Americas Roundup

Americas Roundup: Dollar Edges Higher On Strong U.s. Data, Tax Bill Progress, U.s. Yields Rise, Gold Extends Losses, Oil Drops For Third Day, Awaiting Opec Decision-november 30th 2017

Market Roundup

Currency Summaries

EUR/USD is likely to find support at 1.1807 levels and currently trading at 1.1861 levels. The pair has made session high at 1.1866 and hit lows at 1.1824 levels. Euro edged higher against the dollar on Wednesday as the market focused on progress in President Donald Trump’s tax cut plan while North Korea’s latest missile test kept investors cautious. U.S. Senate Republicans pushed the president’s tax-cut bill through in an abrupt, partisan committee vote that set up a full vote by the Senate as soon as Thursday. The greenback gained further traction after data showed the U.S. economy grew faster than initially thought in the third quarter, notching its quickest pace in three years, as increases in business investment in inventories and equipment offset a moderation in consumer spending. The dollar has also been supported by remarks on Tuesday by Federal Reserve chair nominee Jerome Powell signaling that the central bank is likely to raise interest rates again next month. Powell overall presented himself as an extension of the policies set under Fed chair Janet Yellen and her predecessor Ben Bernanke, confirming market expectations that he offered stability despite the change in leadership at the central bank. The dollar index, which measures the greenback against six rival currencies, was up 0.1 percent at 93.365. The index, which slipped nearly 1 percent last week, is up 0.6 percent so far this week.

GBP/USD is supported in the range of 1.3365 levels and currently trading at 1.3465 levels. It reached session high at 1.3450 and dropped to session low at 1.3369 levels. Sterling rose to two months high against the dollar on Wednesday as sterling was boosted after European Union diplomats said that Britain has moved „close“ to EU demands over Brexit, although concerns that differences remain on key conditions capped the currency’s gains. A British government official cast doubt on a Daily Telegraph report saying the net bill for leaving the bloc would total 45 to 55 billion pounds ($53 to $65 billion), amid growing expectations that a deal will be struck soon. Investors greeted the figure for the „divorce bill“ with relief, lifting the pound more than 1.5 percent from Tuesday’s lows to above $1.34 for the first time since early October. Sterling jumped 0.5 percent to $1.3431 on Wednesday, extending a late Tuesday rally in New York trading. Reflecting the newfound optimism that a deal would be struck, the euro weakened to a three-week low against sterling to 88.55 pence in early trades. Despite sterling’s jump since Tuesday, sterling remained well below a 2017 high of $1.3659 hit in late September and more than 11 percent below the June 2016 Brexit vote of $1.5022.

USD/CAD is supported at 1.2800 levels and is trading at 1.2850 levels. It has made session high at 1.2875 and lows at 1.2838 levels. The Canadian dollar weakened to a nearly four-week low against its U.S. counterpart on Wednesday as oil prices fell and the greenback added to this week’s gains against a basket of major currencies. The U.S. dollar was helped by data showing the U.S. economy grew faster than initially thought in the third quarter, notching its quickest pace in three years. Prices of oil, one of Canada’s major exports, slipped as doubts set in about Russia’s willingness to substantially extend a deal among some of the world’s biggest exporters to curb output. Data will be released Friday on Canada’s jobs for November and gross domestic product for the quarter, which could help guide investor expectations for further interest rate hikes by the Bank of Canada. The central bank raised rates in July and September but has since turned more cautious on the outlook for the economy. It will make an interest rate decision next week. The Canadian dollar was trading at C$1.2853 to the greenback, or 77.87 U.S. cents, down 0.2 percent. The currency’s strongest level of the session was C$1.2805, while it touched its weakest since Nov. 2 at C$1.2875.

NZD/USD is supported around 0.6853 levels and currently trading at 0.6889 levels. It hit session high at 0.6898 and made session lows at 0.6873 levels. New Zealand dollar slipped from 2-1/2 week peak against the dollar on Wednesday after Reserve Bank of New Zealand sounded surprisingly relaxed about the housing market as it loosened lending restrictions. The kiwi dollar initially popped up to $0.6930 as traders wagered the easing of loan-to-value restrictions by the Reserve Bank of New Zealand (RBNZ) could boost house prices and spark inflation. But the currency soon slipped to $0.6890, drifting further away from Tuesday’s $0.6945, the highest since Nov. 13. Tufley said the implications for interest rates are „pretty limited“, adding that the RBNZ was likely to keep rates at a record low 1.75 percent for a long time. Policymakers expect home prices will also be constrained by the government’s move to ban foreign purchases of existing homes from early 2018. House prices have risen more than 50 percent nationally in the past decade, and almost doubled in Auckland, but recently have come off the boil as a slowing economy and lending restrictions curbed demand.

Market Roundup

• US Q3 GDP 2nd Estimate, 3.3%, 3.2% forecast, 3.0% previous.

• US Q3 GDP Sales Prelim, 2.5%, 2.4% forecast, 2.3% previous.

• US Q3 GDP Cons Spending Prelim, 2.3%, 2.4% previous.

• US Q3 GDP Deflator Prelim, 2.1%, 2.2% forecast, 2.1% previous.

• US Q3 Core PCE Prices Prelim, 1.4%, 1.4% forecast, 1.3% previous.

• US Q3 PCE Prices Prelim, 1.5%, 1.5% forecast, 1.5% previous.

• US Q3 Corporate Profits Prelim, 5.8%, 0.1% previous.

• US Oct Pending Homes Index, 109.3, 106.0 previous 105.6 revised.

• US Oct Pending Sales Change MM, 3.5%, 1.0% forecast, 0.0% previous -0.4% revised.

• US W/E MBA Mortgage Applications, -3.1%, 0.1% previous.

• Fed’s Yellen says recovery „increasingly broad-based“ in both U.S. and worldwide.

• Yellen says she is worried about the sustainability of U.S. debt trajectory.

• Yellen says wants to avoid rapidly raising rates and causing recession.

• Fed should continue to raise rates slowly, Williams says.

• Bubble trouble? Bitcoin tops $11,000 after $1,000 surge in 12 hrs.

• Amid bitcoin surge, Dudley says offering digital currency on Fed’s radar.

• Bitcoin not big enough to threaten world economy, BoE deputy says.

• Deficit looms over Republican tax bill as U.S. Senate nears vote.

• White House does not expect U.S. government shutdown.

• SNB’s Zurbruegg says Swiss franc still susceptible to safe- haven pressure.

• Wary EU still pressing Britain for full Brexit deal.

Looking Ahead – Economic Data (GMT)

• 29 Nov 21:45 New Zealand Oct Building Consents, -2.3% previous

• 29 Nov 23:50 Japan Oct Industrial output prelim mm, 1.9% forecast, -1.0% previous

• 30 Nov 00:00 Australia Oct HIA New Home Sales m/m, -6.1% previous

• 30 Nov 00:00 New Zealand Nov NBNZ Business Outlook, -10.1% previous

• 30 Nov 00:30 Australia Oct Building Approvals, forecast -1.8%, 1.5% previous

• 30 Nov 00:30 Australia Q3 Capital Expenditure, 1.0% forecast, 0.8% previous

• 30 Nov 01:00 China Nov NBS Non-Mfg PMI, 54.30 previous

• 30 Nov 01:00 China NOV NBS Manufacturing PMI, 51.4 forecast, 51.6 previous

Looking Ahead – Events, Other Releases (GMT)

• 01:30 BoJ’s Yutaka Harada speaks in Fukushima

• 08:45 ECB’s Mersch speaks in Rome

• 10:00 ECB’s Praet speaks in Brussels

• 11:00 ECB’s Nouy speaks in Frankfurt

• 13:30 Fed’s Loretta Mester moderates speaks in Washington

• 17:30 Fed’s Randal Quarles speaks in Washington

• 18:00 Fed’s Kaplan speaks in Dallas


Equities Recap

European shares rose on Wednesday, reaching their highest level in more than two weeks as retail stocks and financials gained, although Britain’s FTSE was hurt by a jump in sterling after reports of a breakthrough in Brexit talks.

UK’s benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.25 percent, Germany’s Dax ended flat, France’s CAC finished the day up by 0.2 percent.

The Nasdaq posted its biggest one-day drop in more than three months on Wednesday as investors fled high-flying technology stocks and shifted to banks and other pockets of the market that could benefit from improving economic conditions, lower regulations and taxes, and higher interest rates.

Dow Jones closed up by 0.43 percent, S&P 500 ended down 0.04 percent, Nasdaq finished the day down by 1.29 percent.

Treasuries Recap

U.S. Treasury yields rose across most maturities on Wednesday bolstered by upbeat remarks on the economy by Federal Reserve Chair Janet Yellen and data showing stronger than expected U.S. economic growth for the third quarter.

The 10-year Treasury yield was up at 2.386 percent, from 2.337 percent late on Tuesday. It hit a two-week high of 2.395 percent.

U.S. two-year yields, which climbed to a nine-year peak last week, were at 1.774 percent from 1.758 percent on Tuesday.

U.S. 30-year bond yields were up at 2.827 percent from Tuesday’s 2.765 percent. Earlier, 30-year yields hit a two-week high of 2.837 percent.

Commodities Recap

The price of gold fell on Wednesday, as global stocks hovered near record highs making the safe-haven asset less attractive, and upbeat U.S. growth data prompted an earlier rise in the U.S. dollar and U.S. Treasury yields.

Spot gold was down 0.7 percent at $1,284.23 an ounce by 2:45 p.m. EST (1945 GMT). U.S. gold futures for December delivery settled down $12.80, or 1 percent, at $1,282.10 per ounce.

Oil prices dipped on Wednesday in a volatile session buffeted by conflicting statements from oil ministers a day ahead of OPEC’s meeting in Vienna, as members debate the path for an extension of the group’s supply-cut agreement.

Brent crude futures settled down 50 cents to $63.1 a barrel, a 0.8 percent drop, while U.S. crude ended down 69 cents, or 1.2 percent, to $57.30 a barrel.

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