News & Analysis

Tax Reform Spurs Stocks Higher; Key Data starts tonight; USD mixed; Oil takes a breather

Dec 12, 2017 | Daily Market Outlook

Today’s high impact news:

20:30 GBP Average Earnings Index 3m/y
02:30 OIL Crude Inventories
06:00 USD FOMC Economic Projections – FOMC Statement – Federal Funds Rate – FOMC Press Conference

U.S stocks rallied on Tuesday as Tax Reform continues to drive buyer confidence. The Dow Jones added 118.77, the S&P500 gained 4.12 but the NASDAQ finished 12.76 points lower. Optimism that Republican lawmakers would be able to revamp the corporate tax system drove the Dow Jones and S&P500. Wall Street also looked to the Federal Reserve as its two-day policy meeting kicked off.

The prospect of lower corporate taxes has been a boon for U.S. stocks this year as they have ascended to record highs.

European markets started Tuesday mixed but closed higher. Tech stocks were the best performers. Oil was the second biggest sector Tuesday, up more than 1.5 percent, following the closure of the U.K.’s Forties pipeline system due to the discovery of several cracks. Statoil led the oil sector, after shutting down production at its Troll A gas platform in the North Sea. U.K. inflation rate hit a five-year-high of 3.1 percent Tuesday, according to data released by the Office of National Statistics (ONS). The FTSE continues its Stella week adding another 46.93 points. The DAX finished 59.88 points higher but continues to trade below 13,200 level.

Forex, USD traded higher to expectations of a Federal funds rate tomorrow morning. The USD made gains to the CAD, EUR, GBP and finished flat to the JPY. The AUD continued to climb closing higher for a 2nd day. Gold plugged the hole for now closing $4 higher after making new weekly lows. Oil lost 1.5% after trading positive for most of the day. We discussed oil in yesterday’s CFD insights. We wanted to see it break the level it tested last night. Buyers failed to do so. $58.30 can now be pencilled in as resistance.

From midnight data is going to get heavy, the U.S is reporting CPI and CORE CPI data. At 6 am the Fed meets including the fund’s rate. Expectations for a fair while now is a rise in rates to 1.50%. We would think it’s priced in so USD movement might be confusing on its release. Traders will be focusing on the FOMC projections, statement and press conference for futures key points to USD direction. We have key data coming out for the rest of the week. Please, manage your risk around these major releases.

Good trading from Eightcap.

Sources; Reuters, CNBC All times are AEDST

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