· The dollar held near two-week highs on Wednesday, as concerns about Sino-U.S. trade tensions propped up safe haven currencies and as investors awaited cues from the U.S. Federal Reserve on the path of future interest rate increases.
Attention has now turned to a speech by Fed Chairman Jerome Powell later on Wednesday and the minutes from the Fed’s Nov. 7-8 meeting on Thursday. Markets hope to gain fresh insights into the Fed’s thinking on the speed and number of rate hikes in the current cycle.
“We don’t think Powell will diverge too much from the Fed’s data dependent approach. Our base case remains for the Fed to raise rates 4 times in 2019,” said Terence Wu, currency strategist at OCBC Bank.
The U.S. central bank is widely expected to raise rates by 25 basis points next month.
The dollar index .DXY, a gauge of its value versus six major peers, traded at 97.38 having risen for three sessions in a row. It is just below this year’s high of 97.69.
· The yen JPY= hit a two-week low of 113.85 on Wednesday.
·The euro EUR= gained 0.07 percent versus the dollar to $1.1295. The single currency has lost 1.5 percent of its value in recent sessions due to signs of weakening eurozone economic momentum and ongoing tensions between the European Union and Italy over Rome's free spending budget.
· Dollar Index hits two-week high on Fed speak, trade war tensions
The dollar index, which tracks the value of the greenback against the basket of major currencies, is currently trading at 97.39, having clocked a high of 97.50 yesterday - a level last seen on Nov. 13.
· Investors will now turn attention to a speech on Wednesday by Federal Reserve Chair Jerome Powell for further clues on how many more times the U.S. central bank is likely to raise interest rates.
The event has become more critical as signs of a global slowdown and nearly two months of market volatility have clouded an otherwise rosy U.S. picture, prompting speculation the Fed will go slow on rate hikes next year.
· The U.S. Federal Reserve is widely expected to temporarily stop raising interest rates in the middle of 2019 — but Morgan Stanley predicts that stocks in the financial sector will still do well.
· The United States and United Kingdom are nearing an open skies aviation agreement to govern air travel after Britain exits the European Union, two government officials briefed on the matter said on Tuesday.
The sides have set what they expect will be a final round of talks for Wednesday, the U.S. and British sources said. The UK’s secretary of state for transport, Chris Grayling, plans to be in Washington later this week to sign an agreement.
· Ukraine's President Petro Poroshenko has warned that Russia will face serious consequences if it attacks its neighbor Ukraine, days after Russia seized three Ukrainian navy ships and their crew members claiming they had entered Russian waters illegally.
Ukraine and Russia's relationship hit a new low on Sunday after Russia seized three Ukrainian Navy vessels (two artillery ships and a tug boat) and their 23 crew members in the Kerch Strait, a channel that separates the Sea of Azov and Black Sea, to the south of Ukraine and Russia, on Sunday.
Ukraine said the incident was an "act of aggression," while Russia said the ships had entered its territorial waters illegally. Both sides accuse the other of violating the conditions of a 2003 treaty that enshrines free access to the Kerch Strait and Sea of Azov.
· U.S. President Donald Trump said on Tuesday he may cancel his scheduled meeting with Russian President Vladimir Putin at the G20 summit in Argentina because of Russia’s maritime clash with Ukraine.
In an interview with the Washington Post, Trump said he was awaiting a “full report” from his national security team Tuesday evening about Russia’s capture of three Ukrainian naval ships and their crews on Sunday.
Trump is due to meet Putin on the sidelines of the G20 summit in Buenos Aires, which convenes on Friday and Saturday. The Trump-Putin meeting will cover security issues, arms control, and issues in the Middle East and Ukraine, White House national security John Bolton told reporters.
· Back in Europe, concerns surrounding Brexit continue to rumble on. After leaders from the EU endorsed the Brexit withdrawal deal laid out by U.K. Prime Minister Theresa May, investors are now turning their attention to Britain's deeply divided Parliament.
May is urgently trying to rally enough lawmakers to support her Brexit deal — a daunting task given the broad criticism it has received. British lawmakers will vote on the proposal on December 11.
Elsewhere, Italy's economy is likely to be closely monitored by market participants. On Tuesday, deputy Prime Minister Matteo Salvini said he would like to prevent any EU disciplinary action concerning the country's budget for next year, Reuters reported.
· The Organization of the Petroleum Exporting Countries (OPEC) will meet at its headquarters in Vienna, Austria, on Dec. 6 to discuss output policy.
The OPEC-meeting will follow a gathering by the Group of 20 (G-20) nations, which includes the world's biggest economies, in Argentina this weekend, at which the Sino-American trade dispute as well as oil policy are expected to be discussed.
While most analysts expect some form of supply cut from the OPEC meeting, sentiment in oil markets remains negative.
· CRUDE OIL TECHNICAL ANALYSIS
A tepid recovery in crude oil prices stalled on a re-test support-turned-resistance in the 52.10-83 area. Renewed downside momentum from here that takes out support at 49.16, theOctober 2017 low, targets the August 31 2017 bottom at 45.62. Alternatively, daily close above 52.83 exposes resistance in the 54.48-55.21 zone (former support, falling trend line).
· Oil prices rose by one percent on Wednesday ahead of an OPEC meeting next week at which the producer club is expected to decide some form of supply cut to counter an emerging glut.
The shutdown of Britain's largest North Sea oilfield for repairs also supported prices, traders said.
U.S. West Texas Intermediate (WTI) crude futures were at $52.11 per barrel at 0448 GMT, up 55 cents, or 1.1 percent from their last settlement.
International Brent crude oil futures were up 57 cents, or 1 percent, at $60.78 per barrel.
Reference: Reuters, CNBC
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