Oil prices continue to track lower in the wake of late reports yesterday. This confirms that OPEC experts did not reach an output deal at their working meeting in Russia before tomorrow’s formal summit meet in Vienna.
Reports in Asia suggest the Saudi’s have offered Iran a freeze at +3.7MBD, below the +3.97MBD requested by Tehran as it recovers from western sanctions.
The financial market is worried about the outcome of the OPEC meeting in Vienna this week. Most of financial analysts expect lack of compliance as usual by OPEC members even if an output cut/freeze cut can be reached.
Algeria and Venezuela seek to reach a deal to output cut, but Saudi Arabia has recently suggested that a rate cut might not be needed because demand should recover next year. Khalid Al-Falih, the Kingdom's oil minister suggested that with oil demand expected to "recover in 2017, then prices will stabilize, and this will happen without an intervention from OPEC". Algeria and Venezuela continue to seek support from Russia. The energy ministers of both countries will meet in Algiers and then travel to Moscow on Monday.
The European Central Bank will decide at its Dec. 8 meeting on the continuation of its stimulus program, President Mario Draghi said on Monday, quashing speculation about a delay in the decision to January. As a consequence, euro fell on Monday at 1.0563
Mario Draghi said in the European Parliament that the bank's leadership "will assess the various options that would allow the governing council to preserve the very substantial degree of monetary accommodation necessary" to raise inflation toward the bank's goal of just under 2 percent.
The council will discuss whether to extend its 1.77 trillion euros ($1.87 trillion) in bond purchases, a form of stimulus that pumps 80 billion euros per month into the economy.
A strong dollar attracted fresh selling pressure around the precious metal. The Gold plunged after the release of stronger-than-expected US durable goods orders. Gold fell below $1190, for the first time since February. orders surpassed the most optimistic estimates and recorded a growth of 4.8% for October. The core durable goods orders (excluding automobile items) recorded a better-than-expected growth of 1.0%.
The Atlanta Federal Reserve is forecasting GDP rising at a 3.6 percent annual rate in the fourth quarter. The economy grew at a 2.9 percent pace in the July-September period. Gold could fall further from here, with analysts having previously highlighted a technical resistance level around $1,170 as a target. The strong economic growth outlook is likely to encourage the Federal Reserve to raise interest rates in December.
Yields are rising in the US as investors leave Fixed Income for assets like Equities.This is a consequence of Trump's indication to implement tax cuts and lift fiscal spending.
According to a survey of the Wall Street Journal, taken after the election, the unemployment rate could fall further (to 4.7% at the end of 2018), real GDP could rise more (to 2.3% by 2018), inflation is seen at 2.4% by 2018 and the 10-year yield is seen at 3%.
The price is very bullish on USD at this momet. For example, a potential target for the USD/JPY currency pair is 110.00 in the next period. If we see a reverse around 110.00, we may consider a counter trend opportunity towards 107.00.
The dollar surged to an 11-month high against the most of the currencies on Monday. China's yuan lost another third of a percent. The yuan fell to its weakest since 2010, before the launch of its offshore market. The japanese yen and the euro both sank by about another full percentage point to multi-month lows. The euro fell to $1.0726, its lowest since the beginning of the year. The dollar index rose 1 percent to 100.04, its highest since December last year.
These moves are because of expectations that Trump's administration would both boost spending and put more restrictions on trade. These steps could put an end to the low inflation which has dominated the past decade.
The 10-year Treasury note yield rose to a 10-month high of 2.3 percent in European trade. "Investors are still struggling to cope with all the implications the new U.S. president may have for the world's economy. The interest rate is expected to increase at the Fed's final policy meeting of the year in mid-December”, said Marius Ghisea, President and CEO of MS Capital Consulting.
The USD/JPY currency pair remains bullish, while the improvement in prospects for global growth is set to deliver JPY weakness.
“The U.S. dollar is strong against the major world currencies, touching its highest level in more than two weeks, hovering just below levels last seen in February. The Japanese yen is weak, underperforming with a 1.2% decline from Wednesday’s close. This currency has fallen at levels last seen ahead of the Bank of Japan disappointment from July”, said Marius Ghisea, President and CEO of MS Capital Consulting.
Despite this strong volatility, a rate hike is possible. This would mark the first rate move by the Fed since December last year.
Trump’s victory doesn’t appear to be an obstacle for a rate hike from the Fed.
Donald Trump’s balanced approach in his speech after his victory may suggest that he will allow the Fed to get on with their job. This includes hiking interest rates. The Fed doesn’t need to refrain from hiking interest rates to protect from stock market declines.
Financial markets are reacting to the triumph of Donald Trump over Hillary Clinton in the US presidential election.The US dollar has been recovered ever since Trump looked like a winner. The EUR/USD currency pair has fallen below EMA 200 (1.1047) on the daily chart. At the time of writing, the EUR/USD pair reaches 1.0935.
The NZD/JPY currency pair is sensitive to swings in broad-based market sentiment trends. This pair is responsive to economic news that shapes expectations for Reserve Bank of New Zealand (RBNZ) monetary policy. Next week, Reserve Bank of New Zealand will cut the rate. The rate cut is expected by most of the analysts and priced in.
Investors tend to favor carry trades at times of optimism about global economic performance and they avoid them at times of market stress. According to the 1 hour chart, the NZD/JPY has already risen around 200 pips these days. The price has reached 77.30 and it is above resistance 2.
According to the daily chart, the price is at Fibo 0.61 and it may fall from this level. If the price doesnt fall from this level, it may rise until Fibo 0.76 (79.40).
U.S. stocks opened higher after the Federal Bureau of Investigation (FBI) said its fresh review of Hillary Clinton’s emails won’t lead to charges.
According to the FBI Director James Comey, the bureau had "not changed its conclusions," reached in July, on Clinton's private email server. The news triggered a relief rally globally, with Asian and European indexes gaining, the dollar strengthening and gold selling off.
The Dow Jones Industrial Average quickly rose more than 250 points at the open, with Goldman Sachs contributing the most gains to the tune of 25 points. The S&P 500 advanced more than 1 percent. The Nasdaq composite outperformed, rising 1.5 percent.
According to the most market analysts if Hillary wins, this is good for stocks, if Trump wins, this is bad for stocks. "But, anyone who thinks deeper than this knows that the response is going to be much more nuanced. Ask any owner of a healthcare, financial or defense stock," said Peter Boockvar, chief market analyst at The Lindsey Group in a note.
The MPC voted unanimously to keep the key rate unchanged. It maintains the gilt-purchase target at 435 billion pounds and the corporate-bond purchase target at 10 billion pounds.
The Bank of England is ready to ease monetary policy following the inflation developments. It drops its earlier intention to cut the key rate to a new record low, according to the Bank of England governor, Mark Carney.
BOE officials have ‘limited tolerance’ to above-target Consumer price index. The central bank now sees consumer-price growth rising above its 2 percent goal early next year. It said inflation will be at 2.5 percent in late 2019, the biggest three-year overshoot it’s ever predicted. Mark Carney declined to identify if there is a rate that officials would consider too high.