Market Roundup
- Equities climb as oil bounces, Dollar advances after inflation data; Fed decision nears.
- Steadily firming U.S. inflation supports Fed rate hike, Core CPI rises 0.2%, up 2% from year ago.
- Empire State business conditions index at highest since July.
- Canadian factory sales drop for third month in a row (-1.1% v -0.5% forecast).
- Canada sales of existing homes rise (+1.8%) in November – CREA.
- BoC’s Poloz: US Fed rate hike would be in context of a solid US economy, which is important for Canadian exports.
- BoE’s Carney sees more active macro prudential policy in low rates environment.
- Fonterra: GDT dairy prices rise 1.9%, volumes drop 11.6% at auction.
- Brazil speaker Cunha says he will not resign after police raids.
- Moody’s cuts 2016 oil price outlook by $10 to $43 for Brent.
- Investors cut U.S. equity holdings to 8-yr low, raised cash allocation to 5.2% from 4.9%.
Looking Ahead – Economic Data (GMT)
- 21:45 New Zealand Current Account – Qtrly* Q3 forecast -4.901b, -1.220b-previous
- 21:45 New Zealand Current Account- Annual*Q3 forecast -8.30b, -8.30b-previous
- 21:45 New Zealand Current Account Balance To GDP*Q3 forecast-3.5%, -3.50%-previous
Looking Ahead – Events, Other Releases (GMT)
- 23:30 Australia RBA Asst Gov Guy Debelle speaks at the Australasian Finance & Banking Conference – Sydney
Currency SummariesEUR/USD is likely to find support at 1.0880 levels and currently trading at 1.0919 levels. The pair has made session high at 1.1035 and hit lows at 1.0988 levels. The U.S. dollar rebounded from a roughly six-week low against the euro on Tuesday after data showed US CPI rose in the United States in November, clearing the way for interest rate hike by the Federal Reserve on Wednesday. The data gave traders more confidence that the Fed would hike rates Wednesday for the first time in nearly a decade, a move which is expected to boost the dollar by driving investment flows into the United States. The euro dipped from a roughly six-week high of $1.10600 hit earlier in the session to a session low of $1.09340 after Labor Department data showed that the U.S. core Consumer Price Index rose 2.0 percent in the 12 months through November, marking the largest gain since May 2014. To the upside, immediate resistance can be seen at 1.0930. To the downside, immediate support level is located at 1.0901levels.GBP/USD is supported in the range of 1.5000 and currently trading at 1.5038 levels. It reached session high at 1.5068 and hit low at 1.5025 levels. Sterling slipped lower against dollar on Tuesday, after UK inflation failed to boost sterling as the Federal Reserve began a meeting that is widely expected to raise U.S. interest rates for the first time in almost a decade. The pound wavered after the November data showed British consumer prices were unchanged on the month and up 0.1 percent on an annual basis. Sterling rose as high as $1.5182 in early afternoon London trading. But after US data showed that U.S. inflation pressures rose in November, which could give the Fed more reason to raise rates throughout 2016, sterling dipped to $1.5045 as the dollar rallied, leaving it down 0.6 percent on the day and at its weakest in five days. To the upside, immediate resistance can be seen at 1.5059. To the downside, immediate support level is located at 1.5000 levels.USD/JPY is supported around 121.26 levels and currently trading at 121.68 levels. It hit session high at 121.77 and made session lows at 121.18 levels. The dollar edged higher against Japanese Yen on Tuesday after underlying U.S. inflation pressures rose in November, which could give the Federal Reserve more confidence to raise interest rates on Wednesday. The Labor Department said on Tuesday Core consumer price index, which excludes food and energy, gained 0.2 percent last month. Meanwhile, Fed officials started a two-day policy meeting on Tuesday. The U.S. central bank is expected to lift its benchmark interest rate from near zero at the end of the meeting on Wednesday, encouraged by a strengthening labor market. The Fed has not raised interest rates since June 2006. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.5 percent at 98.095 after hitting a nearly six-week low of 97. dollar was last up 0.39 percent against the yen at 121.515 yen. To the upside, immediate resistance can be seen at 122.05. To the downside, immediate support level is located at 121.26 levels. USD/CAD is supported at 1.3654 levels and is trading at 1.3737 levels. It has made session high at 1.3767 and lows at 1.3670 levels. The Canadian dollar slipped lower against the U.S. dollar on Tuesday, after positive US CPI data and disappointing Canadian manufacturing data weighted down on Canadian dollar. The dollar also benefited from buying of the greenback by traders who sought to hold long-dollar positions ahead U.S. Federal Reserve meeting on Wednesday, where its policy committee (FOMC) is expected to raise interest rates. On the data front, Canadian factory sales fell 1.1 percent in October from September, data from Statistics Canada showed. The median estimate was for a 0.5 percent drop. In other domestic data Existing homes in Canada rose 1.8 percent in November from October, a report from the Canadian Real Estate Association showed on Tuesday. The currency’s strongest level of the session was C$1.3674, while its weakest was C$1.3738. To the upside, immediate resistance can be seen at 1.3780. To the downside, immediate support level is located at 1.3722 levels.Equities RecapEuropean equities bounced back on Tuesday from sharp declines in the previous two sessions as energy stocks tracked higher crude oil prices and steel makers gained following a European Commission move on Chinese and Russian steel imports.UK’s benchmark FTSE 100 closed up by 2.5 percent, the pan-European FTSEurofirst 300 ended the day up by 2.9 percent, Germany’s Dax ended up by 3.1 percent, France’s CAC finished the day up by 3.2 percent.U.S. stocks rallied broadly on Tuesday, led by energy and financial shares as crude oil prices rose and ahead of Wednesday’s interest rate decision from the Federal Reserve.Dow Jones closed up by 0.91 percent, S&P 500 ended up by 1.06 percent, Nasdaq finished the day up by 0.87 percent.Treasuries RecapU.S. Treasuries prices fell on Tuesday as gains on Wall Street reduced interest in safe-haven bonds and stable consumer prices supported views that the Federal Reserve will raise interest rates on Wednesday.U.S. 10-year notes fell 13/32 in price to yield 2.227 percent, up from 2.225 percent late on Monday.The 10-year yield hit a session high of 2.289 after the CPI data was released.The 30-year bond fell 25/32 in price to yield 3.001 percent, up from 2.962 percent late on Monday. Its yield rose to a session high of 3.019 percent.Commodities RecapOil prices rose for a second straight day on Tuesday as short-covering and technical support halted a slide to 11-year lows, but the market remained fundamentally weak from oversupply, traders and analysts said.Brent settled up 53 cents at $38.45 a barrel, after reaching a session high at $39. settled up $1.04 at $37.35. It fell to $34.53 on Monday, the lowest since its financial crisis bottom of $32.40.Gold steadied on Tuesday, arresting the previous day’s one percent slide as the two-day U.S. Federal Reserve meeting began and was expected to lead to an interest rate hike for the first time in nearly a decade.Spot gold was down 0.1 percent at $1,061.25 an ounce at 2:29 p.m. ET (1929 GMT). U.S. gold futures for February delivery settled down 0.2 percent at $1,061.60 an ounce.
The material has been provided by InstaForex Company – www.instaforex.com