United Kingdom’s gilts fell during afternoon session, shrugging-off worries over the country’s Prime Minister Theresa May’s leadership challenge that is scheduled for later today amid renewed optimism over the U.S.-China trade truce after months of fear and uncertainty. The yield on the benchmark 10-year gilts, jumped nearly 2-1/2 basis points to 1.211 percent, the super-long 30-year bond yields surged nearly 3-1/2 basis points to 1.755 percent and the yield on the short-term 2-year traded nearly 2 basis points higher at 0.704 percent.
The German bunds suffered during European session following a recovery in investors’ risk sentiments after a U.S.-China trade truce added hopes to financial markets. Also, a rebound in Eurozone’s industrial production for the month of October added fuel to debt prices. The German 10-year bond yields, which move inversely to its price, remained tad higher at 0.240 percent, the yield on 30-year note rose 1/2 basis point to 0.843 percent and the yield on short-term 2-year traded flat at -0.594 percent.
The Australian government bonds held gains across the curve during Asian session despite easing trade tensions between two economic behemoths. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 1-1/2 basis points to 2.447 percent, the yield on the long-term 30-year bond also dipped 2-1/2 basis points to 2.978 percent and the yield on short-term 2-year down 1/2 basis point to 1.952 percent.
