Here are the latest developments in global markets:
- FOREX: The dollar was not much changed versus other major currencies as trading is getting thinner ahead of the Christmas holidays and as the House of Representatives is anticipated to cast a final vote in favor of tax reforms later in the day.
- STOCKS: European equities were heading lower, though losses were limited for the most part. At 1120 GMT, the pan-European Stoxx 600 was down by 0.2% and the blue-chip Euro Stoxx 50 traded lower by 0.4%. The UK’s FTSE 100, German DAX and French CAC 40 were down by 0.2%, 0.25% and 0.3% respectively. Eurozone’s exporter-heavy benchmarks, such as the DAX, were likely under pressure due to a rising euro as a result of rising German bond yields. Dow and S&P futures were up by 0.3%, while Nasdaq 100 equivalents traded higher by 0.35%.
- COMMODITIES: Ahead of the weekly EIA report on US crude stocks, WTI was up by 0.3% at $57.73 a barrel and Brent crude was 0.05% down at $63.77. Gold gained 35% to trade at $1,266.08 per ounce, only marginally below its highest in two-weeks hit earlier in the day.
Day ahead: New Zealand GDP in focus while Swedish currency rises
The Swedish central bank maintained its benchmark rate at -0.50% and said it would reinvest coupons and cash from maturing bonds as it completed its meeting on monetary policy earlier today. The Riskbank left its projections on the timing of monetary policy normalization unchanged, expecting the repo rate to slowly begin rising in mid-2018, while adding that the outlook for inflation and economic activity was unchanged for the most part relative to the last time it met to set interest rates in October.
The Swedish currency surged within the first few minutes of the policy announcement with euro/stocky falling to a two-week low of 9.8592, and dollar/stocky touching 8.3158, this being a three-week low. The euro and the dollar later recovered somewhat, though they were still last down by 0.5% and 0.6% respectively versus the Swedish krona.
The Confederation of British Industry distributive trades survey’s retail sales balance slid to +20 in December as expected. This compares to +26 in November. The survey projected robust expansion in UK retail sales as we’re getting closer to Christmas, though retailers continue facing challenges in underlying trading conditions as consumers are seeing their purchasing power decline. Sterling experienced volatility following the release, initially gaining versus the dollar and the euro but soon after it gave up part of the gains.
On a relatively light day in terms of releases, the US will see the release of figures on November existing home sales at 1500 GMT. The pace of growth in sales is expected to ease relative to the preceding month. The greenback will be eyed for any surprise in the numbers that have the capacity to spur positioning on the currency.
Before that, loonie traders will be keeping an eye on Canada’s October wholesale trade data due at 1330 GMT.
New Zealand third quarter GDP growth figures are scheduled for release at 2145 GMT. Analysts are projecting a slowdown in the pace of expansion during the quarter. The kiwi will be in focus as slowing economic activity has the capacity to delay the RBNZ’s policy normalization plans.
A hearing on the November Financial Stability Report will be taking place at 1315 GMT and will among others feature BoE Governor Mark Carney and Deputy Governor Sam Woods.
Back in the US, the House of Representatives is widely expected to revote in favor of the tax reform bill – a second vote is needed due to procedural issues. The passage of the bill is already priced in by markets with limited, if any, movement expected to take place in relation to this.
In oil markets, the EIA’s weekly report on, among others, US crude stockpiles, is due at 1530 GMT. The release has the capacity to move oil prices.