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America's Roundup: Dollar fades from 2-week high tied to trade fears, S&P 500 closes at highest level in 5 months, Gold slides to seven-month low, Oil rises but declines for the week as supply concerns ease-July 14th,2018

Market Roundup

• Trump vows "great" trade deal with UK, abruptly changing tack on May's Brexit plan.

• Fed's Kaplan 'calling out' US tariff risk before it worsens.

• Fed emphasizes "solid" U.S economic growth, repeats gradual approach.

• Chinese imports to U.S. ports start peaking early amid tariff threat.

• US Jun Import Prices MM, -0.4%, 0.1% forecast, 0.6% previous.

• US Jun Export Prices MM, 0.3%, 0.2% forecast, 0.6% previous.

• US Jul U Mich Sentiment Prelim, 97.1, 98.2 forecastt, 99.3 previous.

• US Jul U Mich Conditions Prelim, 113.9, 117.9 previous.

• US Jul U Mich Expectations Prelim, 86.4, 87.4 previous.

• US Jul U Mich 5-Yr Inf Prelim, 2.4%, 2.6% previous.

• US ECRI Weekly Annualized w/e, 1.5%, 2.2%.

• U.S. banks gain from Washington policy changes but trade worries loom.

• BoE's Cunliffe sees case for "stodginess" in setting interest rates

Looking Ahead - Economic Data (GMT)

• 16 Jul 02:00 China Jun Urban investment (ytd) YY, 6.0% forecast, 6.1% previous

• 16 Jul 02:00 China Jun Industrial Output YY, 6.5% forecast, 6.8% previous

• 16 Jul 02:00 China Jun Retail Sales YY, 9.0% forecast, 8.5% previous

• 16 Jul 02:00 China Q2 GDP YY, 6.7% forecast ,6.8% previous

• 16 Jul 02:00 China Q2 GDP QQ SA, 1.6% forecast, 1.4% previous

Looking Ahead - Events, Other Releases (GMT)

• No major events scheduled

Currency Summaries

EUR/USD is likely to find support at 1.1600 levels and currently trading at 1.1684 levels. The pair has made session high at 1.1683 and hit lows at 1.1636 levels. The euro rose higher against US dollar on Friday as news of a record Chinese trade surplus that may fuel U.S.-China trade tensions weakened dollar. U.S. Treasury Secretary Steven Mnuchin said on Thursday that the United States and China might reopen trade talks, briefly easing concerns about the trade dispute. But data showing China's trade surplus with the United States swelled to a record in June could further inflame tensions. U.S. President Donald Trump this week pledged to impose tariffs on $200 billion more in Chinese imports. Beijing has vowed to retaliate. Escalating trade tensions have not dented the U.S. economy, which on is its second longest expansion on record. The Federal Reserve on Friday pointed to "solid" U.S. economic growth during the first half of the year in its semi-annual report to Congress, where it also reiterated that it expected to continue to raise interest rates gradually. It is the Fed's second submission to lawmakers since Chairman Jerome Powell took the helm of the Fed in early February. He is scheduled to answer questions on it before lawmakers on Tuesday and Wednesday. An index that tracks the dollar against the yen, euro and four other currencies was down 0.07 percent to 94.740 after touching 95.241, which was the highest since June 29. The euro initially fell to a nine-day low at $1.1610 but recovered to trade last at $1.1684.

GBP/USD is supported in the range of 1.3091 levels and currently trading at 1.3224 levels. It reached session high at 1.3234 and dropped to session low at 1.3116 levels. Sterling rebounded from the day's lows on Friday after U.S. President Donald Trump said he looked forward to finalising a post-Brexit trade deals with Britain, though a firm greenback and trade tensions weighed on the British currency. The pound rose from the day's lows of $1.3103 and was last trading at $1.3236. For the week it is down 1 percent, its biggest weekly drop since late May. Trump said on Friday he looked forward to finalising a trade deal with Britain after it had left the European Union, marking an abrupt change from a newspaper interview when he said Prime Minister Theresa May's Brexit strategy would kill such an agreement. Trump's comments follow a series of resignations from May's government over her strategy and also complaints from financial firms over its provisions for the sector after Britain leaves the European Union in March. May’s government outlined its proposals to retain the closest possible trade relations with the bloc, although there was one major shift the government abandoned plans for close ties for Britain's huge financial services industry. Markets are concerned that the EU will demand more concessions from Britain before agreeing to a Brexit deal, spelling months of more political uncertainty.

USD/CAD is supported at 1.3110 levels and is trading at 1.3151 levels. It has made session high at 1.3199 and lows at 1.3148 levels. The Canadian dollar was little changed against its U.S. counterpart on Friday as oil prices rose, but for the week the loonie was on track to fall 0.6 percent after broader gains for the greenback offset a Bank of Canada interest rate hike. The U.S. dollar faded from a two-week peak which was tied to news of a record Chinese trade surplus that may fuel U.S.-China trade tensions and that briefly spurred safe-haven bids for the greenback. Canada exports many commodities, including oil, and runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows.The country has its own trade dispute with the United States and is also in slow-moving talks to revamp the North American Free Trade Agreement (NAFTA).Still, the Bank of Canada raised interest rates on Wednesday for the fourth time since July 2017. The central bank is hoping higher oil prices can cushion the impact global trade tension has on exports and investment. The Canadian dollar was last  trading near unchanged at C$1.3151 to the greenback, or 75.99 U.S. cents.

AUD/USD is supported around 0.7357 levels and currently trading at 0.7421 levels. It hit session high at 0.7421 and made session lows at 0.7358 levels. The Australian dollar rose against its U.S. counterpart on Friday as greenback came under pressure after data showing a record Chinese trade surplus stirred worries about a deeper United States-China trade conflict, encouraging investors into the safety of the dollar. The Chinese yuan, which has suffered in the past six weeks on concern that U.S. tariffs on Chinese goods will eventually hit its economy, reversed earlier gains in Asia and fell half a percent in offshore markets.U.S. Treasury Secretary Steven Mnuchin said on Thursday that the United States and China could reopen trade talks, briefly easing concerns about the trade dispute. Data showing China's trade surplus with the United States swelled to a record in June as exports grew could further inflame tensions. Trump this week pledged to impose tariffs on $200 billion more of Chinese imports and Beijing has vowed to retaliate. The Aussie dollar clawed its way up to $0.7421, from a $0.7383, and was aiming to end a rough week with only a marginal loss. The currency has had a turbulent week, sinking more than 1 percent since Monday.

Equities Recap

European shares rose on Friday, scoring their second week of gains as fears of a full-blown trade war were kept in check and optimism about the next corporate earnings season grew.

UK's benchmark FTSE 100 closed up 0.21 percent, the pan-European FTSEurofirst 300 ended the day up by 0.22 percent, Germany's Dax ended up by 0.43 percent, France’s CAC finished the day up by 0.41 percent.

U.S. stocks rose slightly on Friday, putting the S&P 500 at its highest closing level in more than five months, as gains in industrials and other areas offset a drop in financials after results from three of the big banks mostly disappointed.

Dow Jones closed up by 0.03 percent, S&P 500 ended up by 0.37 percent, Nasdaq finished the day up by 0.12 percent.

Treasuries Recap

Treasury prices moved higher on Friday after the Federal Reserve reinforced views of strong U.S. economic growth in a report to Congress.

U.S. benchmark 10-year notes have traded narrowly between 2.807 percent and 2.884 percent during the past two weeks.

Treasury prices changed little following the early morning rise. The yield on U.S. 10-year notes was 2 basis points lower at 2.833 percent at 3:34 p.m. EDT (1934 GMT).

Commodities Recap

Gold prices slid on Friday to their lowest in more than a week as the dollar rose due to easing trade tensions and demand for the precious metal was weak due to expectations of higher U.S. interest rates.

Spot gold 0.5 percent at $1,240.90 per ounce by 1:34 p.m. EDT (1734 GMT), after earlier falling to $1,236.58, its lowest since Dec. 12. U.S. gold futures settled down $5.40, or 0.4 percent, at $1,241.20 per ounce.

Oil prices rose about 1 percent on Friday as strike actions in Norway and Iraq hit supplies, but futures were set for a second straight week of decline after Libyan ports reopened and on the view that Iran might still export some crude despite U.S. sanctions.

Brent crude rose 88 cents to settle at $75.33 a barrel, a 1.18 percent gain. The global benchmark fell about 2.7 percent for the week.

West Texas Intermediate (WTI) crude futures rose 68 cents to settle at $71.01 a barrel, but lost about 3.9 percent this week.


 

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