The dollar extended its advance after Janet Yellen signalled an interest-rate hike could be imminent, while most metals declined. US equities neared record highs, while Asian stocks earlier today were mixed. The greenback’s strength weighed on oil, gold most currencies, while sovereign bonds declined.
- In her first public comments since the US election, Fed Chair Janet Yellen told lawmakers that the Fed is close to boosting borrowing costs as the economy continues to gain traction, affirming that a rate-hike could come “relatively soon”.
- Yellen declared her full intention to stay until her term expires in 2018, and stressed that the outcome of the US presidential elections hadn’t changed the Fed’s view that the case for a rate increase had strengthened.
- Consumer prices continue to accelerate higher, as CPI in October rose 0.4% month-on-month and 1.6% year-on-year, matching expectations and exceeding prior readings of 0.3% and 1.5% respectively. Stripped of the effects of food and energy prices, CPI rose 0.1% from a month earlier and 2.1% from a year earlier, less than the projected 0.2% and 2.2% respectively.
- Housing starts last month jumped 25.5% month-on-month, the fastest pace in more than 9 years.
- Jobless claims last week fell to 235,000 from 254,000, the lowest level in 40 years.
- According to Fed funds futures pricing on Bloomberg, the odds of a December rate hike is now 98%, up from 80% before the election.
- The S&P 500 Index added 0.5%, close to its record high on 15th Aug. Financials and consumer discretionary stocks led gainers.
- The benchmark 10yr Treasury yield rose 6bps to 2.30% in New York, and a further 3bps earlier today to 2.33%, its highest level this year.
- The dollar index climbed to its highest level in more than 13 years, while the Bloomberg Dollar Spot Index rose 0.4% earlier today, capping a 4.3% gain in less than 2 weeks. The dollar index has broken the all-important 100.50 multi-year resistance level.
- October headline retail sales rose 1.9% month-on-month and 7.4% year-on-year, trumping the median estimates of 0.5% and 5.3% respectively.
- Prime Minister Abe, after his first meeting with US President-elect Donald Trump, told reporters that it was a “warm” meeting and that Trump was a trustworthy leader.
- Australia’s job market slack deepened in October as the participation rate slumped to the weakest level in a decade – 64.4%, reinforcing a lack of inflation highlighted by record-low wage gains.
- Employment rose 9,800 in October, less than the 16,000 expected while September’s drop was revised lower to 29,000 from 9,800.
- The jobless rate held at 5.6%, as expected.
- Full-time employment rose 41,500, while part-time employment fell 31,700.
- Non-oil domestic exports delivered its worst surprise in 3 years yesterday, falling 12% year-on-year last month versus a -3% estimate.
- ANZ Bank noted that if exports continue to remain dismal, the odds of a technical recession for trade-dependent Singapore will continue to rise. .
- Spot gold sank 2.0% to five-month low of $1,205.71/Oz earlier today following Yellen’s hawkish comments last night. The precious metal is now back above the $1,200/Oz support.
- Spot silver fell 3.1% to $16.5478/Oz and its next support comes in around the $16/Oz handle.
- Crude oil for December delivery declined 1.2% to $44.84/bbl, as a USD rally offsets optimism offered by Saudi Arabia that OPEC will finalize a deal this month to curb output and stabilize prices.
- Spot 1.4265
- USDSGD advanced 0.8% to 1.4268, its highest level since April, following broad US dollar strength overnight.
- Near-term resistance lies around 1.4350.
- Spot 0.7386
- AUDUSD sank 2.2% to 0.7382 earlier, the currency pair’s lowest level since June.
- Support levels below come in at 0.7259 and 0.7145.
- Spot 1.3562
- USDCAD rose 1.1% to 1.3563 today, as the currency pair looks set to test the 1.3600 again.
- Having broken past the previous resistance of 1.3300 earlier this month, the momentum continues to be on the upside and the next level of resistance target comes in at 1.3815.
- Spot 6.9109
- The yuan continues its slide against the dollar, with offshore yuan weakening 0.4% earlier today to 6.9125 against the US dollar.
- The PBOC weakened its fixing this morning for the 11th straight day, its longest run on record, 0.15% lower to 6.8796 per USD and extending an 11-day fixing decline to 1.9%.
- Spot 110.78
- USDJPY gained 1.6% 110.78 today, a 5- month high, as the pair continues its ascent towards the next key resistance of 111.45.
- Spot 1.2390
- The pound weakened 0.7% against the US dollar to 1.2385, largely due to dollar strength overnight despite yesterday’s big beat in October retail sales.
- The 1.2100 handle remains a key support level, while 1.2800 acts as an important resistance handle.