Market Roundup
• Trump heads to White House after stunning win, Clinton concedes; Republicans retain control of U.S. House, Senate.
• U.S. stocks jump after Trump shock, MXN drops to new all-time high 20.77 ends NY 19.85; no action from Banxico.
• Moody's says no Latin America ratings changes planned after Trump win.
• RBNZ cuts rate 25bp’s to 1.75%, NZD higher than sustainable, Annual CPI weak in Sep quarter, house price inflation remains excessive.
• OPEC's job has just become tougher with Trump win, Outlook for global economy, oil demand darkens.
• Copper rally could signal break of downtrend but short-term dips loom as longs may begin profit-taking.
• UST curve continues to steepen, 10-yr moves above 2% light demand on auction; 10-yr yield +18.8bp, 30-yr +22bps.
• Trump victory could spell defeat for EU-U.S. trade deal; TTIP in negotiation for past 3-yrs.
• Fed Dec hike forecast reverses from 50% o/n to 81% in late NY- (CME FedWatch).
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e 891.9b-previous
• 23:50 Japan Foreign Invest JP Stock w/e 108.9b- previous
• 23:50 Japan Machinery Orders MM* Sep forecast -0.8%, -2.20%- previous
• 23:50 Japan Machinery Orders YY* Sep forecast 3.5%, 11.60%- previous
• 00:30 Australia Housing Finance* Sep forecast -2%, -3.00%- previous
• 00:30 Australia Invest Housing Finance* Sep 0.10%- previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan- Bank of Japan releases its summary of opinions of the October-November policy meeting
Currency Summaries
EUR/USD is likely to find support at 1.0900 levels and currently trading at 1.0920 levels. The pair has made session high at 1.1012 and hit lows at 1.0900 levels. The euro declined sharply against the dollar on Wednesday as the dollar rebounded after investors digested Donald Trump's surprise win in the U.S. presidential election. After sharp declines in early European session, investor panic appeared to ease as they worried Trump's policies would ultimately weaken the dollar and hike inflation. Trump's win threw into question the core assumption in financial markets that the Federal Reserve will raise interest rates soon. The dollar responded by rising across the board. Against a basket of currencies, the dollar recovered from its Wednesday trough of 95.885 to reach 98.602, a gain of 0.8 percent on the day.
GBP/USD is supported in the range of 1.2350 and currently trading at 1.2416 levels. It reached session high at 1.2485 and hit low at 1.2352 levels. Sterling initially rose against US dollar on Wednesday but, gave up some ground after a surprise victory for Donald Trump in the U.S. presidential election. Investors were caught off-guard after pricing in a victory for the perceived status quo candidate Hillary Clinton and are now adjusting to the uncertainty over which policies Trump will enact and what his victory means for other populist movements. Data on Wednesday showed Britain's trade deficit with the rest of the world narrowed in the three months to September took a backseat to the U.S. election results the pound hardly moved on the figures. Sterling was last trading at $1.2416, having earlier hit $1.2547 before the final election outcome, its highest since enjoying its best weekly gains against the greenback in seven years last week.
USD/CAD is supported at 1.3360 levels and is trading at 1.3411 levels. It has made session high at 1.3438 and lows at 1.3363 levels. The Canadian dollar weakened against its U.S. counterpart in the US session as Republican Donald Trump's election to the White House raised fears about the outlook for Canada's trade-intensive economy. Trump has pledged to renegotiate or scrap the North American Free Trade Agreement, which could threaten parts of Canada's trade-intensive economy. Canada relies heavily on selling goods and services into the much larger U.S. market, and strategists said that if Trump lives up to protectionist campaign talk it could force the Bank of Canada to take more stimulative measures in order to stave off a domestic recession. The Canadian dollar was last trading at C$1.3378 to the greenback, or 74.75 U.S. cents, weaker than Tuesday's close of C$1.3305, or 75.16 U.S. cents.
AUD/USD is supported around 0.7600 levels and currently trading at 0.7640 levels. It hit session high at 0.7697 and made session lows at 0.7618 levels. The Australian dollars declined against the dollar on Wednesday as financial markets took fright after a shock win for Republican Donald Trump in the U.S. presidential election. Republican Trump stunned the world by soundly defeating heavily favored Democratic rival Hillary Clinton in Tuesday's presidential election, ending eight years of Democratic rule and sending the United States on a new, uncertain path. Trump has indicated he would spend more on developing U.S. infrastructure, which could increase the U.S. budget deficit and Treasury supply. The Australian dollar fell against the greenback to hit a 1-1/2 week low of $0.7619. It broke below key chart resistance at 77 U.S. cents, after comfortably staying above that level for 3 straight days.
Equities Recap
European shares surged on Wednesday after the surprise victory of Donald Trump in the U.S. presidential election sparked a sharp reversal driven by gains among drug makers and financial stocks.
UK's benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 1.5 percent, Germany's Dax ended down up 1.5 percent, France’s CAC finished the day up by 1.3 percent.
U.S. stocks rose sharply on Wednesday in a dramatic turnaround from deep overnight losses as Wall Street digested the upset presidential election victory of Republican Donald Trump.
Dow Jones closed up by 1.38 percent, S&P 500 ended up by 1.09 percent, Nasdaq finished the day up by 1.09 percent.
Treasuries Recap
U.S. 30-year Treasury bond yields on Wednesday posted their sharpest rise in more than five years, bolstered by expectations U.S. President-elect Donald Trump will enforce protectionist trade policies and increase fiscal spending that will boost inflation.
In late trading, benchmark 10-year notes were last down more than a point to yield 2.077 percent, up from 1.86 percent late on Tuesday. The yields rose as high as 2.092 percent, the strongest level since January.
Thirty-year bonds dropped more than 4 points to yield 2.870 percent, up from 2.63 percent on Tuesday. Earlier, yields rose as high as 2.89 percent, the highest since January.
The yield curve between five-year notes and 30-year bonds also steepened to 138 basis points, the widest since May.
Commodities Recap
Oil prices edged higher on Wednesday as stocks and the dollar bounced back from a huge early slide following Donald Trump's surprise victory in the U.S. presidential election.
Brent futures rose 32 cents, or 0.7 percent, to settle at $46.36 a barrel, while U.S. crude gained 29 cents, or 0.6 percent, to settle at $45.27 per barrel.
The price of gold turned slightly negative from the sharp gains made earlier on Wednesday, after a conciliatory victory speech from U.S. President-elect Donald Trump also helped the dollar rebound.
Spot gold was down 0.2 percent at $1,272.40 an ounce by 2:38 p.m. EST (1938 GMT).
U.S. December gold futures settled down 0.1 percent at $1,273.50, with volume surging above 785,000 contracts, the highest for the most-active contract on records going back to 1980.
