Crude oil suffered another wipe out during the session, dragging the positively correlated Loonie underwater with it. Markets were also extra anxious ahead of this week’s FOMC decision yet the Kiwi managed to feed off of dollar weakness.
- Canadian manufacturing sales down 0.1% vs. projected 0.3% gain
- U.S. building permits up from 1.27M to 1.33M vs. 1.27M forecast
- U.S. housing starts rose from 1.22M to 1.26M vs. 1.23M forecast
- New Zealand GDT auction yielded 1.7% gain in prices, 2.2% previous
- New Zealand Westpac consumer sentiment up from 103.5 to 109.1
- Economy Ministry spokesperson: Italy struck deal with EU on 2019 budget
- Italian PM Salvini: “Greatly satisfied” by outcome of budget talks
Crude oil takes more hits
As they say, the faster you climb the harder you fall! Crude oil was still busy undoing its rallies for the most part of the year as it took another sharp dive during the session.
This time, the move as driven by speculations that U.S. and Russian production likely hit record levels. An industry source told Reuters that Russian oil production hit a record 11.42 million this month as the country likely pumped like there’s no tomorrow before the output deal takes effect.
Meanwhile, the U.S. Energy Information Administration projected that production from seven major U.S. shale basins is by the end of the year is expected to surpass 8 million barrels per day.
Earlier in the week, Genscape reported that inventories at the Cushing storage hub rose 1 million barrels in the previous week. It was also reported that Britain’s largest oilfield, Buzzard, has reopened after pipework repairs and is set to resume output of 150K barrels per day.
Risk stumbles before FOMC
Folks on Wall Street seem to be biting their nails ahead of this week’s FOMC decision as the central bank is widely expected to hike rates but signal slower tightening down the line. Still, equity indices managed to pull off small gains for the day:
- Dow 30 index is up 82.66 points to 23,675.64 (+0.35%)
- Nasdaq is up 30.18 points to 6,783.91 (+0.45%)
- S&P 500 index is up 0.22 points to 2,546.16 (+0.01%)
The possibility of a partial government shutdown weighed on U.S. bond yields as Senate Majority Leader Mitch McConnell said Democrats had rejected his spending bill proposal. The POTUS has been busy reminding folks why his wall needs to be funded:
Illegal immigration costs the United States more than 200 Billion Dollars a year. How was this allowed to happen?
— Donald J. Trump (@realDonaldTrump) December 18, 2018
Trump has previously stated that a partial government shutdown could be avoided by Friday if Congress can come up with $5 billion in new funds for the border wall.
Major Market Mover(s):
The oil-related Loonie was down in the dumps as oversupply fears dragged Black Crack down by more than 5% for the day.
USD/CAD is up from 1.3396 to a high of 1.3497; CAD/JPY slipped from 83.86 to a low of 83.43; EUR/CAD is up to 1.5309 from 1.5263, and GBP/CAD advanced to 1.7029.
Watch Out For:
- 11:30 pm GMT: Australia’s MI leading index (0.1% previous)
- 11:50 pm GMT: Japanese trade balance (0.31T JPY deficit expected)