Market Roundup
• U.S. Chicago PMI misses 54.6 vs Reuters consensus 57.0, previous 57.6.
• U.S. dollar share of global currency reserves slips in 3rd quarter.
• ECB's Coeure says policy normalisation must be discussed carefully.
• Putin says will not expel anyone in response to U.S. sanctions.
• Chile Sept-Nov jobless rate 6.2%; market expected 6.4%.
• China policymakers pledge stability for "complex" year ahead.
• Brazil Finance Minister Meirelles: downward inflation trend key for central bank to continue cutting rates.
• Meirelles: gov't cannot turn states fiscal woes into a federal problem.
• Catalan referendum on independence 'not possible' says Spain PM.
Looking Ahead - Economic Data (GMT)
• 1-Jan 1:00 China NBS Non-Mfg PMI Dec 54.7 -previous
• 1-Jan 1:00 China NBS Manufacturing PMI Dec 51.5 forecast 51.7 - previous
• 3-Jan 1:45 China Caixin Mfg PMI Final Dec 50.7 forecast 50.9 - previous
• 3-Jan N/A New Zealand Dairy Prices w/e -0.50% - previous
• 3-Jan N/A New Zealand Milk Auctions w/e 3656.0T - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0480 levels and currently trading at 1.0533 levels. The pair has made session high at 1.0577 and hit lows at 1.0512 levels. The dollar initially declined against euro on Friday as single currency dominated foreign exchange markets, with a lack of liquidity and automated short-covering, but recovered its losing streak in the US session as the session progressed. The dollar index, which measures the greenback against a basket of six major rivals, was on track to gain 3.5 percent for the year, even as the euro briefly climbed nearly two full cents in overnight trading to $1.0651, its highest since Dec. 14.The index has gained 4.3 percent since the Nov. 8 U.S. presidential election on expectations that U.S. President-elect Donald Trump's plan to boost fiscal stimulus would benefit the currency. The Federal Reserve's projections on Dec. 14 of three rate hikes for 2017 instead of the two foreseen in September have also contributed. The euro was up 0.67 percent against the dollar at $1.0561.
GBP/USD is supported in the range of 1.2283 levels and currently trading at 1.2333 levels. It reached session high at 1.2387 and dropped to session low at 1.2303 levels. Sterling fell against the dollar on Friday after hitting two-weeks high as dollar pared some losses against sterling as the session progressed in thin holiday market. The pound had initially rallied as high as $1.2387 in early European trading in thin holiday market but declined to trade at 1.2305 as dollar regained its ground against sterling. The dollar has rallied hard since the Nov. 8 U.S. presidential election on expectations that President-elect Donald Trump's plan to boost fiscal stimulus would benefit the currency. A faster projected pace of rate hikes from the Federal Reserve next year also helped the rally. Still, doubts linger about how much dollar appreciation a Trump White House will tolerate. Sterling, which has lost more than 16 percent of its value against the dollar to mark its worst year since 2008 on worries over Britain's June 24 "Brexit" vote to leave the European Union, was last trading at $1.2368.
USD/CAD is supported at 1.3356 levels and is trading at 1.3433 levels. It has made session high at 1.3454 and lows at 1.3400 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as dollar slightly softened against a basket of major currencies in thin holiday market trading. Overseas, a short-lived surge in the euro dominated foreign exchange markets, with a lack of liquidity and automated short-covering in the euro exacerbating moves, driving the U.S. dollar to its lowest since Dec. 8. The price of oil, a key Canadian export, fell on Friday but was still on track for the biggest annual gain since 2009 due to planned output cuts by major crude producers. U.S. crude prices were down 0.15 percent to $53.69 a barrel, while Brent crude lost 0.25 percent to $56.71.The Canadian dollar, which was outperforming most of its key currency counterparts, traded in line with market expectations for the end of the year. The Canadian dollar was last trading at C$1.3445 to the greenback, or 74.38 U.S. cents, stronger than the Bank of Canada's official close of C$1.3508, or 74.03 U.S. cents.
AUD/USD is supported around 0.7179 levels and currently trading at 0.7214 levels. It hit session high at 0.7244 and made session lows at 0.7208 levels. The Australian dollar strengthened against US dollar in thin holiday trading on Friday but looked set to end December lower, extending its losing streak to a third straight month. The biggest move came against the euro, which shot higher after computer-driven buying against the U.S. dollar tripped stop-loss orders. Against its U.S. counterpart, the Aussie was up 0.36 percent at $0.7204 and off a seven-month trough of $0.7160 hit last week. The Aussie is still down nearly 2 percent in December and 0.6 percent for the year, its fourth straight annual loss. Analysts expect more of the same in the New Year with the U.S. currency and Treasury yields on an uptrend following Donald Trump's upset victory in the U.S. presidential election last month. Data showing the Australian economy shrank for the first time since 2011 in the third quarter, raising the spectre of a possible recession, has also weighed on the currency.
Equities Recap
European shares posted a small loss for 2016, though strong gains among mining stocks and the oil & gas sector as well as a turnaround in banks in the latter part of the year lent support, while Britain's FTSE 100 index climbed to a record high.
The UK's benchmark FTSE 100 closed up by 0.3 percent, FTSEurofirst 300 ended the day up by 0.26 percent, Germany's Dax ended up 0.3, and France’s CAC finished the day up by 0.3 percent.
U.S. stocks pulled back on the last trading day of the year on Friday, led down by Apple and other big tech stocks, but major indexes were still poised to post solid gains for 2016.
Dow Jones closed down by 0.24 percent, S&P 500 ended up 0.43 percent, Nasdaq finished the day down by 0.87 percent.
Treasuries Recap
U.S. Treasury debt yields closed lower on Friday in a shortened session, falling for the third straight day to end a weak fourth quarter with a modest consolidation and round out a year of surprises.
Benchmark 10-year Treasury notes rose 8/32 in price to yield 2.446percent.
For the year, 10-year Treasury yields rose 17 basis points. Yields on the 10-year note fell to as low as 1.32 percent after Britain's surprise vote to exit the European Union and rose to as high as 2.64 percent in the days following the U.S. election.
Commodities Recap
Gold prices eased on Friday as gains from a weak dollar was offset by profit-taking at the end of a year in which bullion gained about more than 8 percent, snapping three years of declines.
Spot gold reached its highest since Dec. 14 at $1,163.14 an ounce, before retreating 0.7 percent to $1,150.5 per ounce. Prices were up about 8.5 percent annually, its biggest increase since 2011.
U.S. gold futures ended the session 0.6 percent lower at $1,151.7 per ounce.
Oil prices settled slightly lower on Friday, the year's last trading day, but attained their biggest annual gain since 2009, after OPEC and partners agreed to cut output to reduce a supply overhang that has depressed prices for two years.
U.S. benchmark West Texas Intermediate (WTI) crude futures were down 5 cents, or 0.1 percent, at $53.72 a barrel, while Brent fell 3 cents, or 0.1 percent, to $56.82.
Brent rose 52 percent this year and WTI climbed around 45 percent, the largest annual gains since 2009 ,when the benchmarks rose 78 percent and 71 percent respectively.
The material has been provided by InstaForex Company - www.instaforex.com