News

Dollar Falls and Stocks Soar on Dovish Fed

USD

The dollar index which measures the greenback against a basket of major currencies dropped to a three-week low of 95.16 after dovish outcome from the Federal Reserve meeting. The statement revealed that the Fed would be "patient" on future interest rate moves, and is prepared to adjust any details for completing balance sheet normalization in light of economic and financial developments. Moreover, the Fed said that the economic activity is rising at a solid rate versus a strong rate in the previous meeting. The USDJPY tumbled to a two-week low of 108.65, and the EURUSD surged to a twenty-day high of $1.1514.

Equities       

Major US stock indices jumped to the highest levels since early December, supported by a dovish Fed tone and hopes of a trade deal between China and the United States. The Federal Reserve will be patient with raising rates moving forward. On the other hand, President Donald Trump will meet China's Vice Premier Liu. The Dow Jones Industrial Average rose 1.4% to 25013, the S&P500 gained 1.3% to 2682, and the Nasdaq futures added 2.3% to 6838.

Metals

Metals prices gained sharply as the dollar weakened along with US Treasury yields. The gold ounce rose 0.6% to $1320, the highest since early May, the silver ounce advanced 1.4% to $16.04, and Palladium added 1.2% to hover near $1360.

Oil

Oil prices finished higher for the second consecutive day, supported by tighter US supply and US sanctions on Venezuela's PDVSA. The Energy Information Administration reported that the US weekly crude oil inventories rose by only 0.919 million barrels versus an expectation of over 3 million barrels. On the other hand, the latest US sanctions on PDVSA will lead to supply disruptions. The West Texas Intermediate crude futures rose to a ten-week high of $54.90, and Brent futures climbed to a ten-day high of $62.66.

Major Economic Events

GMT Country Event Expectation Previous
10:00 EU GDP (QoQ)  0.2% 0.2%
10:00 EU GDP (YoY)  1.2% 1.6%
13:30 US Core PCE Price Index (YoY) (Dec) 1.9% 1.9%
13:30 US Initial Jobless Claims 215 199
13:30 CA GDP (MoM) (Nov) -0.1% 0.3%
15:00 US New Home Sales (Nov) 560 544


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