Here are the latest developments in global markets:
FOREX: The US currency remained broadly weaker versus other major currencies in thin trading ahead of New Year celebrations. Commodity currencies maintained their positive momentum as oil and other metals remained on the rise.
STOCKS: Major European blue-chip indices were not much changed around midday. The pan-European Stoxx 600 was roughly flat, with basic materials outperforming on the back of rising commodity prices and technology once again coming under pressure; tech stocks were the worst performers within the Stoxx 600. The blue-chip Euro Stoxx 50 was down by 0.2%. Meanwhile, the UK’s FTSE 100 was 0.1% up and not far below yesterday’s all-time high, while the German DAX was down by 0.2% and the French CAC 40 traded lower by 0.05%. Dow, S&P 500 and Nasdaq 100 futures traded up by 0.15%, 0.1% and 0.2% respectively.
COMMODITIES: Ahead of the EIA weekly report, WTI and Brent crude were up by 0.2% and less than 0.1%, at $59.71 and $66.47 a barrel respectively. They both traded close to2-½-year high levels reached earlier in the week. Gold was 0.4% up at $1,291.83 per ounce after rising to as high as $1,293.25, this being a one-month high for the precious metal which has been benefitting on dollar weakness. Copper futures rose to touch their highest since early 2014.
Day ahead: Weak dollar as markets await weekly jobless claims and crude oil figures
The dollar index, which gauges the greenback against the currencies of six major US trading partners, was 0.3% lower at 92.72. Earlier in the day in hit 92.64, its lowest since December 1.
Ten-year Treasury yields have recovered somewhat during today’s trading after falling sharply in the two days that preceded, though they still stand at a distance to last week’s nine-month high of 2.5040%. They were last at 2.4341%. The decline in long-term yields is rendering the US currency less attractive relative to counterparts, while it was not associated with a fall in short-term yields, leading to yield curve flattening and once again fueling the debate on what that could mean for the economy further ahead. Dollar/yen was 0.4% down at 112.83 after falling to a nine-day low of 112.65 earlier in the day.
Euro/dollar and pound/dollar traded higher by 0.4% and 0.3% respectively. The former recorded a one-month high of 1.1946 earlier in the day, while coming within breathing distance of late November’s three-month high of 1.1960. Pound/dollar recorded a two-week high of 1.3456.
The Swiss franc was another notable gainer versus the dollar. Dollar/franc was 0.6% down, trading not far above the more than more than three-week low of 0.9795 tracked earlier in the day.
The rally in metals kept supporting the aussie, while the kiwi rose in sympathy as well. Aussie/dollar and kiwi/dollar were up by 0.2% and 0.35% respectively. Both pairs recorded two-month highs earlier in the day, with aussie/dollar touching 0.7809 and kiwi/dollar hitting 0.7098.
Higher oil prices as well as rising expectations for another interest rate hike to be delivered by the Bank of Canada when it completes its meeting on monetary policy on January 17 have been supporting the Canadian dollar. Dollar/loonie was 0.4% down, trading close to 1.2601, this being its lowest since October 20 recorded earlier in the day.
In terms of the day’s most important releases, US initial and continued jobless claims for the week ending December 22 will be made public at 1330 GMT, with the release having the capacity to spur positioning on the dollar. December’s Chicago PMI – this being a composite measure that gauges both manufacturing and non-manufacturing activity in the area of Chicago – due at 1445 GMT might also attract some interest. The reading is expected to decline for the second straight month, though still comfortably stand above 50, this being the level that separates expansion from contraction.
Oil traders will be paying attention to the EIA report that, among others, will include information on US crude stocks for the week ending December 22. Crude inventories are forecasted to decline by around 4 million barrels, reflecting their sixth consecutive weekly decline. The release tends to generate volatility in oil prices.
