This week, several records have been broken. Bitcoin crossed the $10,000 mark while Ethereum reached its all-time high of $517.
In the United States, the major indices continued their winning streak. On Thursday, the Dow cruised through the psychological $24,000 level while the S&P reached an all-time high price of $2645.
The upward move was partly attributed to positive economic data and optimism of the tax ‘reform’. On Monday, the Census Bureau released the October New Home Sales data of 685K which beat the analyst consensus of 625K.
On Tuesday, the New York-based Conference Board released the latest consumer confidence data that reached a new 17-year high of 129.5. This figure signaled that most Americans were upbeat about their financial situation and the job market.
The same day, Jay Powell – Trump’s appointee to replace Yellen – held his first hearings with lawmakers. His testimony signaled a continuation to Yellen’s policies on financial regulations, gradual hiking of interest rates, and the reduction of the Fed’s balance sheet.
On Wednesday, the Bureau of Economic Analysis released the Q3 GDP growth of 3.3% which beat the analyst expectations of 3.2%. The improved growth reflected the increased investments, inventories, and exports. The same day, the MoM pending home sales released by the National Association of Realtors (NAR) showed a growth of 3.5% against the expected growth of 1%.
On currencies, the pound and the dollar were the biggest winners this week. The pound advanced to above $1.35 level on the optimism of Brexit talks. This was its highest level since September.
On Wednesday, the United Kingdom bowed to pressure from the EU and agreed to honor its financial agreements. The breakthrough means that the negotiations can now proceed to other issues of the breakup like trade agreements.
The dollar strength was attributed to the positive economic data and statements from the Fed officials. San Francisco Fed president, John Williams remained optimistic that the Fed will continue to raise interest rates if the economic data continued to show strength. The same sentiment was shown in the Fed’s Beige Book which showed that officials expect inflation to improve.
The Euro was under pressure this week. This was because of the challenges Angela Merkel had forming a government. This pulled the Euro down to $1.82 level before rebounding on Thursday on optimism of a deal and the positive economic data. The next level to watch for the EUR/USD pair will be 1.2066 if the
Gold fell from $1297 to $1276 as stocks, the dollar, and cryptocurrencies gained. This was expected since gold is a safe haven which investors turn to in times of uncertainties. The VIX remained at an all-time low even when North Korea launched its most powerful missile.
Investors had a wait and see attitude towards crude oil. While Brent and WTI remained at a 2-year high, the upward trend we saw last week was not there as investors waited for the conclusions of the OPEC meeting in Vienna. On Thursday, OPEC and Non-OPEC members led by Russia agreed to cut production until the end of 2018. While this is a bullish measure, investors should not ignore the shale producers in the United States.
Today, it will be a busy day for the market. While important data like Germany’s and UK’s PMI data, and Canada’s GDP and Employment Change will be released, investors will focus on Capitol Hill.
On Thursday, stocks gained when John McCain said he would support the partisan tax plan. This excitement slowed down when a report by the non-partisan Joint Committee on Taxation (JCT) released its findings on the tax plan. Their report showed that the tax plan would add $1 trillion to the deficit which is a bit challenging to some republicans like Arizona’s Jeff Flake.