21 Dec: Senate passes tax bill but markets remain static. NZD GDP and BOJ Meeting coming up.

By | December 21, 2017

 

The response to the final Senate passing of the US tax bill has bought abought a surprisingly benign response from the financial markets, with the dollar trading mixed and stocks trading pretty much unchanged on the day. US bond yields are trading a bit higher though, and having taken out the important 2.4% level in the 10-years, are trading at 2.497%, a 9-month high, and appear to be picking up further positive momentum, contributing to the current Yen weakness. With regards to Sterling, the IMF today downgraded UK growth forecasts, citing Brexit uncertainty. Growth for 2017 was lowered by 0.1% to 1.6% and is expected to slow to 1.5% in 2018. The IMF managing director Christine Lagarde said that UK is losing out to the rest of the world in terms of growth but Sterling largely ignored the update. The Euro has moved a little higher, briefly reaching 1.1900, driven by the topside breakout of the range in EurJpy and looks as though it may have the legs to head higher still.

The metals are trading a little higher on the back of the uninspiring perfomance of the dollar, as is WTI, after data showed crude stockpiles fell for the fifth straight weekare, albeit that they are all confined to a tight range. In terms of economic data, US home sales increased more than expected in November, hitting their highest level in nearly 11 years, and the latest indication that housing is regaining momentum after almost stalling earlier this year.

Looking ahead, conditions are getting thinner by the day but there is still a fair bit of data to come pre-Christmas. Thursday will begin with the NZ Q3 GDP (exp 0.5% qq, 2.3% yy), and this will be followed in Asia by the BOJ Interest Rate Decision although no change to policy is expected. We might see some volatility in NzdJpy though! There will be very little from Europe apart from the UK PSNBR figures, while from the US we get the Q3 GDP (exp, 3.3% annualised), Philadelphia Fed Mfg Survey, Personal Consumption/Expenditure Index, and the weekly Jobless Claims. Note that Friday will also be a busy US session, headed by the Durable Goods, but also containing the Michigan Consumer Sentiment Index, Kansas Fed Mfg Activity, New Home Sales and the Personal Consumption/Expenditure Index Price Index. Have a safe holiday.

CURRENCIES
EURUSD: 1.1879
Res  1.1900  1.1935  1.1960
Sup  1.1855  1.1830  1.1800
USDJPY: 113.39
Res  113.45  113.75  114.05
Sup  113.05  112.85  112.50
GBPUSD: 1.3397
Res  1.3420  1.3445  1.3465
Sup  1.3375  1.3350  1.3330
USDCHF: 0.9864
Res  0.9875  0.9890  0.9900
Sup  0.9845  0.9830  0.9810
AUDUSD: 0.7665
Res  0.7675  0.7685  0.7695
Sup  0.7650  0.7635  0.7625
NZDUSD: 0.6978
Res  0.7000  0.7020  0.7035
Sup  0.6960  0.6935  0.6910
INDICES / COMMODITIES
S+P: 2684
Res  2690  2700  2705
Sup  2675  2670  2665
DJ30.fs: 24739
Res  24825  25000  24895
Sup  24725  24635  24550
SPI200.fs: 6017
Res  6035  6060  6075
Sup  5990  6005  5970
GOLD: 1266
Res  1270  1275  1280
Sup  1260  1255  1250
XAGUSD: 16.19
Res  16.30  16.40  16.55
Sup  16.05  15.90  15.70
OIL (WTI): 58.06
Res  58.10  58.50  58.85
Sup  57.75  57.45  57.15