Summary:

• Asian stocks set to close the year at record
• The US dollar is posting the biggest weekly decline since the end of November
• Oil prices reach the highest level this year following upbeat DoE report

The last trading day this year has brought more of the same so far as stocks hover near multi-year highs, the US dollar remains weak and oil prices push higher following the upbeat DoE report on inventories released yesterday. Trading volume should be very limited today, but German inflation data could liven up the markets later today.

It’s been a great year for global stock markets. When it comes to Asian indices,  note that MSCI Asia Pacific Index has increased by almost 29% since the beginning of the year supported by a solid pace of economic expansion and a go-slow approach of major central banks in exiting an extremely loose monetary policy. Moreover, a rally in commodities has also favoured a better sentiment in stocks. Today’s session was mixed as gains in Chinese markest were accompanied by declines in Australia (S&P/ASX200 lost 0.38%) and Japan (Nikkei dropped by 0.08%). However, Nikkei (JAP225) is still traded close to its highest level since the early 1990s. The benchmark has managed to post decent gains in spite of yen having the best year since 2011.

 JAP225 ends the year at the highest level since the early 1990s, but it’s still below peak from November. Source: xStation5

As far as currencies are concerned, the US dollar is poised for its biggest weekly decrease since November. The USD weakness stems out of year-end flows amid lower trading volume. Moreover, trades could take profits after the successful passage of the tax reform and Fed rate hikes. However, this trend may reverse in favour of dollar bulls at the beginning of the next year given extremely low net positioning and market rates. It’s also worth looking at oil market as OIL.WTI has climbed to its highest level this year surpassing $60 mark following the upbeat DoE report on inventories released yesterday. 

 OIL.WTI breaks above $60 mark eying peaks from 2015. Source: xStation5