Americas roundup: Dollar index hits six-day high, Euro sinks on German political worries, Wall street rise, Oil eases as traders, investors grow edgy ahead of opec-november 21st 2017
Source: FxWire Pro - Media Round Ups / 20 Nov 2017 16:17:26 Eastern Standard Time
• Yellen in resignation to Trump says she is "Gratified" by the economy's progress since the financial crisis, pledges "Smooth Transition" to Powell.
• Fed chair Yellen announces she will also leave the board of governors seat when successor Powell is sworn in.
• Trump declares N.Korea state sponsor of terrorism, triggers sanctions.
• White House wants Republican in Alabama Senate seat for tax bill vote –adviser.
• Merkel signals readiness for new election after coalition talks collapse.
• Canada, Mexico to question U.S. auto content demands at NAFTA talks.
• EU's Barnier presses UK on Irish border Brexit problem.
• Amsterdam, Paris win post-Brexit EU agencies in lucky dip thrillers.
• Greece to overshoot budget surplus targets in 2017, 2018 - government official.
• German economy powers into year-end despite govt impasse: BuBa.
• Weak pay suggests UK can grow without pushing up inflation-BoE's Ramsden.
Looking Ahead - Economic Data (GMT)
• No major economic events are scheduled
Looking Ahead - Events, Other Releases (GMT)
• 15:00 ECB Executive Board member Benoit Coeure speaks in Frankfurt
EUR/USD is likely to find support at 1.1655 levels and currently trading at 1.1731 levels. The pair has made session high at 1.1776 and hit lows at 1.1721 levels. The euro declined against the U.S. dollar on Monday as the euro weakened amid political risks linked to German Chancellor Angela Merkel's failure to form a three-way coalition government. The dollar also strengthened as investor’s awaited minutes on Wednesday from the Fed’s last meeting. The Fed’s meeting minutes will be evaluated for any new indications that a rate hike is likely in December. Merkel, whose conservatives were weakened after they won an election in September with a reduced number of seats, said she would inform the German president that she could not form a coalition, after the pro-business Free Democrats withdrew from negotiations. The development thrust Germany, Europe's biggest economy, into a political crisis that raised worries among investors of a new election if Merkel cannot form a minority government. The euro fell to $1.1730 following news of the failure to form a coalition German government. It fell dramatically against the yen to 131.16 yen, its weakest since Sept. 15. Traders will be awaiting a speech by Federal Reserve Chair Janet Yellen late Tuesday and a release Wednesday of minutes from the Fed's November meeting for clues on the direction of U.S. monetary policy.
GBP/USD is supported in the range of 1.3200 levels and currently trading at 1.3234 levels. It reached session high at 1.3278 and dropped to session low at 1.3220 levels. Britain's pound weakened against the dollar on Monday as investors took the ongoing Brexit negotiations as mildly negative on the day. Britain will submit proposals on how to settle its divorce bill with the European Union before an EU summit next month and is expected to negotiate hard, finance minister Philip Hammond said on Sunday. The EU told Prime Minister Theresa May on Friday that there was more work to be done to unlock the Brexit talks, repeating its early December deadline for her to flesh out Britain's opening offer on the financial settlement. Last week, May met fellow EU leaders to try to break a deadlock over how much Britain will pay on leaving the bloc, an issue threatening to derail British hopes for a negotiated exit and an agreement on a new trading relationship by March 2019.May has signalled she would increase an initial offer that is estimated at some 20 billion euros ($24 billion) about a third of what Brussels wants. But Hammond, who has been criticised by supporters of Brexit for being too conciliatory towards Brussels and lobbying for a softer exit, said Britain would take a tough stance about how much it owes. The pound initially rose to a high of $1.3272 in, its strongest since Nov. 2.But dipped to trade last at $1.3234 as investors were cautious on making big bets on the British pound.
USD/CAD is supported at 1.2752 levels and is trading at 1.2806 levels. It has made session high at 1.2807 and lows at 1.2771 levels. The Canadian dollar edged lower against its U.S. counterpart on Monday as oil prices fell and investors focused on negotiations to update the North American Free Trade Agreement. Oil, one of Canada's major exports, eased as traders were wary of betting too heavily on which way prices might move ahead of next week's meeting of the Organization of the Petroleum Exporting Countries. On Friday, the loonie touched a two-week low at C$1.2824 after tame inflation data tempered prospects for the Bank of Canada to raise interest rates in the first quarter of next year. Plans by Canada's central bank to add more speeches from policymakers to its schedule after an interest rate decision will not do enough to provide clearer guidance on monetary policy. The dollar strengthened against a basket of major currencies as the euro weakened after German Chancellor Angela Merkel failed to form a three-way coalition government. The Canadian dollar was down 0.1 percent at C$1.2805 to the greenback. The currency traded in a narrow range of C$1.2756 to C$1.2807. On the data front, Canadian wholesale trade for September is due on Tuesday, and retail sales data for that month is set for release on Thursday.
AUD/USD is supported around 0.7534 levels and currently trading at 0.7548 levels. It hit session high at 0.7560 and made session lows at 0.7542 levels. The Australian dollar edged lower on Monday and stayed near five-month lows against the dollar as the greenback strengthened amid political uncertainty in Germany. The dollar touched its highest against a basket of major currencies in nearly a week as the euro weakened after German Chancellor Angela Merkel failed to form a three-way coalition government. The breakdown of talks between Merkel's conservative bloc, the liberal, pro-business Free Democrats (FDP), and environmentalist Greens raises the prospect of new elections and clouds her future after 12 years in power. The Australian dollar was last trading down at $0.7548. The Aussie has been on a downtrend since early September when it climbed atop $0.8100. The Aussie was thumped last week by surprisingly soft wage data which implied inflation will remain lukewarm in the medium term despite the recent strength in employment. The Reserve Bank of Australia (RBA) has also given a strong signal that interest rates in the country are set to stay at record lows for a long time to come. That has prompted the futures market to push out the likely timing of a hike in the 1.5 percent cash rate to early 2019. A couple of months ago, a move had been priced in for July next year. By contrast, the U.S. Federal Reserve seems hell-bent on tightening policy.
European shares rose on Monday as confidence over global economic activity and a retreating euro encouraged investors to brush off worries over the collapse of coalition government talks in Germany.
The UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day up by 0.65 percent, Germany's Dax ended up by 0.5 percent, and France’s CAC finished the up by 0.5 percent.
U.S. stocks rose on Monday, with some of the year's underperforming sectors leading the way, while high-performing tech shares were boosted by a deal in semiconductors.
Dow Jones closed up by 0.32 percent, S&P 500 ended up 0.14 percent, Nasdaq finished the day up by 0.12 percent.
U.S. Treasury yields rose on Monday as investors awaited minutes on Wednesday from the Fed’s last meeting, with no major economic releases due this week and trading expected to be subdued before the Thanksgiving holiday on Thursday.
Benchmark 10-year notes fell 5/32 in price to yield 2.37 percent, up from 2.35 percent on Friday.
Gold fell more than 1 percent on Monday, giving up the prior session's gains on pressure from the rising dollar, expectations for U.S. interest rate hikes and as the market entered a holiday week.
Spot gold was down 1.4 percent at $1,275.66 an ounce by 2:38 p.m. EST (1938 GMT), off Friday's peak of $1,297, its strongest since Oct. 16. U.S. gold futures settled down 1.6 percent at $1,275.30.
Oil prices fell 0.8 percent on Monday, extending recent weakness ahead of next week's OPEC meeting, while a rally in the dollar hurt commodities across the board.
U.S. West Texas Intermediate (WTI) crude futures settled down 46 cents or 0.8 percent to $56.09, while Brent crude futures fell 50 cents or 0.8 percent to $62.22 a barrel.© FxWire Pro 2017. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.