Crude Oil Futures Settle Lower Again

Trading 21 déc 2018 Commentaire »

Crude oil futures ended lower on Friday, extending losses from previous session, amid concerns over excess supply in the market and on near term demand growth worries.

Also, traders appeared to have moved on to the sidelines due to possible government shutdown in the U.S. from Friday midnight and caution ahead of the weekend and the Christmas holiday on Tuesday.

It appears the federal government is heading toward a shutdown after President Donald Trump told House Republicans he is unwilling to sign a short-term spending bill approved by the Senate, due to a lack of funding for his controversial border wall.

Despite OPEC and non-OPEC members deciding to cut output by 1.2 million barrels per day from January 2019, crude oil prices keep hitting multi-month lows due to growing worries about global economic slowdown.

Recent data from almost all parts of the globe have been indicating a weak outlook for the global economy. The lowering of growth projections by the European Central Bank last week and disappointing reports from China, which is the second largest economy in the world continue to weigh on the commodity.

Meanwhile, a report from Baker Hughes said U.S. oil rigs count increased by 10 this week, the highest rise in six weeks.

Crude oil futures for February ended down $0.29, or 0.6%, at $45.59 a barrel, the lowest settlement price since 12 July 2017. On Thursday, crude oil futures ended down $2.29, or 4.8%, at $45.88 a barrel

Crude oil futures shed as much as 11% in the week.

Reports earlier in the day suggested the possibility of OPEC's production cuts from January to be deeper than expected. Still, traders largely shrugged off the reports and stayed wary of making fresh commitments.

Oil output from Russia hit a record high of 11.42 million barrels per day in December. Russian Energy Minister Alexander Novak has reportedly said that the country was sticking to plans to cut oil production by 228,000 barrels per day, in line with a global deal.


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Treasuries Close Roughly Flat Following Lackluster Session

Trading 21 déc 2018 Commentaire »

Treasuries showed a lack of direction throughout much of the trading session on Friday before ending the day roughly flat.

Bond prices spent most of the day lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.792 percent.

The choppy trading on the day came as traders kept an eye on developments on Capitol Hill amid a looming government shutdown.

With just hours to go before a midnight deadline, lawmakers appear to be at an impasse over funding for President Donald Trump's controversial wall on the border with Mexico.

The currently Republican-controlled House voted 217 to 185 in favor of a short-term spending bill late Thursday, although the bill includes more than $5 billion for the construction of the wall opposed by Democrats.

House Republicans took up the bill, which also provides $7.8 billion for disaster relief, after Trump said he would not sign a stopgap spending approved the Senate that did not include wall funding.

The Senate bill passed by a voice vote Wednesday night would fund key government agencies through February 8th but pushes a debate over funding for the wall into the next Congress, when Democrats will control the House.

The Senate is not expected to pass a spending bill including wall funding, as Democratic votes would be needed to reach the 60-vote threshold.

Trump has sought to blame Democrats for the potential shutdown after previously saying he would be "proud to shut down the government for border security," an issue that helped propel him to the White House.

"The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED," Trump said in a post on Twitter.

"If the Dems vote no, there will be a shutdown that will last for a very long time," he added. "People don't want Open Borders and Crime!"

Meanwhile, traders largely shrugged off mixed economic data on durable goods orders, third quarter GDP, personal income and spending and consumer sentiment.

Developments regarding the potential government shutdown may impact trading next week, although trading activity is likely to be subdued due to the Christmas Day holiday next Tuesday.

Economic reports on new home sales, consumer confidence, and pending home sales may attract attention later in the week.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of two-year, five-year and seven-year notes.

The Treasury plans to sell $40 billion worth of two-year notes next Monday, $41 billion worth of five-year notes next Wednesday and $32 billion worth of seven-year notes next Thursday.


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Dollar Rising After Deluge Of Economic Reports

Trading 21 déc 2018 Commentaire »

After recovering from a weak start, the dollar is gaining ground against all of its major rivals Friday afternoon. Traders were confronted with a large number of U.S. economic reports this morning. In addition, traders are keeping an eye on developments on Capitol Hill amid the threat of a looming government shutdown.

Reflecting downward revisions to consumer spending and exports, the Commerce Department released a report on Friday showing slightly slower than previously estimated U.S. economic growth in the third quarter.

The report said real gross domestic product surged up by 3.4 percent in the third quarter compared to the previously estimated 3.5 percent jump. The pace of GDP growth had been expected to be unrevised.

After reporting a steep drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Friday showing a rebound in durable goods orders in the month of November.

The Commerce Department said durable goods orders climbed by 0.8 percent in November after plunging by 4.3 percent in October. Economists had expected durable goods orders to jump by 1.6 percent.

Personal income in the U.S. increased by slightly less than expected in the month of November, according to a report released by the Commerce Department on Friday, although the report also showed slightly stronger than expected personal spending growth.

The Commerce Department said personal spending edged up by 0.2 percent in November after climbing by 0.5 percent in October. Economists had expected personal income to rise by 0.3 percent.

Meanwhile, the report said personal spending climbed by 0.4 percent in November after jumping by an upwardly revised 0.8 percent in October.

Personal spending had been expected to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Revised data released by the University of Michigan on Friday unexpectedly showed an improvement in U.S. consumer sentiment in the month of December. The report said the consumer sentiment index for December was upwardly revised to 98.3 from a preliminary reading of 97.5. Economists had expected the index to be unrevised.

The dollar has climbed to around $1.1375 against the Euro Friday afternoon, from an early low of $1.1474.

Germany's consumer confidence is set to remain steady at the start of next year as households as the divide between expectations on overall economic situation and personal finances widened further.

The forward-looking consumer confidence indicator is set to show a reading of 10.4 in January, unchanged from December, the market research group GfK said Friday. Economists had forecast a score of 10.3 for January.

Germany's import price growth slowed to its lowest level in six months in November, after an acceleration in the previous month, data from the Federal Statistical Office showed on Friday.

The import price index rose 3.1 percent annually in November following a 4.8 percent increase in October. The latest gain was fastest since May, when import prices rose 2.9 percent from a year ago

Export prices increased 1.7 percent year-on year in November, but fell 0.1 percent from the previous month.

The buck slid to an early low of $1.2697 against the pound sterling Friday, but has since bounced back to around $1.2635.

British business investment fell for three consecutive quarters, marking its weakest period since the 2008-09 global financial crisis, as businesses reduced spending due to the Brexit chaos.

Business investment decreased 1.1 percent sequentially in the third quarter, falling for a third consecutive quarter.

Investment declined for such a long duration for the first time since the economic downturn of 2008-2009, the Office for National Statistics said.

The greenback fell to a low of Y110.932 against the Japanese Yen Friday, but has since rebounded to around Y111.300.


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Gold Futures Retreat From 6-month High, Settle Notably Lower

Trading 21 déc 2018 Commentaire »

Gold prices drifted lower on Friday as the dollar gained in strength against most major currencies after equities declined with a government shutdown looming large.

According to reports, U.S. President Donald Trump has vowed a "very long" government shutdown if Democrats do not fund his border wall. Trump is demanding $5.7 billion, which was passed by the House of Representatives. The the demand is likely to be rejected in the Senate.

"I hope we don't but we are totally prepared for a very long shutdown," Trump said earlier in the day. In the event of there being a no deal before the midnight deadline, parts of the US government will begin to close.

With only hours to remaining to strike a deal, Mr Trump said that the "chances are probably very good" of a "Democrat shutdown".

The dollar index advanced to 96.48, gaining nearly 0.8%.

Gold futures for February ended down $9.80, or 0.8%, at $1,258.10 an ounce. On Thursday, gold futures ended higher by $11.50, or 0.9%, at $1,267.90, the highest settlement since June 25, 2018.

For the week, gold futures gained 1.4%.

Silver futures for March ended at $14.702 an ounce, down $0.167 from previous close.

Copper futures for March settled at $2.674 per pound, down $0.023 from Thursday's close.

In U.S. economic news, a report from the Commerce Department showed a rebound in durable goods orders in the month of November. The report said durable goods orders climbed by 0.8% in November after plunging by 4.3% in October. Economists had expected durable goods orders to jump by 1.6%.

Excluding a notable rebound in orders for transportation equipment, durable goods orders fell by 0.3% in November after rising by 0.4% in October. Ex-transportation orders had been expected to edge up by 0.2%.

Another report from the Commerce Department showed real gross domestic product surged up by 3.4% in the third quarter compared to the previously estimated 3.5% jump. The pace of GDP growth had been expected to be unrevised.

The increase in consumer spending, which accounts for about 70% of the economy, was downwardly revised slightly to 3.5% from 3.6%.

Revised data also showed exports plummeted by 4.9% in the third quarter after surging up by 9.3% in the second quarter.

The Commerce Department said the downward revisions to consumer spending and exports were partly offset by an upward revision to private inventory investment, resulting in a general picture of economic growth that remains the same.

Meanwhile, revised data released by the University of Michigan showed consumer sentiment index for December was upwardly revised to 98.3 from a preliminary reading of 97.5. Economists had expected the index to be unrevised.

With the unexpected upward revision, the reading on consumer sentiment in December is above the final November reading of 97.5.

Despite the recent sell-off on Wall Street, Surveys of Consumers chief economist Richard Curtin said just 12% of consumers named falling stock prices as a primary concern about recent economic developments in the last week of the survey.

The report said the current economic conditions index jumped to 116.1 in December from 112.3 in November, while the index of consumer expectations fell to 87.0 from 88.1.

With regard to inflation, one-year inflation expectations edged down to 2.7% in December from 2.8% in November and five-year inflation expectations dipped to 2.5% from 2.6%.


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China will increase economic stimulation in 2019

Trading 21 déc 2018 Commentaire »

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China announced its intention to increase the monetary and fiscal stimulus in 2019. The monetary policy of the Celestial Empire will maintain a balance between tightening and softening.

The authorities announced that next year, a significant tax cut will be implemented. Citizens will be able to count on tax deductions in the amount of 1 thousand yuan ($ 144) to 2 thousand yuan per month depending on the category of expenses. In addition, the Chinese authorities plan to continue to open domestic markets and to achieve a trade agreement with the United States.

The government also noted that, despite the weakening growth of the Chinese economy, Beijing does not intend to embark on full-scale incentives to avoid a negative impact on the yuan.

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U.S. Consumer Sentiment Unexpectedly Improves In December

Trading 21 déc 2018 Commentaire »

Revised data released by the University of Michigan on Friday unexpectedly showed an improvement in U.S. consumer sentiment in the month of December.

The report said the consumer sentiment index for December was upwardly revised to 98.3 from a preliminary reading of 97.5. Economists had expected the index to be unrevised.

With the unexpected upward revision, the reading on consumer sentiment in December is above the final November reading of 97.5.

Despite the recent sell-off on Wall Street, Surveys of Consumers chief economist Richard Curtin said just 12 percent of consumers named falling stock prices as a primary concern about recent economic developments in the last week of the survey.

"This may reflect their initial dismissal as another indication of the heightened volatility of stock prices, and not signal an emerging downtrend," Curtin said.

He added, "While next month's data may reflect increased concerns, it has been news of changing job and income prospects that have been of the greatest concern to consumers."

The report said the current economic conditions index jumped to 116.1 in December from 112.3 in November, while the index of consumer expectations fell to 87.0 from 88.1.

With regard to inflation, one-year inflation expectations edged down to 2.7 percent in December from 2.8 percent in November and five-year inflation expectations dipped to 2.5 percent from 2.6 percent.


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U.S. Personal Income Rises Less Than Expected In November

Trading 21 déc 2018 Commentaire »

Personal income in the U.S. increased by slightly less than expected in the month of November, according to a report released by the Commerce Department on Friday, although the report also showed slightly stronger than expected personal spending growth.

The Commerce Department said personal spending edged up by 0.2 percent in November after climbing by 0.5 percent in October. Economists had expected personal income to rise by 0.3 percent.

Disposable personal income, or personal income less personal current taxes, also rose by 0.2 percent in November following a 0.5 percent increase in October.

Meanwhile, the report said personal spending climbed by 0.4 percent in November after jumping by an upwardly revised 0.8 percent in October.

Personal spending had been expected to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Real spending, which is adjusted to remove price changes, rose by 0.3 percent in November after climbing by 0.6 percent in October.

With spending rising by more than income, personal saving as a percentage of disposable income dipped to 6.0 percent in November from 6.1 percent in October.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth ticked up to 1.9 percent in November from 1.8 percent in the previous month.


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Canadian Dollar Drops After Weak Canada Retail Sales, GDP Data

Trading 21 déc 2018 Commentaire »

The Canadian dollar declined against its major counterparts in the European session on Friday, after data showed that Canadian retail sales and gross domestic product rose less than forecast for October.

Data from Statistics Canada showed that GDP expanded 0.3 percent on a seasonally adjusted monthly basis in October following a 0.1 percent decrease in September. Economists had forecast a 0.2 percent rise.

Separate data showed that retail sales rose in October driven by higher sales at motor vehicle and parts dealers and gasoline stations.

On a month-on-month basis, retail sales increased a seasonally adjusted 0.3 percent in October, while economists were expecting a 0.5 percent gain. Sales grew 0.1 percent in September.

Core retail sales were flat on month after a 0.1 percent uptick in the previous month. Economists were looking for a 0.2 percent increase.

Oil prices fell amid worries a slowdown in the global economy could undercut crude oil demand.

Crude for February delivery dropped $0.72 to $45.55 per barrel.

The loonie held steady against its major counterparts in the Asian session, with the exception of the yen.

The loonie declined to 1.3564 against the greenback, its lowest since May 2017. Next key support for the loonie is seen around the 1.38 mark.

Separate data showed that U.S. durable goods orders rebounded in the month of November.

The Commerce Department said durable goods orders climbed by 0.8 percent in November after plunging by 4.3 percent in October. Economists had expected durable goods orders to jump by 1.6 percent.

The loonie dropped to a 2-day low of 0.9629 against the aussie, from an early high of 0.9565. The loonie is seen finding support around the 0.98 level.

The loonie fell to 81.95 against the yen, off an early high of 82.54. The loonie is likely to find support around the 80.00 level.

The loonie pared gains to 1.5479 against the euro, from an early high of 1.5430. The loonie is poised to find support around the 1.58 area.

Data from the market research group GfK showed that Germany's consumer confidence is set to remain steady at the start of next year as households as the divide between expectations on overall economic situation and personal finances widened further.

The forward-looking consumer confidence indicator is set to show a reading of 10.4 in January, unchanged from December. Economists had forecast a score of 10.3 for January.


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Latvia Producer Price Inflation Rises Slightly In November

Trading 21 déc 2018 Commentaire »

Latvia producer price inflation accelerated slightly in November, figures from the Central Statistical Bureau showed Friday.

Producer prices rose 5.4 percent year-on-year in November after a rise of 5.3 percent in October.

Domestic market prices increased 6.9 percent annually following a 6.6 percent rise in the previous month.

Manufacturing prices grew 4.3 percent in November and prices for electricity, gas, steam and air conditioning supply increased 9.6 percent.

On a month-on-month basis, producer prices rose 0.2 percent in November. Domestic and foreign market prices grew by 0.2 percent and 0.1 percent, respectively.


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*U.S. Personal Income Rises 0.2% In November, Personal Spending Climbs 0.4%

Trading 21 déc 2018 Commentaire »

U.S. Personal Income Rises 0.2% In November, Personal Spending Climbs 0.4%


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