Posted at 09 January 2024 / Categories Market Roundups
Market Roundup
•US Nov Trade Balance -63.20B,-65.00B forecast,-64.30B previous
•US Imports 316.90B,323.00B previous
•US Exports 253.70B,258.80B previous
•Canada Nov Building Permits (MoM) -3.9%,-1.7% forecast,2.3% previous
•Canada Nov Imports 64.17B,63.01B previous
•Canada Nov Trade Balance 1.57B, 2.00B forecast,2.97B previous
•Canada Exports 65.74B,65.98B previous
•US Redbook (YoY) 5.9%, 5.6% previous
•US IBD/TIPP Economic Optimism 44.7, 42.0 forecast, 40.0 previous
•US Atlanta Fed GDPNow (Q4) 2.2%,2.5% forecast,2.5% previous
Looking Ahead Economic Data(GMT)
•00:00 New Zealand ANZ Commodity Price Index (MoM)-1.3% previous
•00:30 Australia Nov Weighted mean CPI (YoY) 4.40% forecast,4.90% previous
Currency Summaries
EUR/USD: The euro declined against dollar on Tuesday as traders awaited inflation data on Thursday for clues on when the Federal Reserve is likely to cut rates. The focal economic data this week is the consumer price inflation report for December, scheduled for release on Thursday. Expectations suggest a 0.2% increase in headline inflation for the month, reaching a 3.2% rise on an annual basis. If the data confirms that inflation is continuing to moderate it could boost expectations for a March rate cut, though if it comes in above expectations it could also reverse some of that pricing.Fed funds futures indicate a 64% probability of a March rate cut, down from 70% a week ago, according to the CME Group’s FedWatch Tool. Immediate resistance can be seen at 1.0981(Jan 7th high), an upside break can trigger rise towards 1.1000(Psychological level).On the downside, immediate support is seen at 1.0928(38.2%fib), a break below could take the pair towards 1.0853(50%fib).
GBP/USD: The British pound weakened slightly against the dollar but remained close to a five-month high reached late last year as drop was driven by expectations that the Bank of England would potentially reduce interest rates at a later time compared to the Federal Reserve. Currently, markets anticipate the Bank of England (BoE) to commence reducing interest rates during the May meeting. In contrast, the Federal Reserve is expected to start easing its policy as soon as March, given that inflation in the UK is more persistent. Consumer price inflation stood at 3.9% in the UK in November, marking the highest among the G7 nations. However, this figure is lower than the peak of 11.1% recorded in November 2022. Immediate resistance can be seen at 1.2754(23.6%fib), an upside break can trigger rise towards 1.2778(Higher BB).On the downside, immediate support is seen at 1.2580 (38.2%fib), a break below could take the pair towards 1.2493(50%fib).
USD/CAD: The Canadian dollar fell to a near four-week low against its broadly stronger U.S. counterpart on Tuesday as investors weighed recent signs that the domestic economy is particularly sensitive to higher borrowing costs. Canada's trade surplus narrowed to C$1.6 billion in November from C$3.2 billion in October as precious metals led the first decline in exports in five months, data from Statistics Canada showed. Separate data showed the value of Canadian building permits falling by 3.9% in November from October.The loonie was trading 0.4% lower at 1.3395 to the greenback, after touching its weakest intraday level since Dec. 15 at 1.3414 .Immediate resistance can be seen at 1.3429 (38.2%fib), an upside break can trigger rise towards 1.3495 (23.6%fib).On the downside, immediate support is seen at 1.3379(50%fib), a break below could take the pair towards 1.3334 (61.8%fib).
USD/JPY: The dollar edged lower against the yen on Tuesday as traders reevaluated their expectations for interest rate cuts by the Federal Reserve, prompted by a report indicating that consumers anticipate lower inflation for the year. The New York (NY) Fed survey released on Monday showed consumers see a decrease in inflation as well as slower gains in household earnings and spending over the next several years. Last week's stronger-than-expected job numbers, combined with the latest Fed minutes, which expressed ambiguity about the timing of rate reductions, dampened expectations for an early policy easing in the U.S.According to the CME FedWatch Tool, the market currently expects a 58% chance of a rate cut during the Fed's March 19-20 policy meeting. Strong resistance can be seen at 144.68(38.2%fib),an upside break can trigger rise towards 145.85(23.6%fib).On the downside, immediate support is seen 143.62(50%fib)a break below could take the pair towards 142.70(61.8%fib).
Equities Recap
European shares were flat on Tuesday, as a sell-off in basic resources partially offset gains in healthcare stocks, while investors awaited more economic data to assess the European Central Bank's monetary policy trajectory for the year.
UK's benchmark FTSE 100 closed down by 0.13 percent, Germany's Dax ended down by 0.17 percent, France’s CAC finished the day down by 0.32percent.
The S&P 500 and Dow closed lower on Tuesday as drop was influenced by a slight increase in Treasury yields. While investors evaluated the potential timing and scale of Federal Reserve interest rate cuts in 2024, anticipating upcoming inflation data.
Dow Jones closed down by 0.42 %percent, S&P 500 closed down by 0.15% percent, Nasdaq settled up by 0.09 % percent.
Treasuries Recap
U.S. Treasury yields were little changed to slightly higher on Tuesday, with prices weighed down by a slew of government and corporate bond issuance, and investors anxiously awaiting key inflation reports later this week.
The benchmark 10-year yield was slightly up at 4.013% . Since hitting a five-month low of 3.783% on Dec. 27, the 10-year yield has gained about 12.5 basis points (bps).
Commodities Recap
Gold gained on Tuesday as investors took advantage of the previous session's price decline to buy the metal, while focus shifted to U.S. inflation data due later this week for more insights into the Federal Reserve's policy path.
Spot gold was up 0.4% at $2,035.19 per ounce as of 9:41 a.m. ET (1441 GMT), after hitting its lowest level since in over three weeks on Monday. U.S. gold futures rose 0.4% to $2,041.70 per ounce.
Oil prices surged approximately 2% on Tuesday due to heightened tensions in the Middle East and a disruption in Libyan supply, offsetting the significant losses from the previous day.
Brent crude futures settled $1.47, or 1.9%, higher at $77.59 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.47, or 2.1%, higher at $72.24.