Americas roundup: Euro surges on ECB tapering hopes, Sterling jumps, Wall street scales record highs on earnings optimism, Oil adds to rally, heads for fourth week of gains-january 13th, 2018
• US Dec Core CPI MM, SA, 0.3%, 0.2% forecast, 0.1% previous.
• US Dec Core CPI YY, NSA, 1.8%, 1.7% forecast, 1.7% previous.
• US Dec CPI Index, SA, 246.524, 246.380 forecast, 246.669 previous.
• US Dec Core CPI Index, SA, 254.43, 253.72 previous.
• US Dec CPI MM, SA, 0.1%, 0.2% forecast, 0.4% previous.
• US Dec CPI YY, NSA, 2.1%, 2.1% forecast, 2.2% previous.
• US Dec Retail Sales MM, 0.4%, 0.4% forecast, 0.8% previous, 0.9% revised.
• US Dec Retail Sales Ex-Autos MM, 0.4%, 0.4% forecast, 1.0% previous, 1.3% revised.
• US Nov Business Inventories MM, 0.4%, 0.3% forecast, -0.1% previous, 0.0% revised.
• US w/e ECRI Weekly Index, 147.6, 147.4 previous, 147.1 revised.
• US w/e ECRI Weekly Annualized, 3.3%, 3.5% previous, 3.4% revised.
• Fed’s Harker repeats he sees 2 rate hikes this year.
• Atlanta Fed raises U.S. Q4 2017 GDP view to 3.3 percent.
• Mnuchin sees $1 trillion revenue growth from U.S. tax overhaul.
• Trump denies “shithole” remarks as condemnation mounts at home and abroad.
• ECB’s Weidmann plays down risk of imminent rate hike.
• S&P sees slower-than-expected fiscal progress in Brazil.
• Canada welcomes Trump suggestion of NAFTA deadline extension.
Looking Ahead – Economic Data (GMT)
• 14 Jan 21:00 New Zealand Q4 NZIER Confidence, 5% previous
• 14 Jan 21:45 New Zealand Dec Food Price Index, -0.4% previous
• 15 Jan 21:45 New Zealand Dec Elec Retail Sales YY, 4.3% previous
• 15 Jan 23:50 Japan Dec Corp Goods Price MM, forecast 0.4%, 0.4% previous
• 15 Jan 23:50 Japan Dec Corp Goods Price YY, forecast 3.2%, 3.5% previous
Looking Ahead – Events, Other Releases (GMT)
• 15 Jan 18:15 BoE’s Silvana Tenreyro speaks at the 2018 Peston Lecture at Queen Mary University – London
EUR/USD is likely to find support at 1.2100 levels and currently trading at 1.2178 levels. The pair has made session high at 1.2180 and hit lows at 1.2108 levels. The euro rose higher against US dollar on Friday as euro was boosted on bets that European Central Bank is getting ready to wind down its huge monetary stimulus, and after German Chancellor Angela Merkel reached a deal that should lead to the formation of a “grand coalition” government. The euro had already jumped on Thursday, after ECB policymakers said in minutes of the bank’s December meeting that they could revisit their communication stance in early 2018. It added to those gains on Friday, rising 0.8 percent to as high as $1.2137, its strongest since Dec. 31, 2014.The euro was given a futher leg up after Merkel’s conservatives and the Social Democrats agreed to a blueprint for formal coalition negotiations, raising prospects of an end to months of political uncertainty in Germany, Europe’s biggest economy. The euro was on track for a more than 1.5 percent rise since Thursday, its strongest two-day performance since August. Hit by the strong euro, the dollar index which measures the U.S. currency against a basket of six major rivals slipped 0.6 percent to its weakest in four months, at 91.308
GBP/USD is supported in the range of 1.3605 levels and currently trading at 1.3731 levels. It reached session high at 1.3733 and dropped to session low at 1.3644 levels. Sterling rose to its highest level against the dollar since the vote to leave the European Union in mid-2016, after a report showed that the Netherlands and Spain were open to a softer Brexit deal for Britain. The pound traded up more than one percent on the day, pushing to as high as $1.3730 and in the process hitting its highest level since June 24, 2016, when the pound plunged after Britain voted to quit the EU. The gains came after Bloomberg reported that the Spanish and Dutch finance ministers had agreed to work together for a Brexit agreement that maintains close ties between the EU and Britain, in what would be a clear divergence in views among the 27 EU member states about how to treat Britain after it leaves. Officials from the Spanish and Dutch finance ministries denied the report and said there was no new agreement between the countries on how Britain should leave the EU. Sterling was already gaining on Friday before the report, helped by demand for euros and the continued weakness for the dollar, before spiking higher. The pound held on to most of those gains. After slumping in 2016, the pound last year had its best performance in a decade as Britain made some progress on negotiating its exit from the European Union and economic data came in better than expected.
USD/CAD is supported at 1.2426 levels and is trading at 1.2480 levels. It has made session high at 1.2546 and lows at 1.2463 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices climbed and chances rose that the Bank of Canada will raise interest rates next week. Oil prices rose for the sixth day after Russia’s oil minister said that global crude supplies were “not balanced yet,” alleviating market concerns about a wind-down of the OPEC-led deal to reduce production. The U.S. dollar fell against a basket of major currencies but made a partial recovery after the Labor Department said its consumer price index, excluding the volatile food and energy components, rose 0.3 percent last month, the biggest advance since January 2017. The Canadian dollar was up 0.4 at C$1.2472 to the greenback or 80.18 U.S. cents. The currency traded in a range of C$1.2466 to C$1.2556.One week ago, the loonie touched its strongest in three months at C$1.2355 after much-stronger-than expected jobs data boosted expectations for a Bank of Canada interest rate hike on Jan. 17.But the currency was rattled this week after Canadian government sources told they were increasingly convinced that the United States planned to announce plans to pull out of the North American Free Trade Agreement.
AUD/USD is supported around 0.7847 levels and currently trading at 0.7913 levels. It hit session high at 0.7923 and made session lows at 0.7854 levels. The Australian dollar rose to hit four-month highs on Friday against its U.S. counterpart as greenback came under pressure after showed U.S. producer prices fell for the first time in nearly 1-1/2 years in December, which could temper expectations that inflation will accelerate in 2018.The U.S. Labor Department said its Consumer Price Index, excluding the volatile food and energy components, rose 0.3 percent last month, amid strong gains in the cost of rental accommodations and healthcare. In the past year, inflation has remained stubbornly lower than the Fed’s target rate of 2 percent, despite strong gross domestic product growth and employment data.In a separate report on Friday, the U.S. Commerce Department said retail sales rose in December and it revised sales growth in November higher, suggesting the economy exited 2017 with strong momentum. The Aussie dollar broke above 0.7900 barrier for first time since September to top out at $0.7926, before profit-taking hauled it back to $0.7915.
Dealmaking activity drove sharp share price moves in Europe on Friday with British engineer leaping after it rejected an unsolicited offer from rival Melrose.
UK’s benchmark FTSE 100 closed up 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany’s Dax ended up by 0.2 percent, France’s CAC finished the day down by 0.5 percent.
Wall Street continued its rally on Friday with record closing highs as the fourth-quarter earnings season kicked off with solid results from banks and robust retail sales drove investor optimism about economic growth.
Dow Jones closed up by 0.88 percent, S&P 500 ended up by 0.66 percent, Nasdaq finished the day up by 0.66 percent.
Treasury yields climbed on Friday as underlying U.S. consumer prices rose the most in 11 months in December, bolstering expectations of a pickup in domestic inflation and Federal Reserve interest rate hikes this year.
The yield on 10-year government notes was 2.554 percent, up from 2.531 percent at Thursday’s close. The yield on two-year government bills hit a high of 2.026 percent, its highest since September 2008, before falling slightly to 2.002 percent.
Gold hit a four-month high on Friday and was on track for a fifth straight weekly gain as the U.S. dollar fell against the euro on an agreement for a political coalition in Germany.
Spot gold was up 1.2 percent at $1,338.39 an ounce by 2:19 p.m. EST (1919 GMT). The session high of $1,339.31 was its highest since September. Bullion is up 1.4 percent this week and set for its longest run of weekly gains since April. U.S. gold futures for February delivery settled up $12.40, or 0.9 percent, at $1,334.90 per ounce.
Oil prices rose for a sixth day on Friday after Russia’s oil minister said that global crude supplies were “not balanced yet,” alleviating market concerns about a wind-down of the OPEC-led deal to reduce production.
Brent crude futures rose 61 cents to settle at $69.87 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 50 cents to $64.30. WTI hit its strongest since late 2014 at $64.77 on Thursday.
Source: FXWire Media Round Ups