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America's Roundup: Dollar firms on optimism on U.S.-China trade deal, Wall Street sinks, Gold dips, Oil rises 1 pct on U.S.-China trade optimism, OPEC+ supply cuts-March 5th, 2019

Market Roundup

• White House's Hassett says progress in China trade talks-Fox Business

• US Dec Construction Spending MM, -0.6%, 0.2% forecast, 0.8% previous

• Atlanta Fed keeps U.S. Q1 GDP growth view at 0.3 pct

• U.S. House Democrats target Trump-Putin talks, obstruction

• British PM Theresa May's lawyer seeks legal fix to the Brexit riddle

• OPEC likely to defer output policy decision until June - sources

Looking Ahead - Economic Data (GMT)

• 4 Mar 21:30 Australia Feb AIG Services Index, 44.3 previous

• 5 Mar 00:30 Australia Q4 Current Account Balance SA (AUD), -9.2 bln forecast, -10.7 bln previous

• 5 Mar 00:30 Japan Feb Services PMI, 51.6 previous

• 5 Mar 01:45 China Feb Caixin Services PMI, 53.6 previous

• 5 Mar 03:30 Australia Mar RBA Cash Rate, 1.50% forecast, 1.50% previous

Looking Ahead - Events, Other Releases (GMT)

• 07:30 Swedish central bank Deputy Governor Cecilia Skingsley participate in a panel discussion about the possible introduction of a digital currency

• 09:00 Swiss National Bank's Vice President Fritz Zurbruegg presents new 1,000 franc banknote in Zurich, Switzerland

• 09:30 The Bank of England's Financial Policy Committee statement from its meeting - Feb. 26 2019

• 12:30 Federal Reserve Bank of Boston President Eric Rosengren to speak on the current economic landscape in the United States and abroad before the National Association of Corporate Directors' New England Chapter in Boston

• 15:35 The Governor of the Bank of England Mark Carney participates in House of Lords Economic Affairs Committee hearing in Boston

• 16:30 Federal Reserve Bank of Richmond President Thomas Barkin speaks on "Moving the Needle in Rural Communities" before the Virginia Governor's Conference on Agricultural Trade, in Richmond, Virginia

Currency Summaries

EUR/USD: The euro declined against the U.S. dollar on Monday, as greenback  gained on bets that China and the United States are moving closer to a trade deal that would end sparring between the world's two biggest economies. The greenback gained for a fourth straight day, bolstered by the rise in U.S. bond yields with benchmark 10-year yields   hitting one-month peaks last week. An index that tracks the dollar versus a basket of six major currencies was up 0.25 at 96.68 after hitting a 16-month high of 97.693 on Monday.  The dollar's increase was limited in the wake of comments from U.S. President Donald Trump, who on Saturday renewed his criticism of Federal Reserve Chairman Jerome Powell.Immediate resistance can be seen at 1.1352 (9 DMA), an upside break can trigger rise towards 1.1384 (50 DMA).On the downside, immediate support is seen at 1.1328 (38.2% retracement level), a break below could take the pair towards 1.1284 (23.6% retracement level).

GBP/USD: The pound slipped lower against dollar on Monday, as Prime Minister Theresa May's top lawyer tried to clinch a Brexit compromise with the European Union in a last-ditch bid to win over rebellious British lawmakers. The pound had gained earlier   on signs some pro-Brexit lawmakers were willing to compromise with May, increasing the chances she will get her Brexit deal through parliament next week. Britain's construction industry reported the first fall in activity in almost a year last month, with the HIS Markit/CIPS Purchasing Managers' Index (PMI) falling to 49.5 in February from January's reading of 50.6, although the pound was unmoved after the release. Immediate resistance can be seen at 1.3248 (5 DMA), an upside break can trigger rise towards 1.3355 (Feb 26th High).On the downside, immediate support is seen at 1.3160 (38.2% retracement level), a break below could take the pair towards 1.3123 (11 DMA).

USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Monday, as investors were cautious ahead of U.S. China trade talks. U.S. President Donald Trump and Chinese President Xi Jinping might seal a trade deal around March 27, given progress in trade talks, the Wall Street Journal reported on Sunday. Washington and Beijing have imposed tit-for-tat tariffs on billions of dollars’ worth of goods, roiling financial markets, disrupting manufacturing supply chains and shrinking U.S. farm exports. Oil futures were higher from news of OPEC output cuts and trade deal hopes but their rally also lost some steam as equity prices declined. Immediate resistance can be seen at 1.3365(23.6% retracement level), an upside break can trigger rise towards 1.3400 (Psychological level).On the downside, immediate support is seen at 1.3255 (100 DMA), a break below could take the pair towards 1.3219 (21 DMA).

USD/JPY: The dollar dipped against Japanese yen on Monday, as investors positioned themselves ahead of  China and the United States trade talks. The United States had been poised to hike tariffs on some $200 billion in Chinese imports to 25 percent from 10 percent after Friday if no deal was reached by then. But on Feb. 24, President Donald Trump announced that he would delay the hike in duties due to advances in negotiations. The two nations have imposed tit-for-tat tariffs on billions of dollars’ worth of each other’s goods, roiling financial markets, disrupting manufacturing supply chains and shrinking U.S. farm exports. The greenback was hovering near a 10-week high of 112.08 yen  reached on Friday. It was last at 111.73 yen, marginally lower on the day.Strong resistance can be seen at 112.08 (38.2% retracement level), an upside break can trigger rise towards 112.66 (23.6% retracement level).On the downside, immediate support is seen at 111.35 (5 DMA), a break below could take the pair towards 111.00 (Psychological level).

Equities Recap

European shares hit five-month highs on Monday with cyclical stocks outperforming defensives, helped by hopes over a deal to end the U.S.-Sino trade war.

UK's benchmark FTSE 100 closed up by 0.36 percent, the pan-European FTSEurofirst 300 ended the day up by 0.27 percent, Germany's Dax ended down by 0.02 percent, France’s CAC finished the day up by 0.39 percent.

Wall Street's major indexes slumped on Monday after a weak U.S. construction spending report, as investors took advantage of optimism over a U.S.-China trade deal to lock in profits after the market's strong run to start 2019.

Dow Jones closed downby 0.77 percent, S&P 500 ended down by 0.37percent, Nasdaq finished the day down by 0.21 percent.

Treasuries Recap

Treasury yields on Monday morning were little changed with the yield curve modestly flatter, despite positive developments in U.S.-China trade talks.

The yield on the benchmark 10-year note was last down about half a basis point from Friday's close. The seven and 30-year yields were also lower, with the biggest move across all maturities in the latter, down 0.8 basis point.

The two-year yield  , which reflects traders expectations of interest rate increases, was unchanged at 2.559 percent.

The Treasury yield curve, the spread between two- and 10-year yields, was slightly flatter, last at 18.9 basis points. That compared with 19.8 basis points at Friday's close.

Commodities Recap

Gold dipped on Monday to its lowest in more than five weeks as the dollar and equities prices rose on optimism about a possible trade deal between the United States and China, while platinum shed 3 percent as investors took profits from a recent rally.

Spot gold was down 0.5 percent at $1,286.94 per ounce at 2:15 p.m. EST (1915 GMT). During the session gold fell as low as $1,282.50, its lowest since Jan. 25.U.S. gold futures fell for the sixth straight session, settling down 0.9 percent at $1,287.5 per ounce.

Oil prices rose slightly on Monday as the United States and China appeared closer to reaching a formal agreement to end a trade war that has slowed global economic growth while Russia said it would speed up its crude production cuts.

Brent crude futures   settled at $65.67 a barrel, up 60 cents or 0.9 percent. U.S. West Texas Intermediate (WTI) crude futures ended 79 cents, or 1.4 percent, higher at $56.59 a barrel.
 

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