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America's Roundup: Dollar under pressure as U.S. yields fall, Wall Street slides, Gold holds near five month peak, Oil sinks after OPEC delays output decision-December 7th,2018

Market Roundup

• Fed's Kaplan says if there is a slowdown in global growth, then the US will not be immune.

• Kaplan: Longer end of yield curve reflects slower growth outlook.

• Atlanta Fed's Bostic: Fed should proceed to neutral rate.

• Bostic says does not expect surge in investment and likely cooling of recent “torrid” pace of consumer spending.

• Rejecting suggestions of delay, UK PM May's team says Brexit vote will go ahead.

• Oil dives 4% after OPEC delays output decision.

• Investors slash Bank of Canada rate hike bets as Poloz frets on oil.

• US Oct Goods Trade Balance (R), -76.98 bln, -77.25B previous.

• US Oct International Trade $, -55.5 bln, -55.0 bln forecast, -54.0 bln prev, -54.6 bln previous.

• US 1 Dec, w/e Initial Jobless Claims, 231k, 225k forecast, 234k previous, 235k previous.

• US 1 Dec, w/e Jobless Claims 4-Wk Avg, 228.00k, 223.25k previous, 223.75k revised.

• US 24 Nov, w/e Continued Jobless Claims, 1.631 mln, 1.700 mln forecast, 1.710 mln previous, 1.705 mln revised.

• US Nov ADP National Employment, 179k, 195k   forecast, 227k previous, 225k revised.

• US Q3 Labor Costs Revised, 0.9%, 1.1% forecast, 1.2% previous.

• US Q3 Productivity Revised, 2.3%, 2.3% forecast, 2.2% previous.

• US Nov Markit Comp Final PMI, 54.7, 54.4 previous.

• US Nov Markit Svcs PMI Final, 54.7, 54.4 previous.

• US Oct Factory Orders MM, -2.1%, -2.0% forecast, 0.7% previous, 0.2% revised.

• US Nov ISM N-Mfg PMI, 60.7, 59.2 forecast, 60.3 previous.

• US Nov ISM N-Mfg Bus Act, 65.2, 62.0 forecast, 62.5 previous.

• US Nov ISM N-Mfg Employment Idx, 58.4, 59.7 previous.

• US Nov ISM N-Mfg New Orders Idx, 62.5, 61.5 previous.

• CA Oct Trade Balance C$, -1.17 bln, -0.70 bln forecast, -0.42 bln previous, -0.89 bln revised.

• CA Nov Ivey PMI SA, 57.2, 59.7 forecast, 61.8 previous.

Looking Ahead – Economic Data (GMT)

• Dec 6 21:30 Australia Nov AIG Construction Index, 46.4 previous

• Dec 6 23:30 Japan Oct All Household Spending YY, 1.4% forecast, -1.6% previous

• Dec 6 23:30 Japan Oct All Household Spending MM, 1.4% forecast, -4.5% previous

• Dec 7 00:00 Japan Oct Overtime Pay, 0.4% previous

• Dec 7 00:00 Japan Oct Overall Lab Cash Earnings, 1.1% previous, 0.8% revised

• Dec 7 02:00 New Zealand  Nov Reserve Assets Total NZD, 27,645 mln

• Dec 7 05:00 Japan Oct Coincident Index, -2.1 previous, -1.2 read

• Dec 7 05:00 Japan Oct Leading Indicator, -0.6 previous, -0.2 read

Looking Ahead – Events, Other Releases (GMT)

• Dec 6 23:45 Fed Chairman Jerome Powell speaks at a conference in Washington D.C. 

• Dec 6 23:30 Fed New York President John Williams participates in a moderated discussion in New York 

• Dec 7 08:30 ECB Executive Board Member Benoit Coeure speaks at a meeting in Frankfurt

• Dec 7 17:15 Fed Board Governor Lael Brainard speaks on “Financial Stability” at an event in Washington D.C.

Currency Summaries

EUR/USD is likely to find support at 1.1308 levels and currently trading at 1.1371 levels. The pair has made session high at 1.1411 and hit lows at 1.1356 levels. The euro rose higher against dollar on Thursday, as U.S. Treasury yields tumbled and traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and heightened market volatility. Fed policymakers are still widely expected to raise interest rates again at their Dec. 18-19 meeting, but the market focus is on how many rate hikes will follow in 2019.Interest rate futures implied traders see no more than one rate increase from the Fed in 2019, compared with expectations a month earlier for possibly two rate hikes, according to CME Group's FedWatch program. Data on Thursday also weighed on the greenback. The U.S. trade deficit jumped to a 10-year high in October as soybean exports dropped further and imports of consumer goods rose to a record high, suggesting the Trump administration's tariff-related measures to shrink the trade gap likely have been ineffective. Separately, data showed private employers hired fewer workers than expected in November, pointing to a moderation in the pace of job growth.

GBP/USD is supported in the range of 1.2691 levels and currently trading at 1.2776 levels. It reached session high at 1.2810 and dropped to session low at 1.2749 levels. The British pound strengthened against the greenback on Thursday, as weaker dollar on the back of falling U.S. Treasury yields offered some respite to the battered pound. The British currency hit a 1-1/2 year low earlier this week as May battles to get the Brexit deal she negotiated with the European Union through parliament in a vote scheduled for Tuesday with the treaty facing heavy opposition from lawmakers both for and against Britain leaving the bloc. Sterling rose 0.3 percent to $1.2778 and moving further away from a June 2017 low of $1.2659 hit earlier this week. Against the euro and the yen, the pound was flat at 89 pence and 143.63 yen respectively. The proportion of investors looking to raise their holdings of UK assets fell to 15 percent from 21 percent in the third quarter, according to a State Street Survey, indicating investors are growing wary as Brexit talks approach a crunch point. The pound and the British stock market top the list of bearish bets among global investors due to Brexit concerns though that could lead to a big snap back if an orderly Brexit or no-Brexit are the outcome.

USD/CAD is supported at 1.13320 levels and is trading at 1.3383 levels. It has made session high at 1.3443 and lows at 1.3377 levels. The Canadian dollar edged lower against its U.S. counterpart on Thursday, as Bank of Canada Governor Stephen Poloz said the economy was weaker than forecast and predicted low oil prices would cut growth. Poloz's comments were likely to reinforce market expectations that the pace of future rate hikes will ease off. Poloz, speaking a day after the central bank kept interest rates on hold, repeated that more tightening would be needed to keep inflation on track but added the pace would be decidedly data-dependent. Oil prices tumbled about 3 percent in a volatile session on Thursday after OPEC signaled it may agree to a smaller output cut than expected and as concern over the economic impact of trade tensions hit global stock markets.On the data front, Canada's trade deficit widened in October to C$1.17 billion ($0.87 billion), as both imports and exports dipped, Statistics Canada said on Thursday. The Canadian dollar was trading down 0.2 percent against the greenback, at 1.3387. The currency hit its weakest level since June 12, 2017 at 1.3443 earlier in the session.

USD/JPY is supported around 112.00 levels and currently trading at 112.48 levels. It peaked to hit session high at 112.70 and made session lows at 112.21 levels. The dollar declined against Japanese yen on Thursday, after the arrest in Canada of a top executive of Chinese tech giant Huawei prompted fears of a flare-up in U.S.-China trade tensions. The dollar has been under pressure over concern about a possible U.S. recession. But the arrest of Huawei Technologies chief financial officer increased safe-haven demand for the currency as doubts emerged over a truce on trade struck days ago between Presidents Donald Trump and Xi Jinping. Investors grew cautious and pulled back from riskier assets the Japanese yen, often sought in times of market unrest, rose 0.4 percent. Against a basket of six rivals , the dollar edged up 0.2 percent to 97.202. The currency has fallen 0.4 percent this week but is only half a percent off a 17-month peak of 97.693 touched on Nov. 12. The yen rose to 112.645 against the dollar and made strides against most of its peers. Traders' attention is now turning to Friday's U.S. non-farm payrolls report, which is also likely to be on the U.S. central bank's radar.

Equities Recap

European shares sank on Thursday after the arrest of a top executive at China's Huawei fanned worries over the Sino-U.S. trade war, sending global stocks spiralling downward with tech and auto among the worst-hit areas.

UK's benchmark FTSE 100 closed down by 3.6 percent, the pan-European FTSEurofirst 300 ended the day down by 3.31 percent, Germany's Dax ended down by 3.9 percent, France’s CAC finished the day down by 3.7 percent.

U.S. stocks fell on Thursday as the arrest of a top Chinese technology executive stirred fears of fresh tensions between the United States and China over trade, although Wall Street's main indexes reduced steep losses from earlier in the session.

Dow Jones closed down by 0.37 percent, S&P 500 ended down by 0.31 percent, Nasdaq finished the day down by 0.14 percent.

Treasuries Recap

U.S. Treasury yields tumbled on Thursday, with 10-year yields hitting three-month lows, as traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and market volatility.

the yield on two-year Treasury notes fell 6 basis points to 2.763 percent after touching 2.693 percent, its lowest level since Sept. 10.
The benchmark 10-year yield hit a three-month trough of 2.826 percent. It was last down over 5 basis points at 2.867 percent.

Commodities Recap

Gold rose on Thursday to near a five-month peak on a weaker dollar and on expectations the pace of U.S. interest rate hikes will slow, with the bullion also getting support from falling equities.

Spot gold was up 0.2 percent at $1,239.44 per ounce at 13:48 EST (1848 GMT), having earlier reached $1,244.32 per ounce, its highest since July 17. U.S. gold futures settled up $1, or 0.1 percent, at $1,243.60.

Oil fell about 3 percent in choppy trading on Thursday after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter the next day.

Brent crude futures were down $1.74, or 2.8 percent, on the day to $59.82 a barrel by 1:53 EST (1853 GMT), off the session low of $58.36. U.S. crude futures fell $1.60, or 3 percent, to $51.29 a barrel, bouncing off the session low of $50.08 a barrel.
 


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