Gold Prices Inch Up in Asia as U.S. Jobs Data Ahead

On Friday, gold prices inched higher in Asia with the jobs statistic in the U.S.observe for indications on the predictions of the Fed Reserve rate hike path in 2017.

Delivery of gold for February on the Comex division of the New York Mercantile Exchange eased 0.20 percent to $1.178.95 a troy ounce. Copper futures increased  0.24% to $2.541 a pound.

Later on Friday, nonfarm payrolls data from the U.S. is projected to set the tone for gold as it is sensitive to higher interest rates and a stronger greenback. The Fed Reserve in December forecast as many as three rate hikes in 2017.

On Thursday, suddenly the gold prices rallied to a four week peak, as the  U.S. greenback moves further away from a 14 year high against a basket of major currencies following the release of  the statement from the Federal Reserve.

Minutes from the Fed’s December policy meeting displayed most officials thought the U.S. economy could develop more quickly because of tax reductions and infrastructure expenditure under President-elect Donald Trump’s incoming administration.

At the same time, policymakers “emphasized their considerable uncertainty” about future economic policy changes.

The minutes of the meeting also presented that policymakers assumed that Trump’s promises of fiscal stimulus could, if delivered, spur inflation, which would in turn lead to a quicker pace of rate increases this year.

On January 20, 2017, Trump will take office and has yet to plan his economic policies in details.

On Additional News

On Friday, oil prices were steady, as the beginning of supply reductions by Saudi Arabia and Abu Dhabi supported the market, however, uncertainties that all producers will carry out production cuts agreed on a landmark agreement last year kept the markets from increasing further.

Brent crude futures, the benchmark for international oil prices, were trading at $56.85 per barrel at 0238 GMT, down 4 cents from their close the prior day.

West Texas Intermediate (WTI) crude futures in the United States were at $53.74 a barrel, two cents below their last agreement.

Thursday’s prices increased after  reports of supply reductions from Saudi Arabia and Abu Dhabi coming into effect as part of efforts by the Organization of the Petroleum Exporting Countries and other producers to curb a global supply surplus.

Overall supply from Organization of the Petroleum Exporting Countries (OPEC) in the December  drop slightly to 34.18 million barrels per day (bpd) from a revised 34.38 million bpd in November, according to the reports.

Although traders stated oil markets were well supported by the agreed reductions, they said uncertainties remained that all producers would fully implement planned reductions.

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Dollar Drops versus Yen as U.S. yields Declines, holds Steady Compared to Euro and Pound

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On Thursday, the greenback dropped against  the yen as U.S. yields decline suddenly to two-week lows, however, the dollar managed to hold steady compared to the euro and pound.

The dollar declined 0.2% at 117.070 yen, having come down from a peak of 117.815 touched overnight.

Treasury yields dropped in the wake of weaker-than-expected pending home sales statistic and a robust debt auction.

The euro slightly adjusted to $1.0420 <eur=>after losing 0.4% the prior day, during which it went as low as $1.0372.

“The dollar looks like it has run its course against the yen for now. But against the euro, the dollar still has room to gain as the pair is now trying to catch up to the widening between U.S. and German yields,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

The spread between the 10-year U.S. Treasury (US10YT=RR) and German bund (DE10YT=RR) yields is the widest on record stretching back to 1990.

The spread is increasing lately on the divergence between European and U.S. central bank policy and outlooks for development and inflation.

The common currency already touched a near 14-year low of $1.0352 the previous week and analysts assume it to eventually reach parity with the dollar the approaching  year.

Sterling was flat at $1.2229. The pound was in reach of a two-month decline of $1.2201 set overnight during fresh doubt over Britain’s Brexit negotiations.

The dollar index declined 0.15% at 103.150 (DXY), however, still in reach of a 14-year peak of 103.650 struck the previous week.

The index has moved to that level on expectations that Donald Trump’s incoming administration will increase U.S. development through fiscal stimulus, which could be accompanied by monetary tightening and higher yields.

The Australian dollar increased 0.15% at $0.7188.

On Additional  New

On Wednesday, the  euro was under pressure compared to the broadly stronger U.S. greenback during  thinning pre-New Year holiday trade, with the single currency looking set to test the lows from January 2003.

The euro declined to a session low of 1.0393 against the dollar, not far from the previous week’s 13-year low of 1.0352. The pair was previously at 1.0397 by 8:05AM ET (13:05GMT), down 0.55% on the day.

Due to the holiday period, trading volumes are expected to stay light this week, as many investors already closed book before the year end, decreasing liquidity in the market, which could exaggerate market changes.

The greenback stayed well-supported after previous day’s data indicated U.S. consumer confidence reaching  its highest level over 15 years in December, in addition to robust  housing figures.

The upbeat reports supported  underscore expectations that the Fed Reserve would increase interest rates at a faster pace the approaching  year.

For the first time in a year, the Fed Reserve hiked interest rates earlier this month and expected three more increases in 2017. In contrast, the European Central Bank stays  committed to very loose monetary policies.

Higher rates increased the greenback by making the currency more attractive to yield-seeking investors.

On Wednesday, the National Association of Realtors is to publish data on November pending home sales at 10:00AM ET (15:00GMT). The report  was expected to show pending home sales increased 0.5%  the previous  month, after edging up 0.1% in October.

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December 26 – 30 Forex Weekly Outlook

On Friday, the U.S. dollar inched a little lower compared to a basket of currencies in pre-holiday trade, falling from its 14-year-peak as investors took profits in the run-up to the Christmas weekend.

The U.S.dollar index, which gauges  the greenback’s strong point against a trade-weighted basket of six major currencies, plunged 0.1% to 103.00 by late Friday. On Tuesday, the index increased to 103.62, the strongest level since December 2002.

During the week, the index gained lower  than 0.1% in thinning trading ahead of the year-end holiday period.

The dollar stayed well-supported thanks to bets of higher U.S. development and a quicker pace of interest rate surged under incoming president Donald Trump.

The Fed Reserve hiked interest rates for the 1st time in a year earlier this month and expected three more increases in 2017.

Higher rates increase the dollar by making the currency more attractive to yield-seeking investors.

Compared to the yen, the greenback decline to 117.34 on Friday, retreating from a 10-1/2 month peak of 118.65 set  the previous  week. The pair lost 0.5% on the week, snapping a six-week win streak.

Temporarily, the euro tacked on 0.2% to end at 1.0456 by late Friday, recovering from 1.0352 on Tuesday, the lowest since January 2003.

Somewhere else, the British pound declined  to a seven-week low of 1.2229, pressured by renewed improbability over the process by which Britain will exit the European Union.

In the week onward, trading volumes are projected to stay light because of the Christmas holiday and as many traders already closed books before the  year end, decreasing liquidity in the market and increasing the volatility.

The U.S. is to release reports on consumer confidence, pending home sales, and jobless privileges, as traders look for additional signal on the strength of the economy and indications on the future path of monetary policy.

Somewhere else, Japanese inflation statistics will also be in emphasis as investors weigh the need for additional stimulus in the world’s 3rd largest economy.

On Additional  News

On December 26, the Bank of Japan will announce minutes of its latest policy meeting.

To make up for Christmas Day falls on a Sunday, stock markets in Australia, New Zealand, Europe, the U.K., Switzerland, Canada and the U.S. will stay closed.

All floor trading for precious and base metals choices  will be close for the Christmas holiday.

On December 27, Japan is to release data on inflation, employment and household expenditure.

Markets in the U.K. and Canada will stay closed for Boxing Day. The U.S. is to release private sector data on consumer confidence.

On Wednesday, December 28, Japan is to produce statistic on industrial output and retail sales. The U.K. is to release industry data on mortgage approvals.  The U.S. is to publish data on pending home sales.

On Thursday, December 29, the U.K. is to post industry data on housing costs.

The euro zone is to release a report on the money supply development and private loans. The U.S. is to create data on weekly jobless claims, wholesale inventories and the trade deficit.

On December 30, in the euro zone, Spain will post monthly inflation statistics.

The U.S. is to recap the week, with data on manufacturing activity in the Chicago-region.

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Weekly Outlook: Forex December 19 to 23

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On Friday, the U.S. greenback inched lower against the other main currencies, but stayed near a 14 year peak as the first U.S. interest rate hike in a year and the possibility of  more aggressive Fed Reserve in 2017 continued to offer support.

The U.S. dollar index, that gauges the greenback’s strong point against a trade weighted basket of six major currencies, dropped 0.1% to 102.92 by late Friday, not far from Thursday’s high of 103.55, a level not perceived since December 2002.

For the week, the index increased 1.3%. The dollar climbed after the Fed hiked interest rates on Wednesday and indicated it expects to increase rates more rapidly than previously anticipated in 2017.

The U.S. central bank forecasted it would increase interest rates three times in 2017, surged from the two hikes forecasted in September.

Higher rates increase the greenback by making the currency more attractive to yield-seeking investors.

Compared to the yen, the dollar declined to 117.94 on Friday, dragging back from Thursday’s 11-month high of 118.65 as a bout of profit-taking kicked in. The pair increased 2.2% on the week.

Temporarily, the euro bounced off an overnight decline of 1.0365, the sluggish level since January 2003, to end at 1.0450 by late Friday. During week, the pair lost 1.1%.

In the week ahead, market participants will be observing the release of Thursday’s  final reading on U.S. 3rd quarter gross domestic product for fresh signs on the strong point of the economy and additional indications on the future path of monetary policy.

Temporarily, on Tuesday, market players will be awaiting a monetary policy announcement from the Bank of Japan, with most investors  anticipating  the bank to hold its negative interest rates and 10-year government bond yield object steady.

On Additional News

In  December 19, New Zealand is to produce statistics on private sector business confidence. In the euro zone, the Ifo Institute is to report on German business climate.

On December 20, the Reserve Bank of Australia is to post the minutes of its current monetary policy meeting, giving investors an understanding into how officials cite the economy and their policy options.

The BoJ is to broadcast its benchmark interest rate and post its rate statement, which outlines economic conditions and the factors influencing the monetary policy decision. The announcement is to be followed by a press conference. Canada is to post a report on wholesales.

On December 21,  New Zealand is to post data on the trade balance. The U.K. is to post statistic on public sector borrowing. The  U.S. is to publish statistic on existing home sales.

On December 22, New Zealand is to post statistic on 3rd  quarter development and recent account data.

The U.S. is to show data on 3rd quarter economic progress, initial jobless claims, durable goods orders and personal expenditure. Canada is to publish data on retail sales and inflation.

On  December 23, Financial markets in Japan will be closed for a national holiday. The U.K. is to report on the latest account and release revised data on 3rd quarter development.

Canada is to release data on economic development.The U.S. is to round up the week with figures on new home sales and consumer sentiment.

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Stocks in Asia Gain as Currency Swing Provide Prospects

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On Friday, Asian shares increased led by Japan as investors concentrated on currency plays.

The Nikkei 225 increase 0.67% asy a weaker yen supported exporters. Nintendo plunged 4.82% to 26,250 yen, and declining more than 10.8% this week. Investors were watchful ahead of the “Super Mario Run” smartphone game release on Apple (NASDAQ:AAPL) ‘s iOS.

The Shanghai Composite Index increased 0.11%, while Hong Kong’s Hang Seng Index inched up 0.12%.

The yuan drop against the greenback  for the 3rd consecutive day, reaching  the lowest level since May 2008 after the People’s Bank of China scheduled  the fixing at 6.9508 Friday.

“Chinese policymakers have been rushing to curb capital outflows and spending foreign exchange reserve to support the yuan, after the Fed raised rates and the dollar hit 14-year highs. China’s foreign exchange reserves fell more-than-expected to a six-year low of $3.05 trillion in November, “ according to the reports.

Suddenly, on Thursday, U.S. stocks were higher after the close, as gains in the Financials, Telecoms and Basic Materials sectors led stocks higher.

At the close in NYSE, the Dow Jones Industrial Average  added 0.34%, while the S&P 500 index increased 0.41%, and the NASDAQ  Composite index gained  0.36%.

On Additional News

After the close on Friday, Australia stocks were lower as losses in the Gold, Metals & Mining and Resources sectors led shares lower.

At the close in Australia, the S&P/ASX 200 decline 0.10%.

The best performers of the session on the S&P/ASX 200 were Orocobre Ltd (AX:ORE), which increased 9.14% or 0.360 points to trade at 4.300 at the close. Meanwhile, Orora Fpo(AX:ORA)  added 6.09% or 0.170 points to end at 2.960 and Estia Health Ltd (AX:EHE)  surged 5.44% or 0.130 points to 2.520 in late trade.

The poorest performers of the session were Resolute Mining Ltd (AX:RSG), which declines 8.80% or 0.095 points to trade at 0.985 at the close. M Pharma Fp (AX: MYX) dropped  8.77% or 0.125 points to end at 1.300 and Saracen Mineral Holdings Ltd (AX:SAR) declined  8.00% or 0.070 points to 0.805.

Declining stocks outnumbered progressing ones on the Australia Stock Exchange by 553 to 453 and 338 ended unmoved.

The S&P/ASX 200 VIX, which gauges the suggested volatility of S&P/ASX 200 options, declined  6.10% to 11.272 a new 52-week low.

Delivery of gold for February increased 0.19% or 2.15 to $1131.95 a troy ounce. Somewhere else in commodities trading, delivery of crude oil for January increased 0.59% or 0.30 to hit $51.20 a barrel, while the February Brent oil deal increase 0.46% or 0.25 to trade at $54.27 a barrel.

AUD/USD was unaffected 0.00% to 0.7358, while AUD/JPY increase 0.01% to 86.98.

The US Dollar Index declined 0.05% at 103.10.

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