Brent crude oil futures advanced 1.8% to close at $73.5 per barrel on Wednesday, driven by the European Union's approval of a new sanctions package targeting Russian oil flows, heightening supply concerns. The EU’s 15th round of sanctions against Russia aims to escalate pressure over its actions in Ukraine. However, gains were tempered as the US EIA reported larger-than-anticipated increases in gasoline and distillate inventories, signaling subdued domestic fuel demand. Adding to market uncertainty, OPEC cut its global oil demand growth forecasts for 2024 and 2025 for the fifth consecutive month, citing weak demand in China and rising non-OPEC+ supply. Earlier, OPEC+ delayed plans to raise output, reflecting cautious market dynamics. Still, market participants remain optimistic about a rebound in Chinese oil demand, spurred by Beijing's plans to implement an "appropriately loose" monetary policy in 2025, the first such easing in over a decade, aimed at bolstering economic growth.

WTI crude oil futures jumped 2.5% to settle at $70.29 per barrel on Wednesday, driven by the European Union's approval of a new sanctions package targeting Russian oil flows, heightening supply concerns. The EU’s 15th round of sanctions against Russia aims to escalate pressure over its actions in Ukraine. However, gains were tempered as the US EIA reported larger-than-anticipated increases in gasoline and distillate inventories, signaling subdued domestic fuel demand. Adding to market uncertainty, OPEC cut its global oil demand growth forecasts for 2024 and 2025 for the fifth consecutive month, citing weak demand in China and rising non-OPEC+ supply. Earlier, OPEC+ delayed plans to raise output, reflecting cautious market dynamics. Still, market participants remain optimistic about a rebound in Chinese oil demand, spurred by Beijing's plans to implement an "appropriately loose" monetary policy in 2025, the first such easing in over a decade, aimed at bolstering economic growth.

Economic calendar in Asia 12 December 2024 - Australian jobs report.The Australian unemployment rate is expected to inch higher in the data for November. The RBA is still relaxed about the labour market and left the cash rate at its 13-year high earlier this week.

Consumer prices in Argentina rose by 2.4% month-on-month in November 2024, down from a 2.7% increase in October. It marked the lowest reading since mid-2020 and came below market expectations of 2.8%. Costs slowed for food and non-alcoholic beverages (0.9% vs. 1.2% in October), housing and utilities (4.5% vs. 5.4%), clothing and footwear (1.9% vs. 4.4%), health (2.9% vs. 3.6%), communication (1.5% vs. 2.1%), and restaurants and hotels (3.6% vs. 4.3%). Conversely, prices accelerated for transportation (3.4% vs. 1.2%) and education (5.1% vs. 3.5%). On an annual basis, consumer prices surged by 166% in November, marking the seventh consecutive month of disinflation and the year’s softest increase, down from 193% in October and broadly in line with forecasts.

The US government reported a $367 billion budget deficit for November 2024, marking a 17% increase from the prior year, driven in part by calendar adjustments that shifted December Medicare and Social Security payments into November, adding approximately $80 billion to outlays. Excluding these adjustments, the deficit would have been about $29 billion, 9% lower than a year ago. Both receipts and outlays reached record highs for November, with receipts rising 10% to $302 billion and outlays increasing 14% to $669 billion. For the first two months of the 2025 fiscal year, which began on October 1, the cumulative deficit hit a record $624 billion, up 64% from the same period last year, surpassing even the COVID-19-era deficits. This surge was further influenced by tax payment deferrals expiring in 2023 due to California wildfires and other disasters. Year-to-date receipts declined 7% to $629 billion, while outlays rose 18% to $1.253 trillion.

Gold increased to a 5-week high of 2720.00 USD/t.oz. Over the past 4 weeks, Gold gained 4.64%, and in the last 12 months, it increased 37.39%.

US stocks extended early gains to erase the declines from prior sessions this week as today's inflation print refrained from surprising to the upside and consolidated bets that the Federal Reserve will deliver a rate cut next week. The S&P 500 rose nearly 1% to approach last week's record high, while the Nasdaq 100 added 1.75% to a fresh record. Headline inflation edged higher to 2.7% in November, as expected, to drive markets to fully price a 25bps rate cut by the Fed in this year's final decision. Tech shares led the gains, supported by tame bond yields and bets that the incoming Trump administration may reduce regulation for the sector. Tesla jumped 3.6%, a near 70% surge since November's election, while Meta added 5.3%, Nvidia jumped 2.6%, and Broadcom surged 5%. On the other hand, UnitedHealth tanked 5% to extend its volatility since the murder of its CEO. This drove the Dow to underperform and hover slightly above the flatline.

Bank of Mexico touts financial system's stability despite economy's weakness.The Mexican financial system maintains a solid and resilient position despite global and domestic risks and the "notable weakness" of the economy, the Bank of Mexico said on Wednesday in its biannual financial stability report.

The Mexican peso strengthened past 20.19 per US dollar, recovering from a March 2022 low of 20.64 on November 26, as hawkish signals from the Bank of Mexico compounded with dovish expectations for the US Fed. US inflation data for November, which showed a slight increase in headline inflation and steady core CPI, raised expectations that the Federal Reserve will reduce rates in its upcoming December meeting. Domestically, Mexico's inflation eased, with November's headline inflation falling to 4.55% year-over-year, its lowest in eight months, and core inflation easing to 3.58%, the softest reading since April 2020. Meanwhile, Mexico’s unemployment rate dropped to 2.5% in October, its lowest since March and well below the forecasted 2.9%. This positive economic data fueled expectations for continued flexibility in Banxico’s rate-cutting cycle, aligning with Governor Irene Espinosa’s cautious outlook ahead of the December 19 meeting.

Argentina Consumer Price Index (MoM) below forecasts (2.8%) in November: Actual (2.4%).Argentina Consumer Price Index (MoM) below forecasts (2.8%) in November: Actual (2.4%)

United States Monthly Budget Statement below expectations ($-353B) in November: Actual ($-367B).United States Monthly Budget Statement below expectations ($-353B) in November: Actual ($-367B)

In Milan, the FTSE MIB Index gained 184 points or 0.53 percent on Wednesday. Gains were led by Telecom Italia (2.92%), Leonardo SpA (2.76%) and Saipem (2.73%). Biggest losers were Hera (-0.90%), Diasorin (-0.72%) and Stellantis N.V. (-0.60%).

Colombia's consumer confidence index dropped by 2 points to -5.7 in November 2024, down from -3.7 the previous month, marking the 29th consecutive month of pessimism. This decline was primarily driven by a 3.3-point fall in the future expectations component, which dropped to -4.1. Meanwhile, the current economic conditions indicator also worsened, declining by a marginal 0.2 points to -8.2.

The DAX gained traction and closed higher on Wednesday afternoon to close 0.4% higher at 20,415, after inflation in the US came in line with expectations, reinforcing bets the Fed will deliver another 25bps rate cut next week. In addition, traders await the ECB monetary policy decision tomorrow, expecting a fourth rate cut and clues on next year’s rate policy. Meanwhile, a batch of corporate updates prevented further gains. Inditex shares tumbled 6.2% following weaker-than-expected third-quarter sales results. Siemens Energy pared losses to close 3.4% higher after the CEO of US competitor GE Vernova expressed a cautious outlook for the struggling wind energy sector. SAP was also under pressure, falling about 0.8%. Also, Zalando added 1.6% after saying it would buy rival About You for €1.1 billion. On the other hand, Adidas rebounded from early losses to add 0.5% as German authorities conducted a raid on its headquarters as part of a long-running tax investigation.

A new French PM is to be named on Thursday.French President Emmanuel Macron is set to appoint a new prime minister on Thursday according to government sources and reported by Bloombert. Prime Minister Michel Barnier's was ousted last Wednesday.

Yellen says US will 'react strongly' to any currency manipulation.U.S. Treasury Secretary Janet Yellen said on Wednesday that the U.S. will "react strongly" when countries try to manipulate their currencies for competitive advantage, but at the moment there is not such market intervention.

US treasury to auction off $39 billion of 10 year notes at the top of the hour.At the top of the hour, the US treasury will auction off $39 billion of 10-year notes. It is the second of three coupon auctions this week.

The South African rand appreciated to around 17.7 per USD, reaching its highest since early November, amid a renewed increase in prices of precious metals, particularly gold. US November inflation came in line with market expectations, supporting bets that the Federal Reserve will cut rates next week. Locally, South Africa's annual inflation ticked up to 2.9% in November 2024, just above the four-year low of 2.8% seen in October. The slight increase in inflation still keeps it below the central bank's 3% to 6% target range, making it likely the monetary policy committee to deliver another cut in borrowing costs next month. The South African Reserve Bank (SARB) reduced the repo rate from 8% to 7.75% on November 21st, continuing the gradual easing cycle that began in September. Governor Lesetja Kganyago recently emphasized a careful approach to interest rate decisions, pointing to the uncertainty surrounding the global economic outlook.

Japanese Yen Loses Ground on Shifting Interest Rate Expectations.The Japanese Yen has lost 2.3% against the US dollar since the end of last week, roughly twice as much as the rise in the dollar index against a basket of six developed market currencies. This change is due to a shift in interest rate expectations, with investors increasingly doubting an imminent rate hike in Japan and seeing fewer rate cuts from the Fed next year.

Gold rose past $2,715 per ounce on Wednesday, gaining traction to extend its two-day rally after the lack of upside surprises for US inflation consolidated bets of an incoming rate cut by the Fed. Headline inflation inched higher to 2.7% in November, as expected by markets, and annual core inflation remained unchanged at 3.3%. Consequently, rate traders increased positions that reflect a 25bps rate cut by the Fed next week. Still, lingering concerns that price growth may remain stubborn next year limited a further increase, as annual services inflation and other key underlying inflation gauges like shelter inflation, remained firmly above the 4.5% mark. In turn, the Bank of Canada cut its key rate by 50bps for a second decision, and the ECB and SNB are both expected to extend their cutting cycles. Additionally, the PBoC resumed gold purchases after a six-month pause and pledged to shift its monetary policy stance to be more accommodative next year.

The annual inflation rate in Russia rose to 8.9% in November 2024, up from a five-month low of 8.5% in the prior month and surpassing market forecasts of 8.7%. Higher prices were recorded for services (+11.4% vs. +11.3% in October) and food (+9.9% vs. +9%), while non-food product price growth remained steady at 5.7%. On a monthly basis, consumer prices rose by 1.4% in November, the most since April 2022, slightly above market estimates of 1.3%.

US gasoline futures rose toward $2 per gallon, after EIA data showed US crude stocks fell while gasoline and distillate inventories rose in the week ending December 6. Crude inventories fell by 1.425 million barrels, more than market expectations for a 1.1 million-barrel draw. Also, crude stocks at the Cushing, Oklahoma, delivery hub went down by 1.298 million. On the other hand, gasoline stocks rose by 5.086 million barrels, compared with expectations for a 1.9 million-barrel build. Gasoline futures have been tracking oil prices higher, boosted by China's announcement of plans to implement a looser monetary policy in 2025, , its first major policy shift in over a decade, which is expected to boost demand for energy-related commodities.

U.S. Dollar Gains Ground After CPI Report: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY.U.S. dollar moved higher as inflation data met analyst estimates.

Nickel futures were at $15,775 per tonne in December, holding the slight losses of the year and not far from the four-year low of $15,500 touched mid-November amid the view that the ongoing supply glut is likely to maintain next year. The ample supply from Indonesia, the world’s top supplier, persisted through the second half of 2024. This extended the soaring supply levels brought by the surge of Chinese smelting projects in Indonesia after the latter prohibited the export of nickel ores in 2020. Indonesia was the host of 44 nickel smelting operations as of September, compared with four 10 years prior. The supply glut prompted Indonesian authorities to state that they may place output quotas on smelters to balance prices. On top of that, new technology used by Chinese battery producers started to use technologies that refrain from using nickel, further denting the outlook for the metal.

US heating oil futures rose above $2.20 per gallon, recovering from a six-week low of $2.13 on December 6, in line with a broader rally in energy commodities as demand prospects improved. Expectations of a 25bps Federal Reserve rate cut next week, fueled by US inflation data meeting forecasts, bolstered the demand outlook. Additionally, China’s announcement of looser monetary policy for 2025, aimed at reviving its economy, further supported the market, alongside a 14% year-on-year rise in China's November crude imports, marking the first increase in seven months. Meanwhile, stronger demand prospects were compounded by a higher-than-expected draw in US oil stockpiles, with a reduction of 1.43 million barrels for the week ending December 6, according to the latest EIA report. However, distillate inventories increased by nearly three times the expected build at 3.24 million barrels, and heating oil stocks grew by 0.5 million barrels, limiting the heating oil price rise.

US crude stocks fell while gasoline and distillate inventories rose in the week ending December 6, the Energy Information Administration said. Crude inventories fell by 1.425 million barrels, more than market expectations for a 1.1 million-barrel draw. Also, crude stocks at the Cushing, Oklahoma, delivery hub went down by 1.298 million. On the other hand, gasoline stocks rose by 5.086 million barrels, compared with expectations for a 1.9 million-barrel build. Distillate stockpiles, which include diesel and heating oil, increased by 3.235 million barrels, versus expectations for a 1.1 million-barrel rise. Meanwhile, net US crude imports fell by 170 thousand barrels per day.

Canada’s 10-year government bond yield rose toward 3.1%, recovering from a two-month low of 2.98% seen on December 6, driven by expectations of a more measured approach to monetary policy amid rising inflationary pressures. The central bank’s recent jumbo rate cut of 50bps and cautious stance on further rate reductions signaled to investors that the rate-cutting cycle may slow, potentially supporting a more stable economic environment and pushing yields higher. Upside inflation risks were heightened by tariff threats from the incoming Trump administration. Meanwhile, stronger-than-expected growth in consumer spending boosted market sentiment, and fiscal measures such as a sales tax holiday contributed to short-term growth prospects.

Arabica coffee futures eased to around $3.20 per pound, after reaching a record peak of nearly $3.50 per pound on December 10, as supply concerns appeared priced in. Dealers noted the market may have overreacted to Volcafe's cut in its 2024/25 Brazil Arabica forecast by 11 million bags to 34.4 million. However, uncertainty persists regarding the long-term impact of Brazil’s extended dry spell on future crops. Meanwhile, there were reports that JDE Peet's, one of the world's largest coffee companies, will raise coffee product prices in Brazil by an average of 30% next year after a near doubling in prices this year on international commodity markets. Retail coffee prices will likely rise in other markets than Brazil, potentially hurting demand in developed countries. Global coffee prices surged to record highs this week, climbing roughly 80% year-to-date, as adverse weather conditions in Brazil and Vietnam, the world’s leading coffee producers, weighed on the current crop outlook.

The Canadian dollar strengthened to around 1.41 per USD in December, rebounding from its lowest level since April 2020 of 1.418 on December 10th, as the Bank of Canada signaled a slower pace of future interest rate cuts following its recent 50bps reduction. The loonie's gain was driven by markets already pricing in the rate cut and focusing on the central bank’s more cautious outlook for future policy, which provided greater stability. While Canada’s policy rate remains significantly lower than the US Federal Reserve’s, the Bank of Canada’s shift toward a more measured approach reassured investors. Additionally, fiscal measures, such as a sales tax holiday and efforts to control inflation, are expected to support short-term economic growth, further boosting investor confidence. Meanwhile, expectations for a Federal Reserve rate cut grew after US inflation data aligned with expectations, contributing to a more favorable environment for the loonie.

US Dollar Forecast: DXY Rises Toward Key Resistance as Fed's Dovish Pivot Looms.US Dollar gains as traders anticipate Fed's dovish pivot. CPI data fuels rate cut expectations, with DXY testing resistance at 106.843.