Americas roundup: Dollar starts 2018 on back foot, Sterling hits three-month high , Gold prices extend rally, Oil hits highest since mid-2015 but settles down as outages abate-january 3rd, 2018
• US Dec Markit Mfg PMI Final, 55.1, 55.0 previous.
• Canada Dec Markit Mfg PMI SA, 54.7, 54.4 previous.
• Bankers to burn midnight oil ahead of “MiFID” dawn.
• Speculators raised net short bitcoin positions in Dec 26 week –CFTC.
• South Korea offers talks with North ahead of Olympics.
• Haley warns North Korea against another missile test.
• ECB may end bond buying in 2018 if economy stays strong: Nowotny.
• Euro zone factory growth surges to record; more uneven in Asia.
Looking Ahead – Economic Data (GMT)
• No major economic events are scheduled
Looking Ahead – Events, Other Releases (GMT)
• 19:00 Fed’s Federal Open Market Committee will release the minutes from its December policy meeting
EUR/USD is likely to find support at 1.1970 levels and currently trading at 1.2059 levels. The pair has made session high at 1.2082 and hit lows at 1.2024 levels. Euro rose sharply against the dollar on Tuesday as euro was boosted on optimism over a brightening economic picture in the eurozone. It ended 2017 with its best year against the dollar since 2003 as European economies strengthened and expectations the European Central Bank will wind down its monetary stimulus grew, boosting demand for the single currency. The European Central Bank’s Benoit Coeure said on the weekend he saw a “reasonable chance” the bank’s bond purchases would not be extended beyond September. The euro added more gains to start the new year, climbing to a nearly four-month high of $1.2082. It was last up 0.2 percent at $1.2059. The euro’s rally was a drag on the greenback. The index that tracks the dollar versus the euro and five other major currencies fell as low as 92.080, which the lowest since Sept. 22. It recorded a 9.8 percent annual decline. The dollar also weakened against the yen sterling, Canadian dollar, Swedish crown and Swiss franc which are the other index components.
GBP/USD is supported in the range of 1.3505 levels and currently trading at 1.3592 levels. It reached session high at 1.3598 and dropped to session low at 1.3537 levels. Sterling rose to a three-month high against the dollar on Tuesday as the dollar was weighed down on the first trading day of 2018 as the market expected Federal Reserve to go slow in raising interest rate amid a tepid U.S. inflation picture. Investors sold the dollar as investors remained doubtful about the Fed’s outlook for three additional interest rate increases this year. The dollar’s upside was also capped as many of the world’s major central banks such as the Bank of England and European Central Bank are moving toward normalizing their own monetary policies. Trading volumes were thin. Some strategists said traders were wary of taking big positions ahead of Wednesday’s scheduled introduction of the wide-ranging EU financial markets directive known as MiFID II, aimed at making European markets more transparent and providing better value for investors. The pound, which in 2017 recorded its best annual performance against the dollar since 2009, it climbed 0.70 percent, its strongest since Sept. 25.
USD/CAD is supported at 1.2472 levels and is trading at 1.2507 levels. It has made session high at 1.2546 and lows at 1.2498 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices held near 2 ½ year high and the greenback fell broadly on the first trading day of 2018. The dollar fell to its lowest in over three months against a basket of major currencies on doubts the Federal Reserve would go slow on raising interest rates further. The Canadian dollar was also helped by recent domestic data which showed an acceleration in inflation and strength in retail sales. The price of oil, one of Canada’s major exports, touched its highest intraday since mid-2015 amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia. Brent crude oil futures ended 2017 with a 17 percent rise, while U.S. crude climbed 12 percent on strong demand and declining global inventories. Iran’s Supreme Leader on Tuesday accused the country’s enemies of stirring unrest, as the death toll rose to 21 from anti-government demonstrations that began last week. Oil prices have been supported by production cuts led by the Organization of the Petroleum Exporting Countries and Russia. The cuts are scheduled to cover all of 2018. The Canadian dollar was last trading at C$1.2507 to the greenback, up 0.32 percent from Friday’s close.
AUD/USD is supported around 0.7798 levels and currently trading at 0.7831 levels. It hit session high at 0.7842 and made session lows at 0.7817 levels. The Australian dollar strengthened against the dollar on Tuesday as upbeat Chinese manufacturing data and weaker dollar across the board boosted Australian dollar. The Aussie dollar firmed near two-month top of $0.7842 before retreating slightly. The next chart targets are $0.7884 and $0.7898.Data showed Growth in China’s manufacturing sector unexpectedly picked up to a four-month high in December as factories cranked up production to meet a surge in new orders, a private business survey showed on Tuesday. The Caixin/Markit Manufacturing Purchasing Manager’s Index (PMI) rose to 51.5 last month, from 50.8 in November, and far outpacing economists’ expectations for a slight dip to 50.6. The news was taken as positive for continued Chinese demand for commodities, which has supported prices in recent months. Prices for iron ore, Australia’s single biggest export earner, were holding above $70 a tonne having been down around $50 in mid-2017.While copper climbed 31 percent in 2017 to a four-year top, while aluminium amassed gains of 34 percent.
European stocks faltered at the start of the trading year on Tuesday as autos stocks fell and strength in the euro weighed, while trading was cautious ahead of the launch of a major reform of European Union financial markets.
UK’s benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.33 percent, Germany’s Dax ended down by 0.6 percent, France’s CAC finished the day down by 0.6 percent.
U.S. stocks rose on Tuesday in the first session of the new year as investors were optimistic that 2018 will bring more gains for the market.
Dow Jones closed up by 0.42 percent, S&P 500 ended up 0.83 percent, Nasdaq finished the day up by 1.49 percent.
U.S. Treasury yields rose on Tuesday on strong Wall Street gains and in line with European government yields after a European Central Bank official said the ECB’s massive bond purchase program may not be continued later this year.
The benchmark 10-year Treasury yield was up 5 basis points at 2.460 percent following a 2 basis-point dip last year.
The five-year yield ended at 2.246 percent after touching its highest level since April 2011 earlier in the day, while the two-year yield retested a nine-year peak of 1.927 percent.
Oil prices hit mid-2015 highs in early trading on Tuesday but dipped to settle slightly lower as major pipelines in Libya and the UK restarted and U.S production soared to the highest level in more than four decades.
U.S. West Texas Intermediate (WTI) crude futures settled 5 cents lower at $60.37 a barrel. In early trading WTI hit $60.74, the highest level since June 2015.
Brent crude futures , the international benchmark, settled 30 cents, or 0.5 percent lower at $66.57 a barrel. The session high of $67.29 was the highest since May 2015.
Gold extended its rally into the new year on Tuesday, touching late September highs on a softer U.S. dollar, while spot palladium jumped to a record on fears of short supplies after soaring 57 percent in 2017.
Spot gold was up 1 percent at $1,315.11 per ounce at 2:36 p.m. EST (1936 GMT) after hitting $1,315.46, the highest since Sept. 20, 2017. Gold has risen each trading session since Dec. 15.
U.S. gold futures for February delivery settled up $6.80, or 0.52 percent, at $1,316.10 per ounce
Source: FXWire Media Round Ups