Market Roundup
- Oil hovers near 3-month high on supply cuts
- Eurozone trade surplus jumps more than expected in October
- Gold steadies as traders await trade deal details
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts increased to an annualized rate of 1.344 million units in November from 1.314 million units in October.
- (0830 ET/1330 GMT) The U.S. building permits are likely to have decreased to a 1.40 million-unit pace in November from a 1.461 million-unit pace in October.
- (0830 ET/1330 GMT) Statistics Canada releases manufacturing shipments data for the month of October. Manufacturing sales are likely to have increased 0.1 percent after declining 0.2 percent in September.
- (0915 ET/1415 GMT) The Federal Reserve is likely to report that industrial production rose 0.8 percent in November after decreasing 0.8 in the prior month.
- (0915 ET/1415 GMT) The Federal Reserve Board is expected to report that capacity utilization edged up 77.2 percent in November from 76.7 percent in October.
- (1000 ET/1500 GMT) The Investor's Business Daily (IBD)/ TechnoMetrica Institute of Policy and Politics (TIPP) will release U.S. Economic Optimism index for the month of November. The indicator rose to 52.9 in October.
- (1000 ET/1500 GMT) The U.S. Labor Department releases Job Openings and Labor Turnover Survey (JOLTS) report for the month of October. The report is expected to show job openings rose to 7.111 million from 7.024 million in September.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0830 ET/1330 GMT) ECB Executive Board member Philip Richard Lane’s speech
- (1330 ET/1830 GMT) Boston Federal Reserve President Eric Rosengren's speech
- (1415 ET/1915 GMT) Bank of England Governor Mark Carney gives a speech
FX Beat
DXY: The dollar index declined as investors were cautiously optimistic over an interim trade deal the United States and China struck last week. The greenback against a basket of currencies traded 0.05 percent down at 97.08, having touched a low of 96.59 on Thursday, its lowest since July 1.
EUR/USD: The euro rose above the 1.1160 handle, after data showed euro zone’s seasonally unadjusted trade surplus rose more than expected in October compared with a year earlier boosted by a sharp fall in energy imports. The European currency traded 0.2 percent up at 1.1165, having touched a high of 1.1199 on Friday, its highest since August 13. Immediate resistance is located at 1.1179, a break above targets 1.1223. On the downside, support is seen at 1.1106, a break below could drag it below 1.108
USD/JPY: The dollar consolidated near recent peak as investors sought more clarity on the phase one trade deal between the United States and China. The major was trading 0.05 percent up at 109.56, having hit a high of 109.70 on Friday, its highest since Dec. 2. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. housing starts, building permits, JOLTS Job opening, industrial production, capacity utilization and Fed Eric Rosengren's speech. Immediate resistance is located at 109.72, a break above targets 109.92. On the downside, support is seen at 109.33, a break below could take it near at 109.08 (5-DMA).
GBP/USD: Sterling plunged by more than 1 percent, weighed down by reports that UK Prime Minister Boris Johnson was taking a hard line on Britain’s transition period for leaving the European Union. The major traded 0.3 percent down at 1.3289, having hit a high of 1.3514 on Friday, it’s highest since May 2018. Investors’ attention will remain on the development surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3350, a break above could take it near 1.3422. On the downside, support is seen at 1.3107, a break below targets 1.3032 (21-DMA). Against the euro, the pound was trading 1.2 percent down at 84.53 pence, having hit a high of 82.75 on Friday, it’s highest since July 2016.
USD/CHF: The Swiss franc advanced, hovering towards a 3-1/2 month peak, amid signs of caution after the U.S. and China announced the phase one agreement and suspended some tariffs on each other’s goods that were due to go into effect on Sunday. The major trades 0.1 percent down at 0.9816, having touched a low of 0.9805 on Friday, it’s lowest since September 5. On the higher side, near-term resistance is around 0.9857 (10-DMA) and any break above will take the pair to the next level till 0.9905 (21-DMA). The near-term support is around 0.9791, and any close below that level will drag it till 0.9775.
Equities Recap
European shares retreated from record highs, weighed down by a sales warning from Unilever and concern that Britain will take a hard line on the Brexit transition.
The pan-European STOXX 600 index tumbled 0.7 percent at 414.30 points, while the FTSEurofirst 300 declined 0.7 percent to 1,617.07 points.
Britain's FTSE 100 trades 0.1 percent down at 7,514.07 points, while mid-cap FTSE 250 fell 1.3 to 21,645.54 points.
Germany's DAX eased 0.05 percent at 13,284.38 points; France's CAC 40 trades 0.6 percent lower at 5,957.96 points.
Commodities Recap
Crude oil prices surged, hovering towards a 3-month high amid hopes that a fully-fledged U.S.-China trade deal is in the pipeline will stoke oil demand in the world’s biggest economies. International benchmark Brent crude was trading 0.3 percent up at $65.10 per barrel by 1122 GMT, having hit a high of $65.77 on Friday, its highest since September 17. U.S. West Texas Intermediate was trading 0.2 percent up at $60.28 a barrel, after rising as high as $60.45 on Friday, its highest since September 17.
Gold prices surged due to uncertainty driven by a lack of concrete details about the interim trade deal between U.S. and China. Spot gold rose 0.2 percent to $1,479.59 per ounce, having touched a high of $1486.62 on Thursday, its highest since November 7. U.S. gold futures were up 0.2 percent at $1,482.90.
Treasuries Recap
The U.S. Treasuries gained during the afternoon session ahead of the country’s JOLTs job openings data for the month of October, scheduled to be released today by 15:00GMT. Also, a host of speeches by members of the Federal Open Market Committee (FOMC), namely, Kaplan, Rosengren and Williams, all due for later in the day shall impart further insight into the bond market. The yield on the benchmark 10-year Treasury yield lost nearly 3-1/2 basis points to 1.857 percent, the super-long 30-year bond yield also slumped 3-1/2 basis points to 2.275 percent and the yield on the short-term 2-year plummeted 2 basis points to 1.625 percent.
The United Kingdom’s gilts surged during European trading hours following mixed labour market report for the month of November, while investors still eye the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be delivered today by 19:15GMT for further direction into the debt market. The yield on the benchmark 10-year gilts, plunged 5 basis points to 0.774 percent, the 30-year yield slumped nearly 3-1/2 basis points to 1.284 percent and the yield on the short-term 2-year plummeted nearly 5-1/2 basis points to 0.551 percent.
The German bunds jumped during European session ahead of the country’s Ifo business climate index for the month of December, scheduled to be released on December 18 by 09:00GMT and the eurozone’s November consumer price inflation (CPI), due on the same day by 10:00GMT. eThe German 10-year bond yield, which move inversely to its price, lost 1 basis point to -0.281 percent, the yield on 30-year note suffered 1-1/2 basis points to 0.237 percent and the yield on short-term 2-year too traded 1 basis point down at -0.637 percent.
The Australian bonds remained mixed during Asian session of the second trading day of the week following optimism over the U.S.-China trade deal that pushed stocks to close at record-highs in the overnight session. In addition, the U.S. Treasury yields also ended at all-time highs yesterday as investors shifted interest towards safe-haven assets. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 2 basis points to 1.170 percent, the yield on the long-term 30-year bond surged 1-1/2 basis points to 1.772 percent while the yield on short-term 2-year suffered 1-1/2 basis points to 0.754 percent.
