Here are the latest developments in global markets:
- FOREX: The US currency remained in the green relative to most majors though it – for the most part – gave up on a portion of gains made earlier in the day. The dollar index traded 0.1% higher at 92.45. The antipodean currencies were the ones advancing notably relative to the greenback, tracking fresh multiweek highs versus the US currency. Aussie/dollar was 0.3% up, after previously touching 0.7886, a level last reached around mid-October. The aussie is on a positive footing following the release of robust November retail sales figures. Kiwi/dollar was 0.4% higher, not far below 0.7230, its highest since later September hit earlier.
- STOCKS: European stocks were mostly in the red around midday, though losses were limited. The pan-European Stoxx 600 was down by 0.1%, with the blue-chip Euro Stoxx 50 being down by the same proportion. The UK’s FTSE 100 was 0.1% up, having earlier risen to a fresh record high of 7,763.49. The German DAX traded 0.15% down and the CAC 40 was more or less unchanged. The Italian FTSE MIB outperformed relative to blue-chip European benchmarks, being up by 0.5%. Retailers Marks and Spencer (down 5.5%) and Tesco (down 4.4%) were the FTSE’s worst performers after investor disappointment on the back of uninspiring Christmas trading updates by the two companies. Futures tracking the Dow, S&P 500 and Nasdaq 100 all traded higher by 0.1%.
- COMMODITIES: WTI was higher by 0.6%, not far below $64.08 per barrel, its highest since December 2014 tracked earlier in the day. Brent crude traded 0.3% up, also near its daily high of $69.62, a level not experienced since mid-2015. Gold was up by 0.2% at $1,319.25 per ounce. On Wednesday it benefitted on the back of dollar weakness, hitting $1,326.56, its highest since September.
Day ahead: ECB minutes due; jobless claims & PPI attracting attention in US
The eurozone’s December industrial production figures released at 1000 GMT came in stronger than analysts projected, spurring hopes for an even brighter outlook for euro area economies. October’s figures were upwardly revised as well. The rise was mostly attributed to an increase in production of capital goods – demand for which goes up when investment ticks higher – as well as production of intermediate and durable consumer goods. Euro/dollar seemed to lack direction as the numbers were released, though overall it kept recovering from losses made during Asian trading. Euro/dollar was last roughly flat at 1.1944.
Earlier in the day (0900 GMT), Germany, the eurozone’s and Europe’s largest economy, saw the release of 2017 full year GDP growth data. Those surprised to the downside, though it should be said that the preliminary estimate’s 2.2% growth still reflects the fastest pace of expansion in six years and constitutes an improvement relative to 2016’s respective figure of 1.9%. Euro/dollar did not react much as the figures went public.
Next in focus will be the European Central Bank’s minutes pertaining to the December meeting due at 1230 GMT. A hawkish or dovish tilt in policymakers’ views is expected to lead to an adjustment in long/short euro positions.
In the US, initial and continued jobless claims numbers for the week ending January 6 will be gathering attention. Those are due at 1330 GMT, with the number of individuals applying for unemployment benefits for the first time expected to stand at 245k, below the previous week’s 250k, as well as below the 300k level which is linked to a strong labor market for the 149th week in a row, the longest such run since 1970. Significant deviations from analysts’ forecasts have in the past induced positioning on the dollar.
Also at 1330 GMT, US producer price data will be made public. PPI is anticipated to grow at a softer pace in December after exceeding expectations in November and pointing to rising price pressures – US CPI figures are due on Friday, with forecasts projecting inflation to remain relatively subdued.
In policymakers’ appearances, New York Fed President William Dudley will be giving a speech on the US economic outlook for 2018 at 2030 GMT; the New York Fed President holds permanent FOMC voting rights. It should be mentioned that Dudley announced a few months ago that he will be stepping down from his role before his 10-year term at the NY Fed expires in January 2019, with speculation on who will replace him well underway.
Developments on the future of NAFTA will also be closely watched. Canadian government sources yesterday indicated that Canada is seeing rising odds that President Trump will soon announce the US’s withdrawal from the trade agreement. This acted as the catalyst for the loonie’s and the Mexican peso’s decline versus the US currency during Wednesday’s trading.