Dollar claws back some losses as investors look to U.S. data
The dollar clawed back some losses on Tuesday as Italian political woes weighed on the euro, though the greenback remained shy of recent highs after U.S. Treasury yields stepped back from multi-month highs.
Political risks helped drag down the euro from its nearly two-week high of $1.0686 EUR= touched overnight. It last traded at $1.0599, down 0.2 percent from late Monday's North American levels.
Worries about Italy's banking system have been mounting ahead of a Dec. 4 referendum on constitutional reform, which could unseat the government of Prime Minister Matteo Renzi.
Later on Tuesday, investors will look to U.S. third-quarter gross domestic product data as well as readings on consumer confidence and consumption for trading cues. They will be followed by the November employment report on Friday.
Markets and the Federal Reserve Finally Agree on Something
Hopes of fiscal expansion under President-elect Donald Trump and improvements in the U.S. economy have combined to achieve the near-impossible: financial markets and the Federal Reserve are now singing in unison on the near-term outlook for the central bank's policy rate.
"The market and FOMC head into 2017 with similar views on rates for the first time in years," writes Neil Dutta, head of U.S. Economics at Renaissance Macro Research.
Overnight index swaps imply that the federal funds rate will end 2017 at 1.07 percent as of 11:30 a.m. ET, which would mean the two hikes in 2017 that the median Fed official is anticipating, plus one in December of this year, based on the dot plot would come to pass.
Dutta cited the firming U.S. Markit Composite PMI, rising core capital goods shipments, robust consumer confidence, and accommodative financial conditions as pointing to strong growth ahead. Indeed, the Atlanta Fed's GDP Nowcast for growth in the fourth quarter stands at 3.6 percent as of Nov. 23.
Traders had previously come to see the Fed as the 'Central Bank Who Cried Rate Hikes' — and with good reason, as monetary policymakers have consistently overestimated how high the federal funds rate would rise over the short and medium-term.
Trump Bubble Burst Will Drive Yen to 98 per Dollar: UBS Wealth
UBS Group AG’s $2 trillion wealth-management arm says yen traders have got Donald Trump all wrong, and the currency will strengthen to 98 per dollar by this time next year.
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The firm’s Tokyo-based head of Japanese equity research Toru Ibayashi says expectations for fiscal expansion have become overblown, and protectionist policies will come first in the new U.S. administration. Trump campaigned on pledges of “massive” tax cuts and spending of as much as $1 trillion over a decade to rebuild infrastructure, while also promising to tear up existing trade deals and punish companies that send jobs overseas. Speculation the president-elect will unleash reflationary stimulus drove the yen to an eight-month low near 114 on Friday, capping the biggest three-week decline since 1995.
Oil prices fall as Russia says will not attend OPEC meeting
Oil prices fell over 1 percent on Tuesday on market jitters over whether producer cartel OPEC would be able to hammer out a meaningful output cut during a meeting on Wednesday, aimed at reining in a global supply overhang and propping up prices.
Non-OPEC oil production giant Russia confirmed on Tuesday that it would not attend the OPEC gathering, but added that a meeting between the group and non-affiliated producers at a later stage was possible.
Brent crude futures LCOc1 were trading at $47.69 per barrel at 0741 GMT, down 55 cents, or 1.14 percent, from their last close.
U.S. West Texas Intermediate crude futures CLc1 were down 51 cents, or 1.06 percent, at $46.58 a barrel.
Reference : Bloomberg,Reuters
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