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Fed FOMC Meeting Minutes In Focus, UK Q2 GDP Second Estimate Awaited

Nov, 19th 17:16

U.S. shares closed lower on Friday with major indexes extending their losses to a second week in a row. Amidst uncertainties over the fate of the Republicans’ tax overhaul plan, the Dow Jones Industrial Average dropped 0.43 percent, to 23,358.24, the S&P 500 lost 0.26 percent, to 2,578.85 and the Nasdaq Composite shed 0.15 percent, to 6,782.79. All there indexes capped a second week of losses.

As stock markets were trading in negative territory, gold futures soared to the highest close in a month. Contracts for December gold settled up 1.27% at $1,294.41 on the Comex division of the New York Mercantile Exchange, contributing to a weekly gain of 1.75% – the strongest weekly performance since early October.

Besides the demand for safe-haven assets, gold prices were also supported by a weakening U.S. dollar as the currency was weighed down by doubts over whether Republicans can pass a historic tax overhaul. On Friday, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled by 0.25% to close at 93.61. The index marked a decline of 0.74 percent for the week and was down for a second consecutive week.

On Wednesday, the Federal Reserve will release minutes of its most recent policy meeting where the U.S. central bank left interest rates unchanged and signaled it still intended to raise rates in December given “solid” economic growth and a tightening labor market. Before the minutes, investors will focus on Fed Chair Janet Yellen, who will speak in New York on Tuesday evening, for any clues on interest rates. The U.S. central bank is forecast to raise rate in its final policy meeting of the year on Dec. 12-13.

In a week shortened by the Thanksgiving holiday in the U.S., the Commerce Department is scheduled to publish data on October durable goods orders on Wednesday. Analysts forecast the report will indicate that U.S. durable goods advanced by 0.3% last month after having climbed 2.0% in September. Meanwhile, core orders are anticipated to jump 0.5% following a rise of 0.7% a month earlier.

In addition to the durable goods report, investors will also pay attention to data on existing home sales due to be released on Tuesday, and revised Michigan consumer sentiment on Wednesday. U.S. markets will be closed Thursday for the Thanksgiving holiday and Friday will be a half-session day.

Turning to the British Pound, Sterling pared back early gains versus the dollar. The pair GBP/USD retreated from a two-and-a-half week high to $1.3213 in late trade after the European Union repeated an early December deadline for Prime Minister Theresa May to move on Britain’s Brexit divorce bill.

In the week ahead, British finance minister Philip Hammond is scheduled to deliver Britain’s budget for 2018 on Wednesday. After that, the Office for National Statistics is due to produce a second estimate on UK economic growth for the second quarter on Thursday. The report is expected to confirm the economy grew 0.4% in the three months ended September 30. If confirmed, the economy would grow at the rate of 1.5% on a year-over-year basis, which is unchanged from an initial estimate.

While Sterling ended in sour note, the euro pushed higher, with EUR/USD up 0.18% at 1.1791 late Friday. In the coming week, the euro zone is to publish preliminary data on manufacturing and service sector activity for November on Thursday, amid expectations for a modest decline.

Before the data release, investors will focus on ECB President Mario Draghi who is scheduled to testify on the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee in Brussels on Monday.

Last week, the U.S. dollar fell to five-week lows against the yen, with the pair USD/JPY down 0.86% to 112.09 in late trade on Friday. Japan’s Statistics Bureau is to publish October trade figures on Monday amidst expectations that exports have grown 15.8% from the same period a year ago in October. If confirmed, exports would mark the 11th monthly increase in a row.

Whereas, imports are anticipated to rise 20.2% last month, the fastest pace of growth since January 2014, due to the fact that higher oil prices inflate import costs. With such changes in exports and imports value, Japan’s trade balance likely stood at 330.0 billion yen ($2.93 billion) in October, narrowing from a revised 667.7 billion yen in September.