Senior Analyst

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Trading volumes were subdued due to the Christmas holidays approaching with the Dollar trading slightly on the weak side. News announcements later in the day, which include a string of data in the US regarding jobs, durable goods orders and inflation could change the picture though. A notable development that deserves a lot of caution though is China. A stock market selloff continued overnight, with stocks hitting their lowest levels since early August. There are increasing signs of distress coming from the world’s largest exporter, and combined with the Trump administration being vocal in China’s policy to devalue their currency, this could be a big theme in 2017, which could pose a risk for global markets.

Currencies: The market is relatively quiet, in a holiday mood, but the US economic data later on could ignite volatility for the last time before markets close for Christmas. EUR is up 0.3% to 1.0440 rebounding from 1.0352, its 14-year low so far. The USD stood at 117.62 yen versus the JPY, retreating from 10-1/2-month high of 118.66 yen set last week. The Australian Dollar also was very close to its 7-month low, pushed down by fears of a Chinese slowdown. The Pound (1.2362) is in a small contracting range of 1.2320-90 for the last 2 sessions and may break down in the early part of the next week. 1.2500 remains the major resistance and 1.2150 the downside target.

Stocks: U.S. stocks, which have been on a rally since the Nov. 8 election on bets that the incoming administration of Donald Trump will proceed with growth-stimulating policies, pulled back from the record highs posted 2 days ago. In Asia, the sell-off in Chinese stocks continued overnight, with offshore stocks hitting the lowest level since early August. The soft tone, was also carried in Europe with the DAX opening lower by 0.3%.

Oil and Gold: Oil prices slipped in tepid Asian trading on Thursday, dragged down by an unexpected rise in U.S. crude inventories last week and moves by Libya to boost output over the next few months. Crude oil dropped 5 cents to $52.44 a barrel, after closing the previous session down 81 cents. It nudged up to $52.71 per barrel in initial trade on Thursday. Gold was flat, trading at 1130 an ounce for most of the day. The precious metal faces a further downward pressure as it yields no interest in a world of likely rising interest rates and bond yields.

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