Market Review - 12/01/2019 03:24GMT
Dollar rises broadly on fall in euro, sterling jumps on report Britain will delay Brexit date
The greenback swung wildly in hectic trading and ended up against its peers on Friday except vs the pound. Dollar's intra-day rally occured in New York morning as the single currency tanked on broad-based selling in euro together. The British pound jumped to a 1-month high in Europe on media report that Britain will delay Brexit date, but was later dismissed by UK PM May, however, cable resumed intra-day gain later climbed to session highs of 1.2866.
Reuters reported U.S. consumer prices fell for the first time in nine months in December amid a plunge in the cost of gasoline, but underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily.
The Labor Department said on Friday its Consumer Price Index dipped 0.1 percent last month, the first drop and weakest reading since March. The CPI was unchanged in November. In the 12 months through December, the CPI rose 1.9 percent after increasing 2.2 percent in November.
Excluding the volatile food and energy components, the CPI increased 0.2 percent, advancing by the same margin for a third straight month. In the 12 months through December, the so-called core CPI rose 2.2 percent, matching November's increase.
December's inflation readings were in line with economists' expectations.
Versus the Japanese yen, although dollar swung broadly sideways in Asian and European session, price retreated to 108.15 at New York open on falling U.S. Treasury yields, however, the pair rose to 108.60 on renewed usd's strength before swinging sideways.
The single currency traded with a firm bias and rose from 1.1496 in Australia to 1.1532 at European open. Despite retreating to 1.1516, euro climbed in tandem with sterling to intra-day high of 1.1540, however, price fell sharply to session lows of 1.1458 in New York morning on brod-based selling i eur especially vs the pound.
The British pound went through a volatile session. Cable initially edged up to 1.2768 in Asia and despite a brief but sharp fall to 1.2710 in European morning on cross-selling in sterling, price swiftly rallied to session highs at 1.2851 after media reported of a possible delay to Brexit date, however, the pair pared its gains and quickly retreated to 1.2775 after UK PM May's dismissal of said report. Later, the pound rebounded to 1.2836, then weakened in tandem with euro to 1.2776 in New York but later climbed again to session highs of 1.2866.
Reuters reported Britain's exit from the European Union looks increasingly likely to be delayed beyond the scheduled date of March 29 because of the backlog of legislation that needs to be passed, according to unnamed senior ministers cited by London's Evening Standard.
Britain is due to leave the globe's biggest trading bloc in under 80 days but parliament looks likely to reject May's negotiated agreement with the EU on Tuesday, increasing the possibility of a disorderly Brexit.
Reuters reported Britain will have implemented the necessary legislation for Brexit before the country leaves the European Union in March, Prime Minister Theresa May's spokeswoman said on Friday after a newspaper quoted a minister as saying the exit could be delayed.
She added that the prime minister had ruled out extending Article 50, which the government triggered in 2017 to launch two years of divorce talks with the European Union.
In other news, Reuters reported Brexit might not happen if Prime Minister Theresa May's divorce deal is voted down by the British parliament next week, Foreign Secretary Jeremy Hunt said on Friday.
Hunt said that if May's deal was defeated then there was a real chance of "Brexit paralysis" that could lead to Britain's planned exit being stopped.
He said the British parliament was committed to stopping a no-deal Brexit.
On the data front, UK Gross domestic product grew 0.3% in the three months to November the ONS reported, slowing from the 0.4% expansion seen in the three months to October and in line with forecasts.
Manufacturing output shrank by 0.3% in November, while the service sector grew by 0.3% and the construction sector expanded by 0.6%.
Month-on-month, GDP ticked up 0.2% in November, picking up from the 0.1% rise seen a month earlier.
Data to be released this week :
New Zealand NZIER business confidence, Japan market holiday, China exports, imports, trade balance, EU industrial production, and U.S. building permits, wholesales inventories, wholesale sales, durable goods, durables ex-defence, durables ex-transport, factory orders, new home sales, construction spending on Monday.
Japan machine tool orders, France budget balance, CPI, Germany annual GDP, EU trade balance, New Zealand GDT price index, UK Parliamentary vote on Brexit, and U.S. NY Fed manufacturing index, PPI, redbook on Tuesday.
New Zealand retail sales, Japan corp goods price, machinery orders, tertiary industry index, China house price index, retail sales, industrial production, Germany CPI, HICP, Italy industrial orders, industrial sales, CPI, UK CPI, RPI, PPI input, PPI output, BBA mortgage approvals, DCLG house price index, and U.S. MBA mortgage application, import prices, export prices, retail sales, business inventories, NAHB housing market index, Fed's Beige Book on Wednesday.
Australia consumer confidence, UK RICS housing price balance, China GDP, Germany wholesale price index, Italy trade balance, EU construction output, HICP, U.S. building permits, housing starts, initial jobless claims, Philadelphia Fed survey and Canada ADP employment change on Thursday.
New Zealand manufacturing PMI, Japan national CPI, industrial production, capacity utilization, Swiss producer/import price, EU current account, UK retail sales, Canada CPI and U.S. industrial production, capacity utilization, manufacturing output, University of Michigan sentiment on Friday.
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