Market Roundup
- U.S. existing home sales plunge; new rules seen as drag.
- U.S. third-quarter growth revised lower to 2.0 percent.
- In shock to market, Turkey central bank keeps rates on hold.
- Turkey presidential aide calls for rate cut after central bank stays put.
- Canada posts narrower budget deficit in Oct as revenues rise.
- Brazil’s new finance minister says focusing on fiscal accounts, primary surplus.
- Brazil loan defaults hit 33-month-high as recession deepens.
- U.S. announces Ukraine-related sanctions on 34 individuals, entities.
Looking Ahead – Economic Data (GMT)
- New Zealand Trade Balance Nov -810m expected; -963m previous
Looking Ahead – Events, Other Releases (GMT)
- Japan Holiday
Currency SummariesEUR/USD is likely to find support at 1.0920 levels and currently trading at 1.0953 levels. The pair has made session high at 1.0984 and hit lows at 1.0943 levels. The dollar declined against euro on Tuesday as more traders booked profits on bullish greenback bets following the Federal Reserve’s interest rate increase last week and a steep drop in existing home sales in November. The euro strengthened again, brushing off the indecisive outcome of the Spanish elections over the weekend and its possible risk to economic reforms in the euro zone’s fourth-biggest economy. The dollar index, which measures the greenback against six currencies, fell 0.21 percent at 98.163. It declined three straight sessions and briefly broke below the 50-day moving average at about 98.02. The euro rose 0.5 percent against the dollar.USD/JPY is supported around 120.56 levels and currently trading at 121.06 levels. It hit session high at 121.10 and made session lows at 121.70 levels. The dollar declined against Japanese Yen on Tuesday after data showed that U.S. economy grew at a fairly healthy clip in the third quarter as strong consumer and business spending offset efforts by businesses to reduce an inventory glut, underscoring its resilience despite a raft of headwinds. Gross domestic product grew at a 2.0 percent annual pace, instead of the 2.1 percent rate reported last month, the Commerce Department said in its third estimate on Tuesday. The Federal Reserve last week raised its benchmark overnight interest rate by 25 basis points to between 0.25 percent and 0.50 percent, the first increase in nearly a decade. The rate hike was a vote of confidence in the economy, which has been buffeted by slower global demand, a strong dollar and spending cuts in the energy sector. The greenback fell 0.1 percent to 121.00 yen after touching its lowest level in a week earlier.USD/CAD is supported at 1.3870 levels and is trading at 1.3920 levels. It has made session high at 1.3945 and lows at 1.3918 levels. The Canadian dollar inched higher against its U.S. counterpart on Tuesday, although it pared some gains after crude oil prices turned lower and U.S. third-quarter economic growth was downgraded less than anticipated. U.S. gross domestic product grew at a 2 percent annual pace in the third quarter, slightly slower than the 2.1 percent anticipated, but better than the 1.9 percent analysts had expected. While other data on Tuesday showed a surprise 10.5 percent plunge in home resales last month, economists cautioned against reading too much into the drop, noting that new mortgage disclosure rules had caused delays in closing contracts. The National Association of Realtors said existing home sales tumbled to an annual rate of 4.76 million units, the lowest level since April 2014. The drop is in stark contrast to robust housing starts, new home sales and bullish homebuilder sentiment. The currency’s strongest level of the session was C$1.3917, while its weakest was C$1.3965. It touched a more than 11-year low of C$1.4003 on Friday.AUD/USD is supported around 0.7205 levels and currently trading at 0.7230 levels. It hit session high at 0.7236 and made session lows at 0.7221 levels. The Australian dollar edged up against US dollar on Tuesday after weak domestic US data weakened the dollar against commodities related currencies. Commodity-linked currencies including the Australian and New Zealand dollars rose against the greenback as oil prices stabilized above 11-year lows and investors hoped for more official action to support growth in China. The Australian dollar rose as high as $0.7204 where it met solid offers at the 72 U.S. cents chart barrier. At $0.7195 it has gained one full cent since touching a one-month trough last week. Meanwhile, Australian shares nudged up 0.1 percent on Tuesday, buoyed by gains in industrials and healthcare stocks. The S&P/ASX 200 index rose to 5,116.7 at the close of trade in the fifth consecutive session of gains. The benchmark has rallied nearly 2 percent since touching a two-year trough last week.Equities RecapEuropean stocks ended little changed on Tuesday after a volatile day but energy plays rose as oil prices recovered, while Spanish equities rebounded following a sell-off in the previous session prompted by concerns over a political stalemate.UK’s benchmark FTSE 100 closed up 0.79, Germany’s Dax ended down by 0.23 percent, France’s CAC finished the day down by 0.2percent, and Europe’s FTSEurofirst 300 provisionally closes down 0.07 percent.US stocks climbed on Tuesday, buoyed by energy shares as sliding oil prices stabilized and by fairly healthy data on U.S. economic growth, while the dollar fell for a third consecutive session.Dow Jones closed up by 0.95 percent, S&P 500 ended up by 0.87 percent, Nasdaq finished the day up by 0.64 percent.Treasuries Recap U.S. short-dated yields rose on Tuesday after U.S. economic data supported views of steady Federal Reserve rate increases next year, while long-dated yields rose after a recovery in the price of U.S. crude suggested slightly higher inflation.Benchmark 10-year Treasury notes were last down 11/32 in price to yield 2.238 percent, from a yield of 2.197 percent late Monday. U.S. 30-year Treasury bonds were last down 26/32 in price to yield 2.966 percent, from a yield of 2.925 percent late Monday.U.S. two-year notes were last down 1/32 in price to yield 0.977 percent, from a yield of 0.956 percent late Monday.Commodities RecapGold eased on Tuesday after a two-day rally, shrugging off the weak dollar and rebound in oil prices as dealers squared their books ahead of year-end amid typically light trade leading up to the Christmas holiday.Spot gold was down 0.5 percent at $1,072.20 an ounce at 3:17 p.m. EST (2017 GMT), while U.S. gold futures for February delivery settled down 0.6 percent at $1,074.10.Oil prices edged up off 11-year lows on Tuesday, though a bearish outlook for 2016 and weaker profits for refining oil products kept a lid on gains.Brent crude for February delivery settled down$36.11 a barrel, after earlier dipping to $ 35.98,below an eleven year low.U.S.West Texas Intermediate (WTI) crude futures flipped to a premium to Brent settling at $ 36.46,while Brent climbed to $ 36.38
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