Crude oil surged to its highest level in 17 months as an agreement among OPEC and rival producers to curb output propelled energy stocks and oil-linked currencies. The US dollar pared some of Friday’s gains, while gold rebounded from a fresh 10 month-low earlier today. Most Asian equities traded lower.
- Wholesale inventories in October fell 0.4% from a month earlier, as expected, maintaining September’s pace of deceleration.
- December’s preliminary release of the University of Michigan’s consumer confidence index surged to the highest level in 23 months, up to 98.0 from 93.8, beating expectations of 94.5.
- All eyes are on the Fed this week, with the central bank widely expected to announce a rate hike on Thursday, 3am SGT. Much focus will be placed on signals on future interest rate-hikes for the year ahead.
- The S&P 500 Index extended its rally to the longest since June 2014, closing 0.6% higher on Friday; health-care shares and consumer staples took turns pacing gains. The Dow Jones Industrial Average closed at record highs as well.
- US Treasury yields rose across the board, as the benchmark 10yr yield gained 6bps to 2.47% in New York on Friday and a further 2bps this morning to 2.49%.
- The US dollar ended last week on a high, driven by strong data and rising yields; the Bloomberg Dollar Spot Index which tracks the greenback across 10 major peers gained 0.5%.
- Paolo Gentiloni has been appointed as Italy’s new Prime Minister to lead an interim government in the wake of the recent failed referendum.
- Banco Monte dei Paschi di Siena SpA is pressing ahead with its 5 billion euro capital-raising plan via debt swap, even after the ECB rejected a request for extra time to raise capital among private investors, increasing the likelihood of a government bail-out.
- Almost two-thirds of economists surveyed by Bloomberg see the Bank of England raising its benchmark from a record low as policy makers confront price growth that could exceed their 2% target as soon as the second quarter of next year.
- US President-elect Donald Trump said his support for the decades-old One China policy will hinge on cutting a better deal on trade and that other nations, especially China, shouldn’t be deciding whom he talks to. The One China policy is an acknowledgement that Taiwan and China are part of the same China, even if they disagree on what that means. China regards it as a bedrock policy, not the bargaining chip that Trump suggested.
- October machine orders rose 4.1% month-on-month and fell 5.6% year-on-year, with the former beating the consensus estimate of 1.1% and the latter missing the median forecast of -4.9%.
- PPI in November gained 0.4% from a month earlier, and declined 2.2% from a year earlier, exceeding estimates of 0.3% and -2.3% respectively.
- Spot gold retreated 0.5% to $1,154.56/Oz this morning, following Friday’s 1.4% drop, as renewed risk sentiment continues to weigh on safe haven assets.
- Meanwhile gold holdings in the SPDR gold ETF decreased by 3.26 metric tons last week, and has fallen by more than 100 metric tons since Trump won the election.
- With the $1,170/Oz support breached, the next level comes in at $1,145/Oz, while the previous support of $1,200/Oz now acts as a key point of resistance.
- Spot silver was 0.3% higher at $16.9168/Oz earlier today. The metal continues to be consolidate within the $16/Oz and 17/Oz handles.
- Saudi Arabia signalled it’s ready to cut oil production more than expected, a surprise announcement made minutes after Russia and 11 other non-OPEC countries pledged to curb output next year.
- Crude oil for January delivery jumped 5.9% to $54.51/bbl earlier today, the highest level in 17 months, and looks set to make a renewed push for the $60/bbl resistance.
- Spot 1.4316
- USDSGD jumped 1.2% to 1.4328 this morning, gaining by the most since Brexit.
- The strong rejection off the 1.4200 support suggest a move to the next resistance level of 1.4444 could be materialise soon.
- Spot 0.7456
- AUDUSD was little changed following Friday’s 0.6% decline.
- The currency pair has been struggling to trade above the 0.7500 level, and a break beyond last week’s low of 0.7413 could signal more downside.
- Support levels below come in at 0.7259 and 0.7145.
- Spot 1.3125
- USDCAD extended recent declines, falling by as much as 0.5% today to 1.3115, driven by crude oil’s jump.
- The next test for the currency pair comes in at its 200-day moving average of 1.3079.
- Spot 6.9292
- The PBOC lowered its fixing earlier today, by 0.17% to 6.9086 per US dollar.
- USDCNH was largely unchanged today, following Friday’s 0.5% gain.
- Spot 115.26
- USDJPY jumped 1.7% on Friday, and was largely unmoved earlier today, as the currency pair continues its rise to the key 116.00 resistance region.
- Support is likely to be found at the 111.00 handle.
- Spot 1.2590
- GBPUSD rebounded off one-week lows, rising 0.2% to 1.2599 earlier.
- On a longer-term basis, the 1.2300 handle remains a key support level, while 1.2800 acts as an important resistance handle.