America's Roundup: Dollar strengthens after Fed statement, U.S. stocks pull back after rally, Gold Slips, Oil prices drop as trifecta of trouble may cause glut-November 9th,2018

Market Roundup

• Fed leaves target interest rate unchanged in range of 2.00 percent to 2.25 percent, as expected.

• Fed repeats that inflation remains near 2 percent; long-term inflation expectations little changed.

• Fed says economic activity rising at strong rate; growth of business fixed investment has moderated from its rapid pace earlier in the year.

• Fed repeats that further gradual increases in Fed funds rate will be consistent with sustained economic expansion, strong jobs market and inflation objective.

• US 3 Nov w/e Initial Jobless claims, 214k, 214k forecast, 214k previous, 215k revised.

• US 27 Oct w/e Continued Jobless claims, 1.623M, 1.635M forecast, 1.631M previous.

• US 30-year mortgage rates rise to 7-1/2 year high -Freddie Mac.

• High-profile U.S. races still unresolved two days after election.

• U.S. Democrats seek hearing on Trump’s ouster of Sessions.

• Italy dismisses "implausible" EU forecasts, says budget is sound.

• U.S. imposes new sanctions on Russia for Crimea, rights abuses.

• UK government source plays down talk of imminent Brexit deal –PA.

• CA Oct Housing Starts, 205.9k, 200.0k forecast, 188.7k previous, 189.7k revised.

• CA Sep New Housing Price Index, 0.0%, 0.1% forecast, 0.0% previous.

Looking Ahead - Economic Data (GMT)

• 9 Nov 00:30 Australia Sep Housing Finance, -1.0% forecast, -2.1% previous

• 9 Nov 00:30 Australia Sep Invest Housing Finance, -1.1% previous

• 9 Nov 01:30 China Oct PPI y/y, 3.3% forecast, 3.6% previous

• 9 Nov 01:30 China Oct CPI y/y, 2.5% forecast, 2.5% previous

• 9 Nov 01:30 China Oct CPI m/m, 0.2% forecast, 0.7% previous

Looking Ahead - Events, Other Releases (GMT)

• 09:00 The Fed's Randal Quarles speaks on the future of financial regulation in Washington

• 10:00 ECB's Benoit Coeure speaks about the ECB's new risk-free benchmark interest rate in Frankfurt

• 13:30 The Fed's John Williams gives opening remarks before the Investing in America's Workforce Book Launch in New York City

• 13:45 The Philadelphia Fed's Patrick Harker speaks on "Workforce Investment by Sector" before the Investing in America's Workforce Book Launch, in New York City

• 14:05 The Fed's Randal Quarles speaks on "Stress Testing" before a Brookings Institution event in Washington

• 18:30 BOE's Andy Haldane speaks with Diane Coyle at the Bristol Festival of Ideas in London

Currency Summaries

EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1360 levels. The pair has made session high at 1.1445 and hit lows at 1.1349 levels. The euro slipped lower against the U.S. dollar on Thursday after the Federal Reserve held rates steady as expected, and said strong jobs and spending kept the economy on track, setting up for a rate hike in December. The central bank's statement reflected little change in its outlook for the economy since the last policy meeting in September, with inflation remaining near its 2 percent target, unemployment falling and risks to the economic outlook appearing to be roughly balanced. The euro was down 0.46 percent on the day against the greenback, which had risen ahead of the announcement. Against a basket of six rival currencies, the dollar index was up 0.6 percent from late Wednesday. The index had fallen in the wake of the U.S. midterm elections, which split power between the two houses of Congress. Democrats’ control of the House of Representatives suggests they will act as a check on President Donald Trump and could block further tax cuts and deregulation. The greenback has rallied this year since the president’s Republican Party pushed through significant tax cuts, and strong economic growth has prompted the Fed to steadily raise interest rates.

GBP/USD is supported in the range of 1.3016 levels and currently trading at 1.3057 levels. It reached session high at 1.3135 and dropped to session low at 1.3037 levels. Britain's pound declined against the dollar on Thursday as dollar rebounded and hopes of an imminent Brexit deal prompted investors to take profits.The dollar shook off its post-midterm election blues and rallied after US Federal Reserve held rates steady as expected. British Prime Minister Theresa May stepped up attempts to court European support for a Brexit deal as negotiations on securing a smooth British divorce from the world's biggest trading bloc enter their final stages. While the pound has benefited this week from signs Britain is closing in on a deal with the European Union less than five months before it is due to leave the bloc, market analysts said the British currency was ripe for a spot of profit-taking. Sterling has risen 3 percent versus the dollar this week in spite of unresolved differences over the Irish border. It is still unclear if enough progress has been made in time to hold an emergency summit of EU leaders in November to sign off on a deal. Against a recovering dollar, the pound edged 0.2 percent lower to trade at $1.3106, below a two-week high of $1.3176 hit on Wednesday.

USD/CAD is supported at 1.3066 levels and is trading at 1.3161 levels. It has made session high at 1.3181 and lows at 1.3090 levels. The Canadian dollar weakened to an eight-week low against its broadly stronger U.S. counterpart on Thursday as oil prices fell and the Federal Reserve left intact its plans to gradually raise interest rates. The Fed said ongoing strong job gains and household spending had kept the economy on track, but it did not explicitly take stock of recent volatility in U.S. equity markets. The U.S. dollar climbed against a basket of major currencies, while U.S. crude oil futures settled 1.6 percent lower at $60.67 a barrel as investors focused on swelling global crude supply. On the data front, Canadian housing starts rose in October to a seasonally adjusted annual rate of 205,925 units from September's upwardly revised 189,730 units. Economists had expected starts to rise to 200,000. In separate data, new home prices in Canada were unchanged in September for the second month in a row, Statistics Canada said. The Canadian dollar was trading 0.4 percent lower at 1.3163 to the greenback, or 75.97 U.S. cents. The currency touched its weakest level since Sept. 10 at 1.3183.

USD/JPY is supported around 113.43 levels and currently trading at 113.98 levels. It peaked to hit session high at 113.99 and made session lows at 113.58 levels. The dollar strengthened against Japanese yen on Thursday as greenback rose after Federal Reserve hinted more rate hikes. Fed policy makers, as expected, left key short-term lending rates at 2.00-2.25 percent following a two-day meeting. Their policy statement signalled more rate hikes on the way with the next one expected next month, which would be their fourth hike this year.Some traders had speculated the Fed may tone down its rhetoric to calm financial markets that were roiled in October partly on worries about rising interest rates. Interest rate futures implied a 78 percent chance the U.S. central bank would raise rates at its Dec. 18-19 meeting, little changed from late on Wednesday, CME Group's FedWatch program showed. The gains against the yen were less notable, with the dollar at roughly the equivalent to 114.01 yen, down from the day's low. The dollar has gained over the past week against the yen due to divergence in the monetary policies of the U.S. Fed and the Bank of Japan.

Equities Recap

European shares were flat to slightly higher on Thursday as a rally following U.S. midterm elections sputtered while strong results from Societe Generale, Commerzbank, and Sodexo soothed concerns about corporate earnings.

UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.04 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day down by 0.3 percent.

The S&P 500 extended its losses slightly on Thursday afternoon after a Federal Reserve statement, and energy stocks led the declines as oil prices fell.

Dow Jones closed up by 0.04 percent, S&P 500 ended down by 0.25 percent, Nasdaq finished the day down by 0.54 percent.
Treasuries Recap

U.S. Treasury yields rose on Thursday with shorter-dated ones reaching their highest levels in over a decade as the Federal Reserve hinted the U.S. economic expansion remained on track, which warrants further interest rate increases.

The two-year yield, which is most sensitive to traders' view on Fed policy, finished close to 2.977 percent, the highest in 10-1/2 years after the Fed statement.

Benchmark 10-year Treasury yields rose 2 basis points to 3.234 percent. It was still below the 7-1/2 year high of 3.261 percent set a month ago during a bond market rout.

The five-year yield rose over 3 basis points at 3.088 percent after touching 3.098 percent, the highest in a decade.

Commodities Recap

Gold eased to a one-week low on Thursday on a stronger dollar, after the Federal Reserve held interest rates steady and was seen on track for further rate hikes.

Spot gold fell 0.2 percent to $1,223.11 per ounce at 2:50 p.m. ET (1950 GMT), after touching its lowest since Nov. 1 at $1,219.59 earlier in the session.

U.S. gold futures for December delivery settled down $3.60, or 0.29 percent, at $1,225.10

Oil prices fell nearly 2 percent on Thursday as investors focused on swelling global crude supply, which is increasing more quickly than many had expected.

Brent crude futures, the global benchmark, fell $1.42, or 1.97 percent, to settle at $70.65 a barrel, the lowest since mid-August. U.S. crude futures fell $1.00, or 1.6 percent, to $60.67 a barrel, the lowest since March 14.


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