Here are the latest developments in global markets:
- FOREX: The dollar index remained pressured near three-year lows, at 90.34 (-0.16%), as investors were waiting for US Senators to prevent a potential government shutdown today. Traders were also pricing that the dollar might lose steam versus its peers if other central banks follow the Fed by tightening monetary policy. Dollar/yen lost 0.38%, retreating to an intra-day low of 110.48. Pound/dollar reversed today’s gains, edging down to 1.3873 after monthly retail sales in the UK declined more than expected in December, seeing the biggest fall since the beginning of 2017. Euro/dollar inched up to 1.2259 (+0.18%) and euro/pound rose to 0.8833 (+0.28%).
- STOCKS: European stocks headed higher with mining sectors leading the gains and offsetting losses in energy shares after China reported a robust industrial data.The pan-European STOXX 600 jumped to fresh 2 ½-year highs and the blue-chip Euro STOXX 50 held onto gains, supported by optimism on global economic performance. The former rose by 0.45% and the latter by 0.40% at 1100 GMT. The German Dax 30 surged by 1.08%, the French CAC 40 gained 0.56%, while the British FTSE 100 rose by 0.31%. Concerns on profits from Dignity and Carpetright as well as a drop in last month’s retail sales weighed on British stocks.
- COMMODITIES: Oil prices managed to pare part of earlier losses after the International Energy Agency said on Friday that global oil markets are tightening faster due to falling supplies in Venezuela which are currently at 30-year lows and are projected to decline even further. WTI crude bounced to $63.64 per barrel (-0.83%) and Brent crawled up to $68.72 (-0.89%) but both remained relatively weak on the day. Gold consolidated around $1,335 per ounce, remaining 0.61% up on the day.
Day ahead: US Senate votes on government’s spending bill
Economic releases will be limited during the rest of the day, with the US and Canada releasing data on consumer sentiment and manufacturing sales respectively.
At 1330 GMT, Canadian manufacturing sales for the month of November are expected to post a strong rebound, rising by 2.0% m/m after falling by 0.4% in October. This would be the highest growth seen in a year.
In the US, the University of Michigan will give preliminary estimates on US consumer sentiment for the month of January at 1500 GMT. Analysts anticipate the index, which gauges the relative level of current and future economic conditions, to take off from three-month lows and climb by 1.1 points towards 97.
A Senate vote on the government’s funding bill, though, will be in main focus in the US as the bill which has been extended three-times so far expires today. Yesterday, the House of Representatives approved a spending bill through February 16 but the battle might be harder in the Senate as some Republicans and Democrats Senators recently expressed their opposition to the House bill. Now markets believe that the Senate might pass a shorter-time-period funding bill in order to avoid a potential government shutdown and gain more time to negotiate the plan.
In oil markets, Baker Hughes will issue readings on the US oil rig count at 1800 GMT. In other news, OPEC and non-OPEC members will gather in Oman over the next two days to review their strategy to cut global supply, with the Russian energy minister Alexander Novak saying that the meeting could include mechanisms to gradually exit supply cuts after the deal concludes in the end of the year.
Turning to public appearances, the Boston Fed President John Williams will participate in an informal discussion titled “Thoughts on the Economy” at 1345 GMT. The Fed Vice Chair for Supervision, Randal Quarles will follow later at 1800 GMT, speaking on Bank Regulation before the American Bar Association Banking Law Committee annual meeting, while the San Francisco Fed President John Williams will also be talking at a Bay Area forecasting conference at 1830 GMT. All three are FOMC voting members.