Market Roundup
- Equities fall on energy drag; dollar strengthens.
- U.S. jobless claims fall from five-month high (271k vs 275k forecast, 282k -previous).
- US Q3 current account gap widens to $124.1 billion, largest since 2008.
- Philly Fed falls to -5.9 in Dec, new orders drop to -9.5. Nearly half of Britons leaning towards voting to quit EU.
- Mexico’s central bank hikes rate 25bps, follows Fed hike in lock-step to support peso.
- Brazil’s Congress approves cut in budget surplus target to 0.5% from 0.7%.
- Argentina’s closed at 13.38/USD, -26.55% after the government announced it was lifting currency controls and allowing the currency to weaken.
Looking Ahead – Economic Data (GMT)
- 00:00 New Zealand NBNZ Business Outlook* Dec 14.6%-previous
- 00:00 New Zealand NBNZ Own Activity* Dec 32%-previous
- 01:30 China House Prices YY* Nov 0.1%-previous
Looking Ahead – Events, Other Releases (GMT)
- 02:00 Japan- Bank of Japan monetary policy meeting, Interest rate announcement
Currency SummariesEUR/USD is likely to find support at 1.0790 levels and currently trading at 1.0820 levels. The pair has made session high at 1.0875 and hit lows at 1.0802 levels. The U.S. dollar edged higher against euro on Thursday a day after the Federal Reserve hiked interest rates, on the view that the central bank’s move would make U.S. assets more attractive. The monetary policy divergence between the tightening Fed and simulative European Central Bank was in place and drawing broader demand for dollar across the board. The Fed’s tightening policy fuels demand for higher-yielding U.S. debt compared to bonds in Europe and Japan, driving investment flows into the United States and boosting the dollar. Meanwhile, The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a two-week high of 99.041 and was last at 98.940, up 1.1 percent. The euro hit a more than one-week low against the dollar of $1.0831. To the upside, immediate resistance can be seen at 1.0850. To the downside, immediate support level is located at 1.0830 levels.GBP/USD is supported in the range of 1.4858 and currently trading at 1.4901 levels. It reached session high at 1.4937 and hit low at 1.4863 levels. Sterling slipped lower against the dollar on Thursday but held its ground on the euro as a surge in pre-Christmas retail sales in November underlined a still robust British economic outlook. The pound has been tensed for past week by worries over the Brexit debate about whether Britain depart from European Union and fading hope that Bank of England will follow the U.S. Federal Reserve’s in hiking interest rate. The dollar gained against all of the major currency pairs after the Fed hiked for the first time in a decade on Wednesday and, aside from a brief blip after the retail sales numbers, sterling followed that trend. While Britain’s economy has grown robustly over the past year, there is less evidence of the sort of pressure on prices that would force policymakers to tighten monetary policy. Data on Wednesday showed average earnings grew at the slowest pace since early this year in the three months to October, even though strong job creation pushed down the unemployment rate. To the upside, immediate resistance can be seen at 1.4930. To the downside, immediate support level is located at 1.4872 levels.
USD/JPY is supported around 121.00 levels and currently trading at 122.55 levels. It hit session high at 122.86 and made session lows at 122.29 levels. The dollar rose higher against Japanese Yen on following day on Thursday after the Federal Reserve increased its benchmark rate by 0.25 percentage point, its first hike in nearly a decade. The long-anticipated though modest increase in the federal funds rate also boosted the dollar to a fresh two-week high against a basket of major currencies, while Wall Street was on pace to snap a three-day winning streak. Economic data on Thursday showed continued healing in the labor market, which could prompt more rate hikes from the Fed next year. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 271,000 for the week ended Dec. 12, the Labor Department said on Thursday. The dollar hit a more than one-week high against the Japanese yen at 122.78. To the upside, immediate resistance can be seen at 122.65 . To the downside, immediate support level is located at 122.20 levels.USD/CAD is supported at 1.3847 levels and is trading at 1.3937 levels. It has made session high at 1.3985 and lows at 1.3930 levels. The Canadian dollar slipped sharply to hit a new 11-1/2-year low against its U.S. counterpart on Thursday, together with broader gains for the U.S. dollar after the Federal Reserve raised interest rates on Wednesday for the first time in more than nine years. The greenback hit a two-week high against a basket of major rivals after the Fed raised interest rates and signaled four more hikes are to come next year. Further more depressed oil prices in the face of a relentless build in oversupply added to pressure on the Canadian dollar. The currency’s strongest level of the session was C$1.3778, while it hit its weakest level since June 2004 at C$1.3880. On the data front Canadian inflation data for November is due on Friday. A forecast shows a uptick in the consumer price index to a 1.5 percent pace from a year earlier. To the upside, immediate resistance can be seen at 1.3970. To the downside, immediate support level is located at 1.3700 levels.Equities RecapEuropean shares rose on Thursday as investors took the U.S. Federal Reserve’s interest rate hike decision and the scope of further tightening as a sign of confidence in the world’s largest economy.UK’s benchmark FTSE 100 closed up by 0.89 percent, the pan-European FTSEurofirst 300 ended the day up by 1.44 percent, Germany’s Dax ended up by 2.69 percent, France’s CAC finished the day up by 1.3 percent.U.S. stocks decline in global equity markets on Thursday a day after the Federal Reserve’s first interest rate hike in nearly a decade, as continued pressure on oil weighed on the energy sector.Dow Jones closed down by 1.41 percent, S&P 500 down up by 1.49 percent, Nasdaq finished the day downby 1.33 percent.Treasuries RecapYields on U.S. Treasuries declined on Thursday, a day after the Federal Reserve increased its benchmark rate by 0.25 percentage point, signaling confidence in the strength of the economy and as investors turned their attention on next rate hike.U.S. benchmark 10-year Treasury notes were last up 9/32 in price to yield 2.257 percent, down from 2.289 percent late on Wednesday.The U.S. 30-year bond was last up 27/32 in price to yield 2.960, down from 3.00 late on Wednesday.Commodities RecapOil prices declined more than 1 percent on Thursday, with global benchmark Brent settling not far from 2004 lows, after fresh supply builds at the delivery point for U.S. crude futures added to worries about a global glut.Brent settled down 33 cents at $37.06 a barrel, finishing less than $1 above its 2004 low of $36.40.U.S. crude’s West Texas Intermediate (WTI) futures ended the session down 57 cents, or 1.6 percent, at $34.95 a barrel, reaching a session low of $34.63. Gold fell 2 percent in its biggest drop in five months on Thursday, flirting with a 2010 low as the dollar surged after the Federal Reserve increased U.S. interest rates for the first time in nearly a decade and hinted at more increases in 2016.Spot gold dipped as much as 2.4 percent to a session low of $1,047.25 an ounce, just $1.40 above a near-six-year low hit earlier this month. It was down 1.9 percent at $1,051.80 by 2:46 p.m. EST (1946 GMT).U.S. February futures settled down 2.5 percent at $1,049.60 an ounce.
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