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Americas Roundup: Dollar rallies as trade war fears ease,Wall Street rises, on track for 3rd day of gains, Gold prices dip, Oil gains on surprise drawdown in U.S. crude inventories-April 6th, 2018


Market Roundup

• China signals tough stance on trade as U.S. officials push talks.

• China launches WTO complaint on U.S. tariffs linked to IP issues.

• U.S. Feb International Trade US$, -57.6 bln, -56.8 bln forecast, -56.6 bln previous, -56.7 bln revised.

• U.S. Feb Goods Trade Balance (R), -75.88 bln, -75.35 bln previous.

• U.S. w/e Initial Jobless Claims, 242k, 225k forecast, 215k prev, 218k revised.

• U.S. w/e Continued Jobless Claims, 1.808 mln, 1.849 mln forecast, 1.871 mln previous, 1.872 mln revised.

• U.S. w/e Jobless Claims 4-Wk Avg, 228.25k, 224.50k previous, 225.25k revised.

• U.S. Mar Challenger Layoffs, 60.357k, 35.369k previous.

• NAFTA nations 'moving forward in significant way' -Canada's Trudeau.

• CA Feb Trade Balance, -2.69 bln, -2.00 bln forecast, -1.91 bln prev, -1.94 bln revised.

• CA Feb Exports C$, 45.94 bln, 45.84 bln previous, 45.78 bln revised.

• CA Feb Imports C$, 48.63 bln, 47.75 bln previous, 47.72 bln revised.

• Brazil's left shaken by prospects of Lula jail, markets rally.

Looking Ahead - Economic Data (GMT)

• 5 Apr 23:30 Japan Feb All Household Spending YY, 0.3% forecast, 2.0% previous

• 5 Apr 23:30 Japan Feb All Household Spending MM, -0.6% forecast, 2.7% previous

• 5 Apr 23:50 Japan Mar Foreign Reserves, 1,261.70 bln previous

• 6 Apr 05:00 Japan Feb Coincident Index, -5.7 previous, -4.8 revised

• 6 Apr 05:00 Japan Feb Leading Indicator, -1.8 previous, -1.2 revised

Looking Ahead - Events, Other Releases (GMT)

• 06:45 ECB executive board member Benoit Coeure speaks at a conference about "The Outlook for the Economy and Finance" - CERNOBBIO, Italy

• 12:10 Governor of Norges Bank Oystein Olsen speaks - London

• 15:15 Bank of England Governor, Mark Carney: Speech at the International Climate Risk Conference for Supervisors - Amsterdam

• 17:30 Federal Reserve Chairman Jerome Powell speaks on the economic outlook before the Economic Club of Chicago - Chicago

• 19:15 Federal Reserve Chairman Jerome Powell tours the HUB facility - Chicago

• 20:00 Fed San Francisco President John Williams speaks on the outlook for the national economy – Santa Rosa, California

Currency Summaries

EUR/USD is likely to find support at 1.2200 levels and currently trading at 1.2236 levels. The pair has made session high at 1.2282 and hit lows at 1.2216 levels. Euro sliped lower against the dollar in the US session on Thursday as dollar was bolstered by a rebound on Wall Street and signs the United States is looking to resolve a trade dispute with China. The U.S. currency also climbed to a three-week peak against the yen and a 10-week high versus the Swiss franc, two safe-haven assets that investors buy in times of market turmoil. White House economic adviser Larry Kudlow said on Thursday he expects the United States and China to work out their trade differences over time and that trade barriers likely will come down on both sides. His comments prompted a recovery in the dollar. China, however, has not backed down. The nation's state news agency Xinhua said on Thursday China will win any trade war with the United States. That belief stems from the country's massive consumer market, which has been China's one advantage from U.S. manufacturers' point of view. Beijing on Wednesday imposed tariffs on key U.S. imports including soybeans, planes, cars, beef and chemicals in response to similar measures from the United States. The dollar index rose 0.36 percent, with the euro down 0.35 percent to $1.2236.

GBP/USD is supported in the range of 1.3910 levels and currently trading at 1.4002 levels. It reached session high at 1.4067 and dropped to session low at 1.3965 levels. The British pound declined against the greenback on Thursday as dollar rebound as trade war concerns eased and after a survey showed British services growing at their slowest since the Brexit referendum vote. The dollar extended gains to a two-week high against a basket of currencies, bolstered by a rebound on Wall Street and signs the United States is looking to resolve a trade dispute with China. Sterling fell 0.7 percent against the dollar to $1.3982, its lowest level since March 19. Against the euro, it weakened 0.2 percent to 87.40 pence. Underlying sentiment on the euro against sterling was also bolstered by expectations that sovereign wealth fund bids were supporting the British currency. Britain's construction PMI showed a similar drop on Wednesday, although manufacturing held up better. Traders this week have largely shrugged off the data as they focus on any signs economic weakness could steer the Bank of England from its path of an expected interest rate rise in May. The predicted rate rise in May is largely baked into sterling's price, and combined with Britain agreeing a Brexit transition deal last month and dollar weakness caused the trade dispute with China have kept the pound above $1.40.

USD/CAD is supported at 1.2743 levels and is trading at 1.2752 levels. It has made session high at 1.2806 and lows at 1.2752 levels. The Canadian dollar was steady against its U.S. counterpart on Thursday, holding near an earlier five-week high even as the greenback broadly climbed and data showed a widening of Canada's trade deficit. Canada's trade deficit in February jumped to C$2.69 billion from C$1.94 billion in January as rail transport problems slashed exports of wheat and canola, Statistics Canada said. Analysts had forecast a C$2 billion shortfall. The central bank has raised its benchmark interest rate three times since July to 1.25 percent but has worried about a number of uncertainties, including the impact of past rate hikes on highly indebted Canadians and the outlook for trade. Chances of an interest rate hike by May slipped to 41 percent from 45 percent before the data, the overnight index swaps market indicated. Still, the loonie has been boosted this week by optimism on a deal to revamp the North American Free Trade Agreement. It touched its strongest level since Feb. 27 at C$1.2745. The price of oil, one of Canada's major exports, was supported by an easing of trade tensions and a surprise draw in U.S. crude inventories last week. The Canadian dollar was last trading at C$1.2752 to the greenback, or 78.40 U.S. cents.

AUD/USD is supported around 0.7647 levels and currently trading at 0.7682 levels. It hit session high at 0.7694 and made session lows at 0.7671 levels. The Australian dollar declined against dollar on Thursday as risk appetite returned with the reduced fears of a trade war and on expectations that a growing economy will be confirmed on Friday when the closely watched U.S. employment report for March is released. Dollar rose as the United States voiced a willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed U.S. tariffs on $50 billion in Chinese goods by targeting key American imports. On the data front, the U.S. trade deficit increased to a near 9-1/2-year high in February as both exports and imports rose to record highs, but the shortfall with China narrowed sharply. The Commerce Department said on Thursday the trade gap rose 1.6 percent to $57.6 billion. That was the highest level since October 2008 and followed a slightly downwardly revised $56.7 billion shortfall in January. This week’s major economic catalyst will be Friday's closely watched U.S. jobs report, which will be evaluated for accelerating jobs gains and wage pressures. The Australian dollar dipped 0.3 percent to $0.7680, from a high of $0.7694 touched earlier in the session.

Equities Recap

European stocks jumped to their highest level in more than two weeks on Thursday as investors bought back into risky assets as concerns over trade tensions ebbed.

UK's benchmark FTSE 100 closed up by 2.29 percent, the pan-European FTSEurofirst 300 ended the day up by 2.47 percent, Germany's Dax ended up by 3.04 percent, France’s CAC finished the day up by 2.65 percent.

U.S. stocks rose on Thursday as investor fears of an escalating trade conflict between the United States and China eased and as focus on upcoming earnings grew.

Dow Jones closed up by 0.99 percent, S&P 500 ended up by 0.68 percent, Nasdaq finished the day up by 0.49 percent.

Treasuries Recap

U.S. Treasury yields rose to one-week highs on Thursday as investors piled back into equities as reduced fears of a trade war drove up the appetite for risk, and ahead of Friday’s closely watched employment report for March.

Benchmark 10-year notes fell 9/32 in price to yield 2.821 percent, after earlier rising to 2.834 percent, the highest level since March 27.

Commodities Recap

Gold prices dropped on Thursday as safe-haven demand eased for bullion after the United States and China signaled willingness to negotiate a trade dispute instead of hitting each other with tariffs that might slow economic activity in both countries.

Spot gold declined 0.5 percent at $1,325.81 by 1:38 p.m. EDT (1738 GMT). During the session, gold hit a one-week low of $1,322.40.U.S. gold futures for June delivery settled down $11.70, or 0.9 percent, at $1,328.50 per ounce.

Oil prices rose on Thursday, helped by gains in U.S. equities markets and Saudi Arabia's unexpected hike in crude prices, though crude's advance was curbed by strength in the dollar.

Brent crude futures gained 31 cents to settle at $68.33 a barrel, and U.S. West Texas Intermediate crude rose 17 cents to settle at $63.54 a barrel.


 

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