Americas roundup: Dollar advances after strong U.S. data, FED minutes, Wall street ends higher, Gold falls, Oil hits highest in 2-1/2 years on Iran tensions-january 4th, 2018
• Fed policymakers see future rate rises guided by inflation, fiscal stimulus.
• Atlanta Fed raises U.S. Q4 growth view to 3.2 percent.
• US Nov Construction Spending MM, 0.8%, 0.5% forecast, 1.4% revised, 0.9% previous.
• US Dec ISM Manufacturing PMI, 59.7, 58.1 forecast, 58.2 previous.
• US Dec ISM Manufacturing Prices Paid, 69.0, 65.0 forecast, 65.5 previous.
• US Dec ISM Manufacturing Employment Index, 57.0, 59.0 forecast, 59.7 previous.
• US Dec ISM Manufacturing New Orders Index, 69.4, 64.0 previous.
• US Dec ISM-New York Index, 756.7, 753.5 previous.
• US Dec ISM NY Biz Conditions, 56.3, 58.1 previous.
• US w/e MBA Mortgage Applications, 0.7%, -4.9% previous.
• US w/e Mortgage Market Index, 368.6, 379.2 previous.
• US w/e MBA Purchase Index, 236.9, 234.3 previous.
• US w/e Mortgage Refinance Index, 1,151.9, 1,240.5 previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.25%, 4.16% previous.
• US w/e Redbook MM, 0.3%, 0.1% previous.
• US w/e Redbook YY, 5.0%, 5.7% previous.
• ECB slashes credit purchases to record low in December.
• Parties optimistic as matchmaker Merkel plans SPD coalition re-run.
Looking Ahead – Economic Data (GMT)
• 3 Jan 22:30 Dec Australia AIG Services Index, 51.7 previous
• 4 Jan 00:30 Dec Japan Nikkei Mfg PMI, 54.2 previous
• 4 Jan 01:45 Dec China Caixin Services PMI, 51.9 previous
Looking Ahead – Events, Other Releases (GMT)
• 18:30 Fed’s Bullard speaks in Philadelphia, Pennsylvania
EUR/USD is likely to find support at 1.1934 levels and currently trading at 1.2010 levels. The pair has made session high at 1.2037 and hit lows at 1.1997 levels. Euro dipped against the dollar on Wednesday as the dollar rallied across the board on upbeat U.S. manufacturing and construction data and after the Federal Reserve reiterated their support for raise interest rates several times this year. The euro fell to a session low versus the dollar after the release of minutes from last month’s Federal Reserve meeting. During the meeting, Fed policymakers decided to raise short-term interest rates for the third time in 2017.According to the minutes, policymakers showed worry over the fate of currently low inflation and saw recent tax changes as providing a boost to consumer spending. The dollar gained earlier in the session after data showed U.S. construction spending rose 0.8 percent in November to an all-time high of $1.257 trillion, driven by a surge in investment in private residential and nonresidential projects. At the same time, a U.S. manufacturing index as measured by the Institute for Supply Management rose to 59.7 last month, beating market expectations. In late trading, the dollar bounced 0.3 percent to 92.18 after falling 2.5 percent over the last three weeks. The dollar’s 10 percent drop in 2017 was the largest annual decline in 14 years.
GBP/USD is supported in the range of 1.3423 levels and currently trading at 1.3510 levels. It reached session high at 1.3569 and dropped to session low at 1.3490 levels. Sterling declined from three-month high against the dollar on Wednesday as investors were cautious about taking on large new positions without any new catalysts. The pound had earlier reached as high as $1.3614, its strongest since Sept. 20 and less than half a cent away from the September peak of $1.3659, its strongest since the referendum on European Union membership in June 2016.But having appeared unruffled by a survey showing growth in Britain’s construction sector slowed last month, sterling weakened during the day as the dollar climbed broadly. The pound last year recorded its best annual performance against the dollar since 2009, with an almost 10 percent rise amid broad dollar weakness. But it is still around 10 percent down against the dollar since the vote for Brexit. Investors say that despite some progress in Brexit talks towards the end of last year, sterling needs stronger signs that Britain will get a transition deal and a favourable trade deal with the EU before it can climb further. Earlier, the IHS Markit/CIPS UK Construction PMI slipped to 52.2 after hitting a five-month high of 53.1 in November, the first slowdown in growth since September. The PMI came in just below a median forecast of 52.5 in a poll of economists.
USD/CAD is supported at 1.2497 levels and is trading at 1.2539 levels. It has made session high at 1.2553 and lows at 1.2518 levels. The Canadian dollar weakened against its U.S. counterpart on Wednesday as the dollar recovered from recent lows after strong U.S. data and Fed minutes, but held near 2-1/2-month high as higher oil prices limited losses. The U.S. dollar recovered from recent losses against a basket of major currencies after upbeat U.S. manufacturing and construction data and after minutes from the Federal Reserve’s last policy meeting showed the central bank remained on track to raise interest rates further this year. The price of oil, one of Canada’s major exports, rose to new two-and-a-half year highs as robust output in the United States and Russia balanced tensions from a sixth day of unrest in OPEC member Iran. The Canadian dollar was trading at C$1.2539 to the greenback, down 0.1 percent.Canada’s employment report for December and November trade data are due on Friday, which could help guide expectations for additional Bank of Canada interest rate hikes this year. The central bank raised its benchmark interest rate for the first time in seven years in July and then again in September, to leave it at 1 percent. Money markets expect three further rate hikes in 2018.
USD/JPY is supported around 112.00 levels and currently trading at 112.48 levels. It peaked to hit session high at 112.59 and made session lows at 112.18 levels. The U.S. dollar strengthened against the Japanese yen on Wednesday as dollar after the release of minutes from last month’s Federal Reserve meeting, while upbeat US economic data also supported dollar bulls. U.S. Federal Reserve policymakers showed worry over the fate of currently low inflation and saw recent tax changes as providing a boost to consumer spending, according to the minutes of the U.S. central bank’s last policy meeting on Dec. 12-13 released on Wednesday. The details of the meeting, at which the Fed raised interest rates for the fifth time since the 2008 financial crisis, also showed that officials have a similar lack of certainty over the impact of fiscal stimulus on raising price pressures. Investors have all but ruled out an interest rate increase at the Fed’s upcoming meeting but currently see another nudge upwards at the following one in March. Friday’s U.S. non-farm payrolls report should provide more clarity about the outlook for interest rates this year. The greenback was last trading up 0.2 percent versus the yen at 112.45 in the late US session.
European shares recovered on Wednesday from a muted start to the year as a rising dollar boosted exporters and new records on Wall Street lifted spirits on a day devoted to the implementation of the new European MiFID II market rules.
UK’s benchmark FTSE 100 closed up 0.4 percent, FTSEurofirst 300 ended the day up by 0.55 percent, Germany’s Dax ended up by 0.9 percent, and France’s CAC finished the day up by 0.9 percent.
The S&P 500 index rose above 2,700 for the first time on Wednesday and other major indexes hit record highs as technology stocks climbed amid indications of robust economic growth in the United States and overseas.
Dow Jones closed up by 0.37 percent, S&P 500 ended up 0.60 percent, Nasdaq finished the day up by 0.81 percent.
U.S. Treasury yields were little changed on Wednesday as traders stuck to their view that the Federal Reserve would gradually increase interest rates in 2018 based on the minutes of the central bank’s December policy meeting.
The benchmark 10-year Treasury yield was down 1.8 basis points at 2.447 percent, while the 30-year yield was down 2.5 basis points at 2.785 percent, both compared to Tuesday’s close.
The two-year yield reached a nine-year high at 1.939 percent. It was last down 0.8 basis point at 1.931 percent.
Gold fell on Wednesday, extending losses after the Federal Reserve released minutes of its December policy meeting, which fed the view among investors that more U.S. interest rate hikes are in store.
Spot gold was down 0.7 percent at $1,309.35 an ounce by 2:29 p.m. EST (1929 GMT), off its session high of $1,321.33. U.S. gold futures for February delivery settled up $2.40, or 0.2 percent, at $1,318.50 per ounce.
Oil prices rose about 2 percent on Wednesday to the highest in 2-1/2 years, with a sixth day of unrest in OPEC member Iran and strong economic data from the United States and Germany spurring buying.
U.S. West Texas Intermediate (WTI) crude futures were at $61.62 a barrel, up $1.23, or 2.1 at 2:08 p.m. EST (1908 GMT), just off the session high of $61.67, highest since June 2015.
International benchmark Brent crude futures were up $1.13 or 1.7 percent at $67.71 a barrel after touching $67.84 a barrel, highest since May 2015.
Source: FXWire Media Round Ups