Forex News from InstaForex

Oil Sinks on Skepticism Supply Cut Will Be Big Enough to End Glut

Prevailing apprehension that a planned crude output cut by OPEC and Russia would be strong enough to end the two-year oil glut in the market pulled down oil prices on Wednesday.

Benchmark Brent crude oil futures traded down 24 cents or 0.45% at $53.69 per barrel, while U.S. WTI crude futures slipped 19 cents or 0.37% from their last finish at $50.74 per barrel.

Oil prices rallied as high as 19% after OPEC and Russia struck a deal to jointly limit output in 2017 in a move to support the oil market.

However, skepticism have since surfaced about whether the planned production cuts will be strong enough to end oversupply as both parties involved in the agreement reported record production volumes in the previous month.

With virtually almost every crude exporting region producing at record amounts, there is persisting skepticism in the market how both parties will be able to commit to the Vienna production cut targets, analysts said, adding that the higher their production, the higher the starting point of the cut will be.

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China CPI +2.3% On Year In November

Consumer prices in China were up 2.3 percent on year in November, the National Bureau of Statistics said on Friday.

That exceeded expectations for 2.2 percent and was up from 2.1 percent in October.

On a monthly basis, inflation added 0.1 percent after easing 0.1 percent a month earlier.

The bureau also said that producer prices surged an annual 3.3 percent versus forecasts for 2.3 percent following the 1.2 percent gain in the previous month.

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Dollar Climbs as Euro Falls on ECB Decision

The dollar climbed against the yen and euro, as the common currency plunged overnight after the European Central Bank's move to extend the debt-purchasing programme. The ECB announced that it would cut its monthly asset purchases to 60 billion euros as of April.

The euro shortly increased to almost a one-month high, with the decision seen as a form of policy tapering. However, the common currency retraced its advances as the central bank's move offset any increase from the reduction of its debt purchasing amount. The euro stood flat at $1.0616. The dollar strengthened at 114.070 yen. Investors are currently focused on the Federal Reserve. The likelihood of a Fed rate hike next week has nearly been fully priced in the market.

The dollar index was steady at 101.100 and is on track to climb 0.3 percent this week. The Australian dollar was flat at $0.7458.

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Japan Core Machine Orders Jump 4.1% In October

Core machine orders in Japan were up 4.1 percent in October, the Cabinet Office said on Monday - coming in at 878.3 billion yen.

That beat forecasts for a gain of 1.1 percent following the 3.3 percent decline in September.

On a yearly basis, core machine orders tumbled 5.6 percent - shy of expectations for a fall of 4.9 percent following the 4.3 percent gain in the previous month.

The total number of machinery orders, including those volatile ones for ships and from electric power companies, added 1.2 percent on month but tumbled 15.8 percent on year to 984.2 billion yen.

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Iran-Boeing Deal Valued at $16.6 Billion

The agreement between Iran's national carrier and Boeing Co. regarding a purchase of 80 aircrafts that is valued at $16.6 billion, will eventually force both the Congress and President-elect Donald Trump to balance their diplomatic priorities with U.S. job expansion. According to a company statement, the deal will include 50 737 MAX 8s, 15 7777-300ERs and 15 777-9s.

The Islamic Republic News Agency has reported that the aircraft will be delivered over ten years and will start in 2018. The report has also cited Iran Air Chief Executive Officer Farhad Parvaresh. Boeing has remarked that the deal was acquired under the conditions of a U.S. government license that was issued in September and will also support nearly 100,000 jobs in the U.S. aerospace industry. The bill regarding the deal was recently approved by the House in November and currently awaits Senate action.

The value of the deal worth $16.6 billion is based on list prices ahead of large discounts that have been established for major airlines.

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China Industrial Output Jumps 6.2% In November

Industrial production in China was up 6.2 percent on year in November, the National Bureau of Statistics said on Tuesday.

That exceeded expectations for an increase of 6.1 percent, which would have been unchanged from the October reading.

The bureau also said that retail sales jumped an annual 10.8 percent - again topping forecasts for 10.2 percent and up from 10.0 percent in the previous month.

Also, fixed asset investment advanced 8.3 percent on year - in line with expectations and unchanged from the previous month.

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U.S. Stocks Lower as Dow Hits Record Close

Stocks ended mostly lower as oil prices surged and Treasury yields jumped prior to the Federal Reserve meeting. The Dow Jones Industrial Average reached a 15th record finish, while financial firms pulling down major U.S. stock indexes.

The Dow Jones Industrial Average gained 0.2 percent at 19,796.43, the S&P 500 slipped 0.11 percent at 2,256.96 while the Nasdaq Composite fell 0.59 percent at 5,412.54. The blue-chip index climbed for the sixth straight session to reach another record high, as advances in Exxon Mobil and Johnson & Johnson helped counterbalance the lows in American Express and Goldman Sachs Group. The S&P 500's financial sector finished lower in four sessions since Nov. 8. The Nasdaq Biotechnology Index edged down 0.7 percent.

Energy shares rallied alongside oil prices following an announcement from a group of oil producers who agreed to reduce their output with the Organization of Petroleum Exporting Countries. The S&P 500's energy sector gained 0.7 percent. Exxon Mobil was up 2.2 percent to $90.98. FMC Technologies climbed two percent to 36.08 while Helmerich & Payne added 1.7 percent to 83.18.

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BoJ Tankan: Large Manufacturers' Index Steady At +10 In Q4

An index monitoring business sentiment in Japan was unchanged in the fourth quarter of 2016, the Bank of Japan said on Wednesday in its quarterly Tankan business survey.

The large manufacturers' index came in with a score of +10, in line with expectations and up from +6 in the previous quarter.

The outlook came in at +8, shy of expectations for +9 but up from +6 in the three months prior.

The survey is closely watched by the Bank of Japan for formulating policies.

The large non-manufacturers index was at +18, unchanged from Q3 although missing forecasts for +19.The outlook score was +16, also unchanged but shy of forecasts for +18.

Large industry capex for the current fiscal year is now seen higher by 5.5 percent, missing forecasts for 6.1 percent and down from 6.3 percent in the previous quarter.

The small manufacturing index came in at +1, beating expectations for -1 and up from -3 in the third quarter. The outlook was -4, missing forecasts for -2 after showing -5 in the three months prior.

The small non-manufacturing index had a score of 2, in line with forecasts and up from 1 in the previous quarter. The outlook came in at -2, unchanged although shy of forecasts for +1.

The sentiment indexes are derived by subtracting the percentage of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.

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Gold Slips on U.S. Federal Reserve Meeting

Gold inched lower, as the Federal Reserve started its two-day meeting where it is widely anticipated to deliver the second U.S. interest rate raise in a decade and will also give some observation regarding the outlook on 2017. U.S. gold futures were down 0.6 percent at $1,159 an ounce.

Markets have implied nearly a 100 percent likelihood of a quarter-point hike. Spot gold fell 0.6 percent to $1,155.65 per ounce. Investors await further clues as to how the U.S. central bank will handle inflation that might arise from the expansionary policies of President-elect Donald Trump and economic growth expectations. SPDR Gold Trust (GLD) also dropped, which reflects the lacklustre sentiment on the precious metal.

Silver fell 1.3 percent at $16.85 per ounce. Platinum edged up 0.3 percent at $933.80 while palladium climbed 0.9 percent at $728.10.

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Australia Jobless Rate Climbs To 5.7%

The unemployment rate in Australia was a seasonally adjusted 5.7 percent in November, the Australian Bureau of Statistics said on Thursday.

That missed forecasts for 5.6 percent, which would have been unchanged from the October reading.

The Australian economy added 39,100 jobs in November, far surpassing forecasts for a gain of 17,500 following the addition of 9,800 jobs in the previous month.

The participation rate jumped to 64.6 percent, beating expectations for 64.5 percent and up from 64.4 percent a month earlier.

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GM, Ford Shares Tumble After Report China Will Penalize Unnamed U.S. Carmaker

Shares of U.S. automakers stumbled after Zhang Handong, a senior Chinese state planning official, cautioned that Beijing could slap penalties on an unnamed U.S. carmaker over price-fixing.

The warning, which was delivered via the China Daily newspaper, came in the heels of U.S. President-elect Donald Trump's remarks questioning whether America should standby its commitment to the “One China” policy.

Chinese authorities have been probing and reviewing the pricing practices of carmakers ahead of Trump's remarks, sources stated.

Trump's controversial remarks which have broken diplomatic protocols have shaken U.S. corporations who are dependent on the steady U.S.-sino relations. A spokesperson for Trump's transition team said they are aware of the report but stated that it would be premature to respond.

GM shares lost 2.2% while Ford fell 1.0% following the report's publication. In a statement, GM did not confirm if it was being investigated by the Chinese government. Meanwhile, Ford's Asia-Pacific business said the firm was not knowledgeable of the issue.

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Fxwirepro: Eur/krw Breaks Key Support at 1,232 Mark, Stay Bearish

EUR/KRW is currently trading around 1,230 mark.
Pair made intraday high at 1,232 and low at 1,229 levels.
Intraday bias remains bearish till the time pair holds immediate resistance at 1,242 mark.
A sustained close above 1,242 will take the parity higher towards key resistance around 1,255, 1,260, 1,269 and 1,272 marks respectively.
On the other side, a consistent close below 1,230 will drag the parity down towards key supports around 1,222, 1,218, 1,209, 1,203, 1,199 and 1,163 marks respectively.
Seoul shares open up 0.03 pct at 2037.35.
We prefer to go short on EUR/KRW around 1,235 with stop loss at 1,242 and target of 1,222/1,209.

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Oil Prices Rise on Reports of Kuwait’s Deeper-than-Expected Production Cuts

Oil prices rose on Friday as sentiment was lifted by reports that Kuwait was cutting its production by more than initially anticipated beginning January as it fulfills its commitment to a coordinated effort by crude producers to curb a global oil glut.

International Brent crude oil futures traded up 20 cents or 0.37% from their last close at $54.22 per barrel. U.S. WTI crude futures also rose 24 cents or 0.47%, trading at $51.14 per barrel.

Prices edged up after OPEC member Kuwait told its customers that it will reduce its supply starting January as part of its commitment to a deal between OPEC and other producers to lower output by around 1.8 million bpd to help rebalance the oil markets.

Kuwait Petroleum Corporation stated that it has told its customers that it will cap its production in accordance with the OPEC deal. Traders observed that prices rose as KPC indicated that it was cutting supplies more than previously anticipated and beyond the operational capacity

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Japan November Trade Surplus Y152.513 Billion

Japan posted a merchandise trade surplus of 152.513 billion yen in November, the Ministry of Finance said on Monday.

That was shy of expectations for a surplus of 227.4 billion yen following the 496.2 billion yen surplus in October.

Exports were down 0.4 percent on year to 5.956 trillion yen, beating expectations for a decline of 2.3 percent following the 10.3 percent fall in the previous month.

Exports to all of Asia gained 3.4 percent on year to 3.235 trillion yen, while exports to China alone climbed 4.4 percent to 1.103 trillion yen.

Exports to the United States skidded an annual 1.8 percent to 1.211 trillion yen, while exports to the European Union slid 2.2 percent to 633.258 billion yen.

Imports slipped an annual 8.8 percent to 5.804 trillion yen versus expectations for a decline of 12.1 percent following the 16.5 percent tumble a month earlier.

Imports from the rest of Asia dropped 7.7 percent on year to 2.883 trillion yen, while imports from China alone slid 9.9 percent to 1.4876 trillion yen.

Imports from the United States fell 5.1 percent to 630.121 billion yen, while imports from the European Union dropped 13.3 percent to 716.954 billion yen.

The adjusted trade surplus was 536.1 billion yen, missing expectations for 590.5 billion yen and up from 474.3 billion yen in October.

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Japan Exports Edged Up in November as Yen Weakens

Japan's export performance rose robustly in November as the yen continued to weaken and the improvement in overseas demand buoyed shipments from the trade sector. Exports slipped 0.4 percent in the year to November, according to the Ministry of Finance (MOF) data. However, it exceeded economists' expectations of a 2.0 percent annual decline.

The value of exports to China increased at an annual 4.4 percent, the first rise in nine months as a result of higher shipments of automobile parts. Exports in terms of volume climbed 7.4 percent from a year earlier, as external demand begin to show signs of regaining ground. Data has shown that exports dropped in November at a slower pace due to the declining value of car and steel shipments in comparison to the previous month. Exports to the United States edged down 1.8 percent year-on-year against the 11.2 percent annual decline in October.

The trade balance arrived at a surplus of 152.5 billion yen ($1.29 billion). The yen dropped 8.4 percent in November, which resulted in pulling up the value of Japanese exports.

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RBA Minutes: Economy Expected To Rebound Next Year

Members of the Reserve Bank of Australia's monetary policy board said that the country's economic growth has slowed in recent months but is expected to rebound after the first of the year, minutes from the December 6 meeting revealed on Tuesday.

Policymakers expect higher commodity prices to boost national income, the minutes showed. The global economy has been generally more positive in recent months.

Inflation is expected to remain low, while wages appear to be on an upward trend. "The board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets," the minutes said.

At the meeting, the bank decided to hold its benchmark lending rate steady at the record low of 1.50 percent.

Higher commodity prices underpinned a rise in terms of trade, although they remain much lower than they have been in recent years. Higher prices are providing a boost to national income.

"Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment," the minutes said.

Regarding the labor market, the bank said the unemployment rate has declined this year, while employment growth overall has slowed. The forward-looking indicators point to continued expansion in employment in the near-term.

The bank also observed that conditions in the housing market have strengthened overall, although they vary considerably around the country. Further, the bank said housing credit has picked up a little, although turnover of established dwellings is lower than it was a year ago.

"The board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time," the minutes said.

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Dollar Trims Losses Following Janet Yellen Comments

The dollar pared losses after Federal Reserve Chairwoman Janet Yellen restated her confidence in the U.S. job market. The WSJ Dollar Index rose 0.2 percent to 93.22.

Yellen has recently discussed the developments in the labor market which have pulled down the unemployment rate to 4.6 percent. The central bank has improved its projections for the interest-rate hike in 2017. The optimism of the Fed drove the dollar to a 14-year peak as higher rates make U.S. assets more appealing to yield-seeking investors. The dollar was lower against the Japanese yen at 0.6 percent to ¥117.145. It follows a sharp drop in the Japanese yen in recent weeks that has helped boost Japanese exports and inflation expectations.

The Turkish lira and Russian rouble both declined to session lows versus the greenback on reports that the Russian ambassador to Turkey was assassinated in a gun attack at an art gallery in the Turkish capital of Ankara. The lira last fell by nearly 0.6 percent at 3.525 a dollar and the rouble reached a session low of 62.045 a dollar before backtracking to 61.854, as stated in the Reuters data.

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Dollar Climbs to 14-Year High

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The dollar soared to a fresh 14-year peak, as the Japanese yen fell after the Bank of Japan's decision to leave its monetary policy unchanged. The dollar index rose more than 0.1 percent at 103.31 after reaching 103.65, its highest since December 2002.

The BOJ's upbeat outlook follows amid an 11 percent decline in the yen since the U.S. presidential election and the earlier week's Federal Reserve meeting which sent the dollar surging. The benchmark 10-year Treasury yield rose beyond two basis points at 2.562 percent. The dollar rebounded against the yen after the Bank of Japan left policy unchanged as predicted.

The euro edged down 0.1 percent versus the dollar and the British pound slipped 0.2 percent. The greenback rose 0.6 percent at 117.72. The Turkish lira was stable at 3.5300 liras per dollar.


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New Zealand GDP Expands 1.1% In Q3

New Zealand's gross domestic product was up 1.1 percent on quarter in the third quarter of 2016, Statistics New Zealand said on Thursday.

That beat forecasts for an increase of 0.8 percent following the 0.7 percent gain in the previous three months.

Business services advanced 2.0 percent on quarter, due to scientific, architectural and engineering services, the bureau said.

Transport was up 3.7 percent, due to increases in road, air, and transport support services.

Manufacturing was up 1.2 percent, due to food, beverage, and tobacco manufacturing; and transport equipment, machinery and equipment manufacturing.

Construction was up 2.1 percent, due to increases in all the construction sub-industries. In all, 13 of the 16 GDP industries saw an increase in the third quarter.

Expenditure on gross domestic product grew 1.4 percent in Q3.

Household consumption expenditure was up 1.6 percent, driven by spending on services and non-durable goods.

Investment in fixed assets was up 1.4 percent, due to increased investment in transport equipment and residential building. Exports of goods and services fell 0.7 percent.

Imports of goods and services added 1.2 percent, due to imports of transport equipment, including aircraft purchases.

Inventories ran down $200 million, due to a decrease in manufacturing inventories.

Also on Thursday, the bureau said that New Zealand posted a seasonally adjusted current account deficit of NZ$1.899 billion in the third quarter of 2016.

The services surplus fell NZ$16 million to NZ$1,006 million in the third quarter. The investment income deficit added NZ$71 million to NZ$2,040 million in the latest quarter.

The balance of goods was a NZ$686 million deficit (NZ$190 million larger than Q2 deficit).

For the year ended September 2016, the current account deficit was NZ$7.5 billion.

New Zealand's external debt position was NZ$148.5 billion (58.0 percent of GDP) at 30 September 2016, up from a revised NZ$141.4 billion (55.9 percent of GDP) at 30 June 2016.

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Dollar Loses Ground Ahead of Holidays

The dollar fell from its 14-year peak against a basket of currencies, ahead of the holidays and the release of a batch of U.S. economic data. The dollar index was last at 103.02.

The greenback's retreat was limited as the Federal Reserve indicated further rate hikes next year, somewhat on expectations for speedy economic growth under the upcoming Trump Administration. The market is currently focused on the huge batch of U.S. economic data, which includes revised GDP for July-Sept, weekly initial unemployment claims and durable goods orders. The euro climbed 0.4 percent to $1.0424 and the yen rose 0.25 percent to 117.55 a dollar.

The Swedish crown tracked its largest gains in around ten months against the euro after the central bank of Sweden voted to extend its bond buying programme. The euro was down nearly one percent to 9.6077 crowns, its largest one-day decline since February.

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