Forex News

WTI crude oil futures rose above $71 per barrel in thin holiday trading, nearing a seven-week high, as traders focused on upcoming US and China economic data to gauge demand in the world’s top oil consumers. Investors are awaiting China’s PMI factory surveys and the US ISM survey for December, with optimism fueled by expectations of stronger Chinese growth in 2025. Additionally, colder-than-usual weather lifted natural gas futures by 20%, potentially driving short-term oil demand. Still, concerns about a 2025 supply glut and geopolitical risks keep the market cautious, with traders also watching the incoming Trump administration for potential impacts on oil policy.

Silver eased to below the $29 per ounce mark, the lowest level since September, amid the outlook of a hawkish Fed and uncertain demand for silver’s industrial utility. Concerns of stubborn inflation drove the FOMC to project fewer rate cuts for the upcoming year, driving markets to trim their exposure to non-yielding bullion assets. While the earlier rate cuts by the Fed supported bullion enough to raise silver prices by 23% this year, pessimistic demand for silver as an industrial input drove the metal to sharply underperform gold in the period. Overcapacity in China’s solar panel industry drove photovoltaic companies to sign up for a government self-discipline program that aims to regulate supply, limiting the outlook of silver demand from its top industry. Pressure was also noted from the threat of a yuan devaluation in accordance with China's looser monetary policy stance, lowering asking prices from one of the world's top exporters.

The Dallas Fed's Texas manufacturing activity index moved up six points to 3.4 in December 2024, its first positive reading since April 2022. The company outlook index was positive for the second successive month, increasing slightly to 8.0, while the outlook uncertainty index fell five points to 1.2. The production index rose to 3.9 from a near-zero reading last month, and the new orders index shot up 11 points to -0.9, suggesting demand was unchanged from November. The capacity utilization and shipments indexes both edged up but remained in negative territory, coming in at -2.5 and -2.0, respectively. Labor market measures suggested employment and workweeks held steady this month. Regarding price development, upward pressure on raw material prices eased this month. Selling prices dropped, and wages rose moderately. The future production index remained positive but decreased to 32.7 from 44.0, with 44 percent of firms expecting an increase in production six months from now.

Progressive decreased to a 18-week low of 237.26 USD. Over the past 4 weeks, Progressive lost 11.78%, and in the last 12 months, it increased 49.93%.

Verizon decreased to a 22-week low of 39.43 USD. Over the past 4 weeks, Verizon lost 10.92%, and in the last 12 months, it increased 5.28%.

The yield on the 10-year US Treasury note was at the 4.55% mark on Monday, falling nearly 10bps from the near seven-month high touched in the prior session as markets continued to assess the policy outlook for the Fed next year. Investors heeded hawkish signals penned by FOMC members in the latest dot plot amid upward revisions to projections on PCE inflation and the target funds rate, driving rate traders to only price two rate cuts next year. Still, uncertainty remains on whether the economy may drift into a backdrop that could warrant a higher magnitude of rate cuts. This was lastly underscored by the soft rise in core PCE inflation for November. Additionally, continuing unemployment claims rose to their highest in over three years halfway through December. For the whole year, the slow disinflation process in the US and pro-inflationary risk brought by President-elect Trump’s campaign drove the 10-year yield to rise 50bps in 2024.

Pending home sales in the United States rose 2.2% month-over-month in November 2024, above forecasts of a 0.7% increase and following a downwardly revised 1.8% advance in October. Across major US regions, the Midwest, South, and West experienced month-over-month gains in transactions, while the Northeast decreased. Year-over-year, contract signings increased in all four regions, with the West leading the pack. According to NAR Chief Economist Lawrence Yun, "Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory. Buyers are no longer waiting for or expecting mortgage rates to fall substantially."

Top currency losers are Turkish Lira (-0.74%), Mexican Peso (-0.45%), Swedish Krona (-0.40%), Euro (-0.19%) and British Pound (-0.13%). Gains are led by Japanese Yen (0.47%) and Dollar Index (0.13%).

The S&P/TSX Composite Index fell 1.1% to dip below the 24,550 mark on Monday, pressured by declining commodity prices and concerns over potential U.S. policy changes as Donald Trump prepares to take office in January. The proposed 25% tariff on Canadian imports threatens crude oil, Canada’s major export, adding significant pressure to Canadian markets. Thin holiday trading, mixed base metal prices, and a stronger U.S. dollar further dampened sentiment as investors turned cautious ahead of key employment data from Canada and the U.S. in early January, which could shape economic outlooks and central bank policies. Most sectors traded in the red with e-commerce heavyweight Shopify among biggest laggards shedding over 2.5%. Gold miners also underperformed as bullion prices retreated, with Agnico Eagle, Barrick Gold, Wheaton Precious, and Franco-Nevada declining between 1.3% and 2.1%.

Comcast decreased to a 22-week low of 37.23 USD. Over the past 4 weeks, Comcast lost 13.63%, and in the last 12 months, it decreased 15.53%.

The Chicago Business Barometer, also known as the Chicago PMI, dropped further to 36.9 in December 2024, compared to November's 40.2 and missing market forecasts of 42.5. The latest data indicated that Chicago's economic activity contracted for the 13th consecutive month, recording its steepest decline since May.

Oracle decreased to a 13-week low of 165.40 USD. Over the past 4 weeks, Oracle lost 10.12%, and in the last 12 months, it increased 56.08%.

US stocks fell sharply on Monday, extending the pullback from Friday despite the halt in the selloff for US Treasuries as markets assessed the Fed’s policy outlook for next year. The three main averages were more than 1% lower. Trading volumes remained thin ahead of the New Year’s holiday on Wednesday, but investors await the ISM Manufacturing PMI due Friday for more hints on whether factory activity deteriorated further enough to warrant less restrictive borrowing costs by the Fed. Tech shares led the losses with pressure from Nvidia and Amazon, trimming the sector’s rally that carried the surge in US equity indices this year. In turn, Boeing sank 5% after one of the company’s 737-800 aircraft operated by Jeju Air crashed over the weekend. The S&P 500 and the Nasdaq 100 are due to close the year 27% and 30% higher, respectively, while the Dow’s larger composition of defensive stocks and lower exposure to speculative tech stocks left the index on course for a softer 14% gain.

Brazil's 10-year government bond yield climbed above 15%, its highest since early 2016, as investors weighed labor market strength, inflation data, and fiscal concerns. The unemployment rate fell to a historic low of 6.1% in the three months to November, driven by robust consumer demand and elevated government spending. This tight labor market has amplified expectations of sharp central bank rate hikes early next year to temper economic overheating and anchor inflation expectations. Inflation showed slight relief, with mid-month figures easing to 4.71% in December, below the projected 4.82%. However, the central bank's $20 billion intervention in the spot market has stabilized the real, reducing currency risk and supporting demand for reais-denominated bonds. In 2024, persistent fiscal challenges and elevated interest rates have significantly pressured Brazilian assets, driving a more than 40% surge in the 10-year bond yield this year.

IBM decreased to a 5-week low of 220.10 USD. Over the past 4 weeks, IBM lost 3%, and in the last 12 months, it increased 34.71%.

Microsoft decreased to a 4-week low of 425.36 USD. Over the past 4 weeks, Microsoft gained 0.59%, and in the last 12 months, it increased 13.38%.

Gold held below $2,620 per ounce, trimming gains from earlier in the session to trade with limited movement in the past week as investors continued to heed signs of a hawkish Federal Reserve. Resilient labor market data per payroll counts and evidence of stubborn inflation drove FOMC members to project fewer rate cuts by the Fed in 2025, raising the opportunity to hold non-yielding assets and forcing gold prices to a slight loss in Q4. Still, gold is due to end the year 27% higher. The Fed delivered 100bps in interest rate cuts since the start of its cutting cycle, including a 50bps cut in September following a sudden rise in the unemployment rate. Gold was also supported by heightened demand for safe-haven assets throughout the year amid war in Ukraine, Gaza, Lebanon, and missile strikes from Iran. Lastly, gold was lifted by large volumes of central bank buying, led by efforts by the PBoC to stoke up reserves, lifting prices to a record high of $2,790 in September.

The Ibovespa rose 0.2% to above the 120,300 level on Monday, following Brazil's Supreme Court decision to release part of R$4.2 billion in commission amendments, signaling increased fiscal flexibility. Confidence was further supported by the central bank’s report showing a slight reduction in the public debt-to-GDP ratio and a smaller-than-expected primary deficit. While the Focus Bulletin underscored rising inflation and dollar projections for 2025, market participants appeared more focused on near-term fiscal improvements. Commodity-producing mega-caps led the gains, with Petrobras advancing around 1% amid optimism over CEO Magda Chambriard’s assurances of profitability and stakeholder alignment. Vale added over 0.7%, driven by stronger iron ore prices and improved demand expectations following recent Chinese stimulus measures. Despite the day’s gains, the São Paulo exchange was set for an annual decline of over 10%, reflecting persistent fiscal challenges impacting Brazilian assets.

Futures attached to the open of US stock markets were firmly lower on Monday, extending the sharp pullback from Friday despite the halt in the selloff for US Treasuries, as markets continued to assess the Fed’s policy outlook for next year. The three main averages were due to open nearly 1% lower. Trading volumes remained thin ahead of the New Year's holiday, but investors await the ISM Manufacturing PMI due Friday for more hints on whether slowing factory activity may warrant looser policy by the Fed. Tech led the losses, trimming the rally from the sector that carried the surge in US equity indices this year. In turn, Boeing futures were 4% lower after one of the company’s 737-800 aircraft operated by Korean Jeju Air crashed over the weekend. The S&P 500 and the Nasdaq 100 are due to close the year 27% and 30% higher, respectively, while the Dow’s larger composition of defensive stocks and lower exposure to speculative tech stocks left the index on course for a softer 14% gain.

US natural gas futures surged over 20% to surpass $4.1/MMBtu on Monday, the highest since December 2022, driven by forecasts of a cold blast hitting major population centers as early as this weekend. After mild temperatures earlier in the week, colder-than-normal conditions are expected across the Lower 48 states through mid-January, potentially causing strong demand and freeze-offs. Weekend data showed a frosty pattern for Jan. 2–12, possibly leading to withdrawals exceeding 200 Bcf. The latest EIA report showed a 93 Bcf withdrawal, falling short of the five-year average of 127 Bcf but exceeding last year's 87 Bcf. Inventories now stand at 3,529 Bcf, with a surplus of 166 Bcf to the five-year average. Also, demand for LNG exports remains robust at over 14.0 Bcf/d, while production slipped slightly to 105.9 Bcf/d.