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Dec 13, 2018

EU FX I Currencies: Euro slips as ECB ends bond purchases.

David Reid

The euro fell against the dollar on Thursday after the European Central Bank as expected halted new bond purchases and promised to maintain policy support for the euro zone due to risks from trade tensions, Brexit and budget woes in Italy and France.
Sterling held steady following UK Prime Minister Theresa May’s prevailing in her party’s vote on her leadership the previous day. It had rallied on Wednesday in anticipation as traders bet her win might allow her to negotiate more generous terms for Britain in its exit from the European Union in March.
The dollar strengthened against most major currencies stemming from optimism on some progress between China and the United States to resolve their trade issues, analysts said. “Continuing confidence and increasing caution,” was how ECB President Mario Draghi at his news conference described ECB’s decision for ending the 2.6 trillion euro ($2.95 trillion), four-year-long quantitative easing program. It will reinvest cash from maturing bonds.
On the other hand, ECB kept its primary rate target at -0.40 percent. It also marked down its outlook on regional growth.
“The balance of risks remains on the downside,” said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Investments in Boston. “It’s hard for the euro rally from its current trading range.”
At 10:47 a.m. (1547 GMT), the single currency was 0.25 percent lower at $1.13405. Against the pound, it slipped 0.27 percent at 89.815 pence.
Traders’ attempt to extend sterling’ gains faded on uncertainty on what more May, who is currently in Brussels, could get from EU leaders to improve on her Brexit proposal. On Monday, May scrapped a parliamentary vote on her current plan, sending the pound to a 20-month low against the dollar and triggering a no-confidence vote on her leadership. The sterling was little changed at $1.263, retreating from an earlier peak of $1.2687. An index that tracks the greenback against the euro, sterling and four other currencies was 0.23 percent higher at 97.271.
U.S. President Donald Trump’s upbeat comments on trade talks with China and Beijing’s first major purchase of U.S. soybeans in months boosted the dollar. “While not settled, sentiment has improved,” Upadhyaya said of renewed optimism about U.S.-Sino trade relations.
Among other major currencies, the Norwegian crown had risen as much as half a percent versus the euro and dollar after Norges Bank reiterated its plans for a March rate increase. The crown gave up its earlier gains and was little changed against the dollar and only up 0.15 percent versus the euro

Source: CNBC

Bond Yields at Close Report: Treasury yields slip amid ECB rate decision, inflation data

Thomas Franck,Ryan Browne

U.S. government debt yields slipped on Thursday after the European Central Bank said it will end its enormous bond-buying program at the end of December.

The end of the central bank’s so-called quantitative easing policy will result in a steep drop in the amount of debt purchased by the ECB, from 15 billion euros per month to zero.
At 9:51 a.m. ET, The yield on the benchmark 10-year Treasury note drifted lower to 2.9 percent, while the yield on the 30-year Treasury bond dipped to 3.143 percent. Bond yields move inversely to prices.
The ECB’s asset purchasing program — under which the bank bought more than 2.6 trillion euros ($2.9 trillion) — was introduced in March 2015 in a bid to rescue the euro zone economy from deflationary forces and rebuild confidence.
Trade relations between the U.S. and China continue to dominate the headlines, as the two countries attempt to resolve their differences during a 90-day period for talks.
President Trump earlier this week tweeted that discussions with Beijing had been “very productive” and that some “important announcements” were forthcoming.
Trump has also said he would intervene in the Department of Justice’s case against Meng Wanzhou, chief financial officer of China’s Huawei, if it would help secure a trade deal with Beijing.
On Tuesday, the Labor Department’s Consumer Price Index showed no change in inflation from the previous month, following a 0.3 percent rise in October. In the last 12 months, the headline index increased 2.2 percent, down from the October year-on-year reading of 2.5 percent. Core CPI, which does not include volatile energy or food prices, increased 0.2 percent in November and is up 2.2 percent in the past 12 months.
Investors continue to look ahead to an upcoming two-day meeting of the Federal Open Market Committee (FOMC), which is scheduled to take place on Dec. 18-19. The Federal Reserve is expected to raise interest rates, however expectations for further hikes next year have tempered lately due to fears of waning economic growth.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Dec. 7, 2018.
Michael Nagle | Bloomberg | Getty Images
Trump criticized the Fed’s rate hiking path again recently, saying it would be “foolish” for the central bank to hike the federal funds rate. He said he thought of Fed Chair Jerome Powell as a “good man,” but that he disagreed with his “aggressive” stance on monetary policy.
Elsewhere in Europe, fixed-income investors looked to political developments in the U.K., after Prime Minister Theresa May won a vote of confidence from her fellow Conservative lawmakers. May’s relief over winning the vote may be short-lived, however, as she still has to convince disgruntled Conservatives as well as opposition parliamentarians to vote for her Brexit deal.

Wall Street at Close Report: Dow rises in wobbly session as Wall Street digests latest US-China trade developments

Fred Imbert,Sam Meredith

Stocks seesawed on Thursday while investors digested new developments in the ongoing U.S.-China trade war and Wall Street’s volatile week approached its end.
The Dow Jones Industrial Average closed 67 points higher after alternating between gains and losses throughout the day. The S&P 500 fell marginally, while the Nasdaq Composite dipped 0.4 percent as Amazon and Alphabet gave up their initial gains.
Equities rose broadly earlier in the day, with the Dow rising more than 200 points at its session high. The S&P 500 and Nasdaq both rose as much as 0.7 percent.
“It seems like things are headed in the right direction,” said JJ Kinahan, chief market strategist at TD Ameritrade. But “we’re going to be moving a lot until we get some resolution on tariffs.”
He said positive sentiment around trade and a sharp rebound in General Electric contributed to the early rise in equities.
On Wednesday, Reuters reported Chinese state-owned companies had bought at least 500,000 tons of U.S. soybeans. It was the first major U.S. soybean purchases in more than six months, and the clearest sign to date that China plans to step up efforts to support its slowing economy.
President Donald Trump also said he would intervene in the Justice Department’s case against Huawei CFO Meng Wanzhou if it would help smooth over U.S.-China trade relations. Meng was arrested earlier this month; her arrest is seen as a possible detriment to U.S.-China trade talks.
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange on January 17, 2018 in New York.
Bryan R. Smith | AFP | Getty Images
U.S. stocks finished higher on Wednesday, buoyed by the perceived progress in trade talks between Washington and Beijing.
Uncertainty around these trade talks have sent stocks for a wild ride as Wall Street gauges the potential impact of a prolonged conflict on corporate earnings and the global economy. The major indexes have also traded around correction territory recently, down 10 percent from all-time highs set earlier this year.
Stocks have also traded in wide ranges lately. The Dow has posted intraday swings of at least 570 points in five of the past eight sessions.
“There have been lots of reversals this week,” said Willie Delwiche, investment strategist at Baird. “If you want to get constructive in this market, tentativeness at the open is better than widespread gains.”
Jeff Saut, chief investment strategist at Raymond James, said Thursday the S&P 500 has finally reached a bottom. “On Oct. 2, we had on our short-term model a sell signal and we told people if you have trading positions you should sell,” Saut told CNBC’s “Squawk Box. ” “And we have put some of that money back to work.”
General Electric shares jumped more than 7 percent after J.P. Morgan analyst Stephen Tusa, a longtime bear on the company, upgraded GE. The analyst cited a more “balanced risk reward at current levels. ”

Source: CNBC

Gold Price at Close Report: Gold eases to 1-week low as dollar, stocks

Gold eased to its lowest in nearly one week on Thursday as the dollar rose and investors latched on to gains in global stocks, while palladium touched record highs on expectations of higher demand.
Spot gold eased 0.21 percent to $1,242.74 per ounce at 11:21 a.m. EST (1621 GMT), while U.S. gold futures settled at $1,247.40 per ounce, down $2.60.
The dollar gained against a basket of major currencies, helped by a dip in the euro after the European Central Bank reduced growth and inflation projections for next year and said the balance of risk was tilted toward the downside.
“It looks like ECB President Mario Draghi was a little more dovish than expected, so we are seeing the euro currency back off and the dollar strengthening, and this is weighing on gold prices,” said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
Also weighing on bullion was an upbeat sentiment for risk, with global stock markets receiving a boost on signs of easing U.S.-China trade tensions. “With equities rebounding this week, gold has fallen slightly out of favor as traders unwound their safe-haven bets,” said Fawad Razaqzada, an analyst with
Markets would now be turning their attention to the Federal Open Market Committee (FOMC) meeting on Dec. 18-19, with the focus on the future path of interest rate hikes in 2019.
“If the Fed adopts a more dovish stance, we should see the dollar quickly retreat and that should give gold an opportunity to rally,” Streible said.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, making it cheaper for holders of other currencies.
“Gold’s recent breakout above the $1,240 resistance means the path of least resistance is still to the upside and it should get a lift if the dollar were to fall on the back of a dovish Fed,”’s Razaqzada said.
Among other precious metals, spot palladium was down 0.7 percent at $1,253.24 per ounce, having touched a record high of $1,269.25 earlier in the session.
“Palladium has got a very firm upward trend with good fundamentals behind it. There is a lot of demand for palladium right now and it should continue to move up on a favorable supply and demand structure,” RJO Futures’ Streible said.
Silver was steady at $14.73 per ounce, having hit $14.81 earlier, its highest since Nov. 2. Platinum fell 0.6 percent to $793.60, after rising to a more than one-week peak earlier.

Source: CNBC

Metals I CMI I Spot Prices as of the Close of Trading in New York.

Spot Prices as of close of trading in New York
Thursday, December 13, 2018

Crude Oil Price at Close Report: US crude rises 2.8%, settling at $52.58, on signs of tightening oil supply

Tom DiChristopher

GS: Oil pumpjacks 171121
Pumpjacks pump petroleum from the ground on September 23, 2014 near Ruehlermoor, Germany.
David Hecker | Getty Images
Oil prices rose on Thursday, after data showed inventory declines in the United States and as investors began to expect that the global oil market could have a deficit sooner than they had previously thought.
OPEC’s output agreement with Russia and Canada’s decision to mandate production cuts could create an oil market supply deficit by the second quarter of next year, if the top producers stick to their deal, the International Energy Agency said in its monthly Oil Market Report.
U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell by nearly 822,000 barrels in the week through Dec. 11, traders said, citing data from market intelligence firm Genscape.
Stockpiles fell by 1.2 million barrels in the week to Dec. 7, disappointing some investors who had expected a decrease of 3 million barrels. The data showed stockpiles jumping by 1.1 million barrels in Cushing during that week.
Benchmark Brent crude oil was up $1.19, or 2 percent, at $61.34 per barrel by 2:28 p.m. ET. U.S. West Texas Intermediate light crude ended Thursday’s session up $1.43, or 2.8 percent, to $52.58.
“The market over the last week has attempted to stabilize and I still think that’s what is happening today,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.
“For further weakness in the market you need to see even stronger signs that demand growth is going to deteriorate and supply will continue to increase.”
Global oil supply has outstripped demand over the last six months, inflating inventories and pushing crude oil to its lowest in more than a year at the end of November.
OPEC and other big producers, including Russia, said last week they would try to trim surplus supply, agreeing to cut production by a total of 1.2 million barrels per day.
Still, Oil demand growth is slowing, OPEC says.
OPEC said on Wednesday that demand for its crude in 2019 would fall to 31.44 million bpd, 100,000 bpd less than predicted last month and 1.53 million bpd less than it currently produces.
Iranian Oil Minister Bijan Zanganeh said his country has no plans to reduce its oil production, but will remain a member of OPEC, the official news agency IRNA reported.
Factors such as production cuts and output losses elsewhere should keep markets tight in the first half, Jefferies analyst Jason Gammel said. But he added that U.S. production growth “will almost inevitably re-accelerate in 2H19 as incremental pipeline capacity is installed in the Permian Basin. This means that by early 2020 the market could move back into oversupply.”
The United States, where weekly crude production has hit a record, is set to end 2018 as the world’s top oil producer, ahead of Russia and Saudi Arabia.
Stock market investors worried about U.S.-China trade tensions breathed a sigh of relief as China made its first major U.S. soybean purchases in more than six months on Wednesday.
Crude future also drew support from indications that the trade war between the United States and China may be easing.
In a sign that China wants to lower trade tensions with the United States, the country made its first major U.S. soybean purchases in more than six months on Wednesday. Investors breathed a sigh of relief across broader stock markets.
— CNBC’s Tom DiChristopher contributed to this report.

Source: CNBC