Morning Call from FXCC

USA consumer confidence reaches a thirteen year high, DJIA approaches 20,000, USA dollar nears highest point in a decade.

Dec 28 • Morning Roll Call • 1655 Views • Comments Off on USA consumer confidence reaches a thirteen year high, DJIA approaches 20,000, USA dollar nears highest point in a decade.

shutterstock_174472404Two key confidence measures were released in the USA on Tuesday. Firstly, the Case-Shiller index revealed that house prices in the USA rose by 5.1% on an annual basis. All 20 cities in the index showed a YoY gain, the highest gain reported was a 10.7 percent gain in Seattle, whilst New York had the smallest 12 month increase, at 1.7 percent.

Secondly, the conference board confidence index beat expectations, by increasing to 113.7 (from a revised 109.4 in November). The share of Americans expecting better business conditions six months ahead rose to 23.6 percent, the highest reading observed since February 2011, up from 16.4 percent. Americans expecting equity prices to be higher in 2017 rose to 44.7 percent, the highest reading reported since January 2004. Sentiment amongst 35 to 54 year olds was the highest since July 2007. Crucially, in terms of overall consumer sentiment, more Americans reported plans to purchase automobiles and major appliances.

The crises of the Italian banking system; Monte Dei Paschi requiring a circa €9 bn liquidity advance, versus the €5 bn originally suggested being the most prominent example, failed to unsettle European markets. Analysts and investors appear to be confident that the Italian government have controlled the situation. In Europe the STOXX rose by 0.1 percent, DAX up by 0.9%, CAC up by 0.18%, whilst Italy’s MIB rose by 0.24%.

The SPX continued its monthly advance, but with volume of trading circa 50 percent below the 30 day average. The Nasdaq rose to its all time high and the DJIA approached 20,000. The SPX rose 0.2 percent to 2,268.88, the DJIA added 0.1 percent to 19,945.04.

Gold futures for February delivery rose by circa 0.5 percent to settle at $1,139.10 on the New York Comex, gold futures had earlier climbed by up to 1.6%. Comex silver futures were at circa $16.01 at 23:30 Tuesday evening.

Trading was thin in FX as the markets in Britain, Australia, New Zealand, Canada and Hong Kong closed for a “bank holiday”. The U.S. dollar rose versus the yen on Tuesday, due to the better then expected economic data regarding house prices and sentiment, but remained below its recent 10 month high in thin trading.

The euro was roughly flat versus the greenback at $1.0457. The dollar extended gains to a session high versus the yen of 117.61 yen, up nearly 0.5 percent against the Japanese currency on the day. The dollar remained below its ten month high versus the yen of 118.66 yen reached on Dec. 15th. The dollar index, was relatively flat during Tuesday’s trading at 103.020, below the recent 14 year peak reached of 103.650.

The dollar index is approaching a 4.5 percent rise for 2016, which would represent its fourth yearly increase in series. The gains have arrived from Nov. 8th, after the USA election prompted belief that the Fed would raise rates several times in 2017, following the rise in December.

Economic calendar events for Wednesday December 28th, all times listed are London times

09:30, currency effected GBP. BBA Loans for House Purchase (NOV). The expectation is for the UK’s mortgage lending to have increased to 41100 from 40851 previously.
15:00, USD Pending Home Sales (YoY) (NOV). The current reading is 0.2%, the anticipation is for pending home sales in the USA to be down marginally, down to 0.1%.

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