Investing.com - Here are the top five things you need to know in financial markets on Friday, December 16:
1. Dollar halts Fed-backed rally on profit-taking
Investors opted to take profits in the greenback on Friday, causing it to pull back slightly from a Fed-induced rally that took the dollar to 14-year highs against major rivals.
As buying sentiment in the American currency took a breather, the euro managed to bounce back from its lowest levels since January 2003. European Central Bank member and German Bundesbank president Jens Weidmann took aim at euro zone governments on Friday, reminding them that the region’s monetary authority could not stand in for politicians when it comes to fostering growth.
In a light calendar day stateside, investors would only have November building permits and housing starts to digest.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.25% at 102.89 by 5:58AM ET (10:58GMT).
2. Global stocks mixed in quiet trade
Global stocks showed mixed trade on Friday with little movement in equities across the globe.
Asia closed mostly lower though China’s Dow Jones Shanghai managed to end in the black, trimming its biggest weekly drop in eight months.
European stocks were mixed on Friday, as investors continued to digest the Federal Reserve’s most recent policy decision and eyed the release of final euro zone inflation data that offered no surprises with year-on-year headline inflation unchanged at a 0.6% increase and the core reading being confirmed at a 0.8% gain.
U.S. stock futures pointed to a slightly higher open on Friday in what was expected to be a session with few references. At 5:58AM ET (10:58GMT), the blue-chip Dow futures gained 39 points, or 0.20%, S&P 500 futures traded up 4 points, or 0.15%, and the Nasdaq 100 futures advanced 7 points or 0.13%.
3. Gold trims sixth weekly decline
Gold prices bounced off the previous session’s ten-month lows on Friday, but gains were expected to remain limited as the Federal Reserve’s decision to raise interest rates this week continued to lend broad support to the U.S. dollar.
As investors took profit in the greenback, gold moved higher. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.58% at $1,136.35 by 5:59AM ET (10:59GMT), off Thursday’s 10-month trough of $1,123.90.
4. West Texas on track for weekly loss
Oil prices moved lower on Friday in its third consecutive session of losses, pushing the barrel of West Texas Intermediate oil towards a weekly decline of more than 1%.
Although Goldman Sachs lifted its second quarter estimates for crude on Friday, the broker saw limited short-term upside for oil until confirmation of compliance with the agreement by major oil producers to cut production arrives in mid- to late January.
Investors were also eager to see the latest Baker Hughes’ data on the number of rigs actively drilling oil in the U.S. last week. The latest read saw the number of active rigs jump from 477 to 498 in its sixth consecutive ramp up of production.
U.S. crude oil futures fell 0.59% to $50.60 at 6:00AM ET (11:00GMT), while Brent oil traded down 0.30% to $53.86.
5. 2017 may be the year Japan awakes from its lost decades
Japan was in the spotlight throughout Friday’s session as Bank of America-Merrill Lynch came out with a note suggesting that 2017 could be the year that Japan emerges from two decades of deflation, falling incomes and declining productivity.
Also on the radar, Reuters cited sources familiar with Bank of Japan’s way of thinking who said that the Japanese central bank was contemplating tightening monetary policy in 2017 for the first time in a decade.
"The BoJ's focus next year may not be about whether to ease more but to possibly raise its yield target," one of the sources was cited as saying, adding that a small hike next year cannot be ruled out.