Dollar Rebounds, Posts Notable Gains Against Peers

Trading 12 Déc 2020 Commentaire »

The U.S. dollar gained in strength against its peers on Friday as risk sentiment waned amid uncertainty about a Brexit deal and the continued impasse over U.S. stimulus talks.

The surge in coronavirus cases in several countries across the world and tighter restrictions on businesses in several places contributed as well to dollar's uptick.

Talks on U.S. stimulus failed to make progress, with Democrat House Speaker Nancy Pelosi indicating that negotiations could stretch beyond Christmas if necessary.

U.S. producer prices edged slightly higher in the month of November, according to a report released by the Labor Department. The report said the producer price index for final demand inched up by 0.1% in November after climbing by 0.3% a month earlier.

According to a preliminary report from the University of Michigan, U.S. consumer sentiment has unexpectedly improved in the month of December. The report said the consumer sentiment index climbed to 81.4 in December from 76.9 in November. The increase surprised economists, who had expected the index to edge down to 76.5.

The dollar index, which advanced to 91.04 in the European session, was last seen at 90.98, up 0.17% from previous close.

Against the Euro, the dollar firmed up to $1.2115, gaining about 0.22%.

The Pound Sterling weakened to $1.3323 a unit, giving up over 0.5% due to increasing possibility of a no-deal Brexit.

After months-long talks and with just three weeks to go until the end of the transition period, British Prime Minister Boris Johnson said there is now a "strong possibility" the U.K. will leave the EU without a deal.

European Commission President Ursula von der Leyen also said there was a "higher probability for no deal than deal."

The Yen was stronger at 104.03 a dollar, firming up from 104.22 on Thursday evening.

The Aussie was little changed against the greenback, with the AUD-USD pair quoting at 0.7537, compared to 0.7535 yesterday.

Against Swiss franc, the dollar was stronger with the dollar-franc pair at 0.8894, nearly 0.4% up from previous close.

The Loonie weakened to 1.2772 a dollar, losing about 0.25%.


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Oil Futures Settle Lower On Demand Worries

Trading 12 Déc 2020 Commentaire »

Crude oil prices drifted lower on Friday as surge in coronavirus cases and tighter restrictions on businesses in several places across the world raised concerns about outlook for energy demand.

Oil was hurt also due to uncertainty about a U.S. fiscal stimulus anytime soon, and possibility of a no-deal Brexit.

British Prime Minister Boris Johnson said there was "a strong possibility" Britain and the EU would fail to strike a new deal.

The rollout of coronavirus vaccines in the UK, and the nod for Pfizer/BioNTech vaccine from the U.S. drug regulators helped limit oil's decline.

West Texas Intermediate Crude oil futures for January ended down $0.21 or about 0.5% at $46.57 a barrel.

However, WTI futures gained about 0.7% in the week.

Brent crude futures were down $0.28 or 0.56% at $49.97 a barrel a little while ago.

In the U.S., New York governor Andrew Cuomo ordered New York City restaurants to suspend indoor dining effective Monday, following a surge in new coronavirus cases in the city.

Recent data showing a surge in crude inventories in the U.S., and increased output from Libya also weighed on oil prices.

A report from Baker Hughes said the number of active U.S. rigs drilling for oil rose by 12 to 258 this week. The total active U.S. rig count, which includes those drilling for natural gas, was also up by 15 to 338, according to the report from Baker Hughes.


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Treasuries Extend Upward Move Amid Lack Of Progress On Stimulus

Trading 12 Déc 2020 Commentaire »

Treasuries moved modestly higher during trading on Friday, extending the upward move seen over the course of the previous session.

Bond prices gave back some ground after an early advance but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.5 basis points to 0.893 percent.

The continued strength among treasuries came as lawmakers in Washington remain at an impasse over a new fiscal stimulus bill.

The Senate managed to pass a temporary spending bill to prevent a government shutdown on Saturday, but the lack of a breakthrough on a new relief package has raised concerns about traders.

Despite prolonged negotiations, Republicans and Democrats remain at odds over issues such as aid for state and local governments and unemployment assistance.

Buying interest was somewhat subdued, however, as traders also reacted to more upbeat news regarding a potential coronavirus vaccine.

On Thursday, an FDA advisory committee voted in support of the coronavirus vaccine developed by Pfizer (PFE) and BioNTech (BNTX).

FDA Commissioner Stephen Hahn subsequently said the agency will rapidly work toward finalization and issuance of an emergency use authorization.

In U.S. economic news, the University of Michigan released a report showing an unexpected improvement in consumer sentiment in the month of December.

The report said the consumer sentiment index climbed to 81.4 in December from 76.9 in November. The increase surprised economists, who had expected the index to edge down to 76.5.

Surveys of Consumers chief economist Richard Curtin said the unexpected improvement in consumer sentiment was due to a partisan shift in economic prospects.

"Following Biden's election, Democrats became much more optimistic, and Republicans much more pessimistic, the opposite of the partisan shift that occurred when Trump was elected," said Curtin.

Curtin called it "surprising" that the recent resurgence in coronavirus infections and deaths was overwhelmed by partisanship.

Traders are likely to keep a close eye on developments in Washington next week, although reports on industrial production, retail sales, homebuilder confidence and housing starts may also attract attention.

While the Federal Reserve is also scheduled to hold a monetary policy meeting, the central bank is widely expected to leave interest rates unchanged for the foreseeable future.


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Gold Futures Settle Higher

Trading 12 Déc 2020 Commentaire »

Gold prices moved higher on Friday as rising coronavirus cases, uncertainties over Brexit and U.S. stimulus, and worries about growth boosted the commodity's safe-haven appeal.

Traders were also betting on hopes the Federal Reserve will come out with some stimulus measures at their upcoming monetary policy meeting next week.

The dollar's recovery from recent slide limited gold's gains. The dollar index rose to 91.04 and was last seen at 90.97, up 0.16% from previous close.

Gold futures for February ended up by $6.20 or about 0.3% at $1,843.60 an ounce. Gold futures gained 0.2% in the week.

Silver futures for March ended flat at $24.092 an ounce, while Copper futures for March settled at $3.5280 per pound, down $0.0480 or about 1.3% from previous close.

After months-long talks and with just three weeks to go until the end of the transition period, British Prime Minister Boris Johnson said there is now a "strong possibility" the U.K. will leave the EU without a deal.

In U.S. stimulus news, U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi cited progress over a new Covid-19 relief package, although Republican Senate Majority Leader Mitch McConnell's staff were skeptical compromises could be made.

Pelosi suggested that the negotiations could stretch on after Christmas if necessary.

Coronavirus cases continue to surge in the U.S. and several countries across Europe. Germany is reportedly looking at imposing fresh lockdown measures to curb the spread of infections.

In economic news, U.S. producer prices edged slightly higher in the month of November, according to a report released by the Labor Department. The report said the producer price index for final demand inched up by 0.1% in November after climbing by 0.3% in October. Economists had expected producer prices to rise by 0.2%.

Excluding food and energy prices, core producer prices still crept up by 0.1% in November, matching the uptick seen in October. Core prices were also expected to increase by 0.2%.

According to a preliminary report from the University of Michigan, U.S. consumer sentiment has unexpectedly improved in the month of December. The report said the consumer sentiment index climbed to 81.4 in December from 76.9 in November. The increase surprised economists, who had expected the index to edge down to 76.5.


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