Here are the latest developments in global markets:
FOREX: The dollar posted some gains to climb further above a 3½-month low versus a basket of currencies hit on Tuesday. The euro eased versus the greenback despite the release of positive jobs data out of Germany, while pound/dollar lost some ground following the release of construction PMI figures that came in below analysts’ expectations; the pair previously crossed above the 1.36 handle to record its highest since late September.
STOCKS: European equity markets were broadly in the green. The pan-European Stoxx 600 was 0.3% up near midday, while the blue-chip Euro Stoxx 50 traded higher by 0.25%. The UK’s FTSE 100 was up on the margin after yesterday’s retreat from record high levels; sterling being on the rise weighed on the export-heavy benchmark during Tuesday’s trading. The German DAX and the French CAC 40 traded up by 0.5% and 0.4% respectively. The Italian FTSE MIB underperformed, being down by 0.2%. Retailer Next (up 7.7%) was a notable outperformer, leading gains within the FTSE as well as being one of the top performers within the Stoxx 600 after the firm upgraded its profit guidance on the back of better-than-anticipated Christmas sales. The new EU-wide MiFID financial market rules and what they mean moving forward were also gaining attention during today’s European session. Dow, S&P 500 and Nasdaq 100 futures all traded up by 0.2%.
COMMODITIES: WTI and Brent crude recovered from morning losses to both trade higher by 0.4%, at $60.63 and $66.84 per barrel respectively. Both benchmarks were close to yesterday’s 2½-year highs. Gold was down by 0.2%, at $1,315.12 an ounce after touching $1,321.33 earlier in the day, its highest since mid-September. Should it finish lower, this would mark its first daily decline in numerous days.
Day ahead: Fed meeting minutes awaited; euro retreats despite positive surprise in German labor data
The dollar index, which gauges the greenback’s strength versus the currencies of six major US trading partners, was 0.25% up at 92.10 ahead of the FOMC minutes pertaining to December’s meeting. This compares to 91.75 recorded on Tuesday, the index’s lowest since September 20. A hawkish or bearish bias in policymakers’ views has in the past spurred movements in the dollar and is expected to do so again as the minutes go public at 1900 GMT. Dollar/yen was roughly flat at 112.23 after touching 112.04 on Tuesday, its lowest since December 15.
Euro/dollar was 0.4% down, giving up most of yesterday’s advance that saw it hit 1.2082, coming close to September 8’s 1.2092 which is also the highest for the pair in nearly three years. The decline could be in part attributed to profit-taking ahead of sizable gains in preceding days as well as positioning ahead of upcoming releases, with lower European bond yields in today’s trading also possibly playing a role. The pair failed to find support from largely upbeat labor market data out of Germany, eurozone’s – and Europe’s – largest economy that saw the unemployment rate decline to the post-reunification low of 5.5%. Despite the decline, euro/dollar remained above 1.20.
Pound/dollar was down by 0.2%. Despite falling, the pair consolidated around 3½-month high levels. Earlier in the day it touched 1.3612, its highest since September 20. The pair retreated after December’s Markit/CIPS construction PMI came in below expectations and reflected a slowdown relative to November’s five-month high of 53.1; the first such slowdown since September. The respective figure for the services sector – by far the largest sector in the UK – is due on Thursday.
In commodity currencies, the antipodeans recovered from earlier losses to trade roughly flat versus the greenback. Aussie/dollar and kiwi/dollar were at 0.7832 and 0.7099 respectively, trading not far below their highest since late October hit on Tuesday. The oil-linked Canadian dollar lost some ground versus the its US counterpart, though it still traded close to its highest in two-and-a-half months (as dollar/loonie touched 1.2496 earlier in the day).
In terms of other data, the US will see the release of figures on November construction spending and ISM’s manufacturing PMI for the month of December. Both figures are expected to ease, though the latter one only slightly so. Any surprises are likely to see forex market participants positioning accordingly. December total vehicle sales out of the US are due at 2030 GMT, while the API’s weekly report that includes information on, among others, US crude stocks, has the capacity to lead to movements in oil markets.
