Here are the latest developments in global markets:
- FOREX: Encouraging data out of the Eurozone including on retail sales and economic sentiment did little for the euro which pared a small part of earlier losses in the wake of the figures. Euro/dollar continued to trade weaker, slightly below the 1.20 handle (-0.32%) as traders engaged in profit-taking. This compares to last week’s four-month peak of 1.2089. On the other hand, the UK’s disappointing housing figures kept the pound under pressure, with pound/dollar remaining close to intraday lows at 1.3459 (-0.18%). The dollar index inched below the 92-key level (+0.26%) against a basket of six currencies but maintained its upside momentum as markets continued to bet that the Fed would proceed with further monetary tightening this year. Dollar/yen stood flat at 113.13 after retreating from three-week highs reached early today, while aussie/dollar was on the backfoot, slipping to 0.7836 (-0.33%).
- STOCKS: European shares followed their Asian counterparts and hit new highs on Monday as confidence in the Eurozone’s economic performance continued to feed investor’s appetite for riskier assets ahead of corporate earnings releases. The pan-European STOXX 600 jumped to a more-than-two-year high, lifted by rising auto shares, being 0.20% up on the day at 1000 GMT. The blue-chip Euro STOXX 50 gained 0.30% with all sectors being in the green. The German DAX 30 and the French CAC 40 increased by 0.36% and 0.32% respectively. The British FTSE 100 was steady around Friday’s record peak. US futures on major Wall Street indices were all up.
- COMMODITIES: Oil prices held onto gains, with WTI crude climbing by 0.60% to $61.81 per barrel and Brent rising by 0.28% to $67.81. A Reuters survey showed that OPEC compliance to supply cuts strengthened in December due to output cuts in Venezuela and other production drops in other OPEC countries. Gold steadied at $1,320.40 per ounce, trading near three-week highs it first hit on Thursday.
Day ahead: FOMC members in focus; May initiates Cabinet reshuffle
Looking forward to the day, the economic calendar will gather little attention as data releases will be relatively light. Instead, the focus will turn to speeches made by FOMC members as investors seek for new clues on the path of US interest rates which federal fund futures suggest rising twice – by 25 bps each – this year. Moreover, a cabinet reshuffle is anticipated to take place today in the UK.
At 1740 GMT, the Atlanta’s Fed President Raphael Bostic will speak on the economic outlook and monetary policy before the Rotary Club of Atlanta, while John Williams (1835 GMT) and Eric Rosengren (2125 GMT), the San Francisco and the Boston Fed Presidents, will follow up, participating in a panel discussion before the Brookings Institution event titled “Should the Fed stick with the 2-percent inflation target or rethink it?”.
Meanwhile in the UK, the British Prime Minister is expected to hold the third cabinet reshuffle later on Monday since her appointment in July 2016. The reshuffle, triggered by the forced resignation of Damian Green as the first secretary of state due to sexual harassment, is expected to continue into Tuesday, and be an opportunity for May to unify the already divided-over-Brexit Conservatives and refresh the government. However, Philip Hammond (Chancellor of the Exchequer), Boris Johnson (Foreign Secretary) and David Davis (Brexit Secretary) are among ministers anticipated to remain in place.
In other political news, North and South Korea officials will meet early on Tuesday at 0300 GMT – this being the first high-level meeting since 2015 – to primarily discuss North Korea’s participation in next month’s Winter Olympics in Pyeongchang. Yet, markets see the talks as a great chance for the sides to express what they can offer beyond cooperation on the Olympics. According to South Korea’s government officials, the South Korean President Moon Jae-in and the North Korean leader Kim Jong-Un will be able to listen to the discussions and if needed to intervene.