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Currencies

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Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Categorized | Currencies, Equities

US stocks head for Black Friday shopping spree


Posted on November 25, 2016

US stocks are likely heading for yet another record high when Wall Street returns from the Thanksgiving break, but the dollar is easing back slightly from near-14-year highs.

US futures suggest the S&P 500 will be in line for another record, looking to add 1.5 points to 2,206.3 when the opening bell rings later in New York.

What to watch
Friday’s Wall Street session is just half a day, meaning attendance will be thin and this should have implications for volumes across Europe, too.

Standout story
The yen has been the whipping boy of the greenback’s recent advance, sliding more than 10 yen since Mr Trump’s election. Early on Friday it was approaching ¥‎114 to the dollar as the selling continued, helping the exporter sensitive Topix equity index to record an 11th straight day of gains.

But perhaps some traders think the recent slide for the yen was too stretched, because it has recovered to trade 0.5 per cent firmer at ¥112.76, possibly helped by news that the Japanese economy may be emerging from deflation.

Data released on Friday showed that headline consumer prices turned positive in October for the first time since February, while a measure of underlying inflation that strips out food and energy prices rose last month after registering zero growth in September.

Equities
The pan-European Stoxx 600 is dipping 0.2 per cent as miners gain ground but banks and energy groups pull back.

The tone across Asia was broadly positive, with Australia’s S&P/ASX 200 up 0.4 per cent and Hong Kong’s Hang Seng adding 0.5 per cent. China’s Shanghai Composite recovered an initial loss to gain 0.6 per cent.

Currencies
In general, foreign exchange is where the fireworks have been this week, with the likes of the Chinese renminbi, Indian rupee, Malaysian ringgit and Philippine peso all hitting multiyear lows against the US dollar. The ringgit is at a fresh trough but other EM currencies are a bit more chipper, with the Mexican peso, for example, gaining 0.3 per cent.

The dollar index hit a fresh near 14-year high of 101.92 early in the session, but is now off 0.3 per cent to 101.41 as the euro adds 0.4 per cent to $1.0590. So-called commodity currencies like the Aussie and Canadian dollars are firmer as the “Trumpflation trade” trundles on.

Fixed income
The US Treasury market has returned to action after a day’s holiday and the benchmark yield is again moving up as investors reprice inflation and monetary policy expectations in the wake of Mr Trump’s election victory.

The US 10-year yield is up 3 basis points to 2.38 per cent, only a few basis points off its highest since July 2015, while equivalent maturity German Bunds are easing 1bp to 0.26 per cent.

The yield on the US 2-year note, which is particularly sensitive to monetary policy moves, is up 1bp to 1.15 per cent — its most in six years as the market puts the probability of a December rate rise by the Fed at 100 per cent.

Commodities
Gold is benefiting from the softer buck, the bullion adding $8 to $1,192 an ounce. Brent crude is down 1 per cent to $48.52 a barrel as some traders remain sceptical that Opec can reach a deal to cut production during its meeting at the end of the month.