Once again the main USA equity markets rallied on Monday to set new record highs. The dissent and disagreement amongst Republican politicians over the tax plan, appears to have been solved and the expectation is that a vote could now take place as early as midweek, with the prediction of a win in the House of Representatives and the Senate for Trump and his Republican Party. The U.S. dollar index was down circa 0.4% on the day and fell versus its major peers; GBP, EUR and JPY.
Economic calendar news relating to the USA was thin on the ground, the only release of any significance came in the form of the latest NAHB index, which is based on a monthly survey of NAHB members designed to analyse the single family housing market. The survey asks respondents to rate market conditions for the sale of new homes now and over the next six months, combined with the traffic of prospective buyers of new homes. The reading came in at 74, beating the forecast of 70, revealing that optimism is high amongst U.S. house builders for the coming year, suggesting that consumers feel confident in taking on new housing debt.
Gold rose for the first time in approximately a week, reaching a daily high of 1264, just short of the 200 DMA, sited at 1268. Since reaching a recent low of circa 1236 on December 12th XAU/USD has made a sizeable recovery. WTI oil initially whipsawed in a bullish range on Monday; breaching R2 before reversing back to fall through the daily PP, to then reverse direction again, moving up circa 0.2% at 57.3. However, the security then fell to S1, down circa 0.3% on the day, at 56.97.
Bitcoin (BTC/USD) experienced the wild fluctuations and whipsaws associated with the crypto currency; a high of circa 19,750, with a low of approx. 17,800, a trading range of approx. 11% on the day, presumably triggering certain trading circuit breakers being implemented by the various futures exchanges, who are now creating a market in the peer to peer virtual currency. Price reaching just under 20,000, was attributed to the opening of futures trading through CME.
European indices rose across the board during Monday’s trading sessions; DAX rising by 1.59% and EURO STOXX by 1.37%, the only significant economic news supporting the rise, appeared to be CPI for the Eurozone remaining at 1.5% YoY. The euro rose by circa 0.2% versus the U.S. dollar and dropped by a similar amount versus the U.K. pound.
Brexit news concerned E.U. officials (once again) reminding the U.K. of the only various exit options available to them, but each time they remind the prime minister May of her route forward, she appears to deliberately conflate and confuse what was either previously agreed, or the clear instructions from the E.U. on how to proceed. Sterling made modest gains versus certain peers, closing out the day up circa 0.2% versus the U.S. dollar and 0.3% versus the Canadian dollar. Positive economic calendar news for the U.K. came in the form of the latest CBI selling prices and orders metrics, both beating forecasts.
U.S.DOLLAR.
USD/JPY traded in a narrow bullish range on Monday, rising by circa 0.3% and through R1 to slip back to the daily PP, before closing up circa 0.1%, at 112.55. USD/CHF traded in a wide daily bearish range, falling through S2 at one stage to make a modest recovery, closing down 0.5% at 0.985. USD/CAD traded in a narrow bullish range of approx 0.2% during the day, closing out the day up circa 0.1% at 1.286.
EURO.
EUR/GBP traded in a narrow bearish range throughout Monday’s sessions, closing out the day up circa 0.1% at 0.884, just above the daily PP point. EUR/USD whipsawed during the day, falling by 0.2% in the Asian session, before recovering to breach R2 up 0.6%, then falling to close the day out up circa 0.2% at 1.178. The major pair has traded close to the 100 DMA since early December, currently sited at 1.180, price did breach this level on an intraday basis. EUR/CHF initially breached the daily PP to the upside before selling off, to end the day down circa 0.6% at 1.161, resting on S2.
STERLING.
GPB/USD traded in a narrow bullish range on Monday, breaching R1, before slipping back to end the day up circa 0.1% at 1.338. GBP/CHF traded in a narrow range with a bias to the downside, rising up through the daily PP, the cross currency pair ended the day down 0.1% at 1.318. Versus its other peers the U.K. pound made modest gains, GPB/CAD ended the day up 0.3%, close to the first level of resistance.
GOLD.
XAU/USD bucked its recent trend by trading in a bullish range, rising to a high of 1264 during the daily sessions, at one point up circa 0.5%, before falling back to 1261 up circa 0.3% on the day. With a recent low of 1236 printed on December 12th, the precious metal has made considerable gains since, recovering by circa 2% and currently trading only 5 points from the 200 DMA.
EQUITY INDICES SNAPSHOT FOR DECEMBER 18th.
• DJIA closed up 0.57%.
• SPX closed up 0.54%.
• FTSE 100 closed up 0.62%.
• DAX closed up 1.59%.
• CAC closed up 1.33%.
KEY ECONOMIC CALENDAR EVENTS FOR DECEMBER 19th.
• EUR German IFO Business Climate (DEC).
• EUR German IFO Expectations (DEC).
• USD Housing Starts (MoM) (NOV).
• USD Building Permits (MoM) (NOV).
• NZD Trade Balance (NOV).
• NZD Current Account Gross Domestic Product Ratio YTD (3Q).
