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America's Roundup: Dollar rise on latest U.S. tariff threat, Wall Street ends lower, Gold down, Oil slips on U.S./China trade dispute, OPEC supply outlook-June 20th, 2018

Market Roundup

• Trump threatens almost all imports from China as Beijing fires back.

• US May Housing Starts Number, 1.350 mln, 1.310 mln forecast, 1.287 mln previous.

• US May Housing Starts MM: Change, 5.0%, -3.7% previous.

• US May Building Permits: Number, 1.301 mln, 1.350 mln forecast, 1.364 mln previous.

• US May Build Permits: Change MM, -4.6%, -0.9% previous.

• US w/e Redbook MM, 0.0%, -0.2% previous.

• US w/e Redbook YY, 4.7%, 4.3% previous.
• Trump says 'getting there' in NAFTA talks with Canada, Mexico.

• Canada foreign minister: deal to update NAFTA is still possible.

• Merkel, Macron back euro zone budget in "new chapter" for bloc.

Looking Ahead - Economic Data (GMT)

• 19 Jun 22:00 New Zealand Q2 Westpac Consumer Survey, 111.2 previous.

• 19 Jun 22:45 New Zealand Q1 Current Account - Qtrly, 0.000 bln forecast,, -2.770 bln previous.

• 19 Jun 22:45 New Zealand Q1 Current Account - Annual, -8.07 bln forecast,, -7.72 bln previous.

• 19 Jun 22:45 New Zealand Q1 Cact Balance To GDP, -2.8% forecast, -2.7% previous.

• 19 Jun 23:00 Japan Jun Reuters Tankan DI, 22 previous.

Looking Ahead - Events, Other Releases (GMT)

• 19 Jun 23:50 Bank of Japan releases Minutes of Monetary Policy Meeting held on Apr 26 and 27, in Tokyo

• N/A Conference organized by the Maleki group to discuss EU finances and the shaping of Europe's future. The conference will be held simultaneously in Amsterdam, Frankfurt, London and Paris, via videolink. Speakers include Bundesbank board member Joachim Wuermeling, Bafin President Felix Hufeld, European Investment Bank President Werner Hoyer, Deutsche Bank CEO Christian Sewing in Frankfurt

• N/A Fed Chair Jerome Powell, ECB's Mario Draghi, BOJ Governor Haruhiko Kuroda and RBA Governor Philip Lowe speak at an ECB conference on Central Banking in Sintra, Portugal

• 07:15 Panel Discussion by Bundesbank board member Joachim Wuermeling, Title: "Financing the EU's Economy" in Frankfurt

• 07:30 Bank of France governor Francois Villeroy de Galhau presents an annual report on the French and euro zone economy in Paris

• 08:00 ECB's Sabine Lautenschlager chairs Session 2 "Microeconomics of price and wage-setting" at ECB Forum on Central Banking in Sintra, Portugal

• 10:30 ECB's Benoit Coeure chairs Panel "Microeconomics of price and wage-setting" at ECB Forum on Central Banking in Sintra, Portugal

• 13:30 Panel participation by Philip Lowe, RBA Governor, at the Forum on Central Banking, hosted by the ECB, Portugal

• 13:30 Participation by the ECB President Mario Draghi in Policy Panel at ECB Forum on Central Banking in Sintra, Portugal

• 13:30 Fed's Jerome Powell participates in "Monetary Policy at a Time of Uncertainty and Tight Labor Markets" panel before the 2018 ECB Forum on Central Banking in Sintra, Portugal 

• 13:30 St Louis Fed's James Bullard gives presentation on "Macroeconomics of Price and Wage Setting" before panel at the 2018 ECB Forum on Central Banking, in Sintra, Portugal

• 16:30 Banks Speech by Member of the Board of the Deutsche Bundesbank Joachim Wuermeling, title: "Brexit means Brexit - But what does that mean for the financial center of Europe?", in Frankfurt

Currency Summaries

EUR/USD is likely to find support at 1.1508 levels and currently trading at 1.1583 levels. The pair has made session high at 1.1587 and hit lows at 1.1530 levels. Euro declined against the dollar on Tuesday as euro remained under heavy pressure due to a dispute in Germany's governing coalition and expectations the European Central Bank will hold interest rates steady into 2019. Chancellor Angela Merkel's Bavarian allies may defy her by implementing a plan to limit immigration at the German border, which could destabilise her three-month-old coalition. The single currency on Tuesday slumped to a two-week low of $1.1531 after ECB President Mario Draghi called for a patient approach to European monetary policy at a forum in Portugal. The euro had its biggest fall in two years last Thursday after Draghi offered dovish guidance for monetary tightening while outlining details of the end of quantitative easing. The U.S. dollar index touched its highest since July 2017 against a basket of currencies, as U.S. President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing said it would retaliate. The trade spat reinforced concerns about global growth and triggered a selloff in equities, while boosting safe-haven currencies such as the yen and the dollar.

GBP/USD is supported in the range of 1.3058 levels and currently trading at 1.3174 levels. It reached session high at 1.3189 and dropped to session low at 1.3148 levels.  British pound declined to hit seven- month lows against the greenback on Tuesday as concerns about an escalating trade dispute between the world's two biggest economies weighed on risk appetite. With all eyes focused on the Bank of England's policy decision on Thursday, in which it is expected to unveil its monetary policy stance for the rest of the year after a run of mixed data, investors have cut bets on the British currency. Market expectations are for a less than 40 percent likelihood of the Bank of England raising interest rates by August, with about an 80 percent chance of one more rate hike by the end of 2018. Investors are not expecting BoE to raise rates on Thursday. Sterling extended losses to fall 0.6 percent on the day at at $1.3151, its lowest since late November. It has fallen a cumulative 0.8 percent over the past two sessions. Latest Brexit headlines offered no support. Prime Minister Theresa May's Brexit plans were rejected by parliament's upper chamber on Monday, setting up a confrontation with pro-EU lawmakers later this week which will test her ability to lead a minority government.

USD/CAD is supported at 1.3212 levels and is trading at 1.3279 levels. It has made session high at 1.3290 and lows at 1.3257 levels. The Canadian dollar weakened to a one-year low against its U.S. counterpart on Tuesday as an escalating trade dispute between the United States and China pressured global stock and commodity markets. Oil prices fell after U.S. President Donald Trump on Monday threatened to impose a 10 percent tariff on $200 billion of Chinese goods, which Beijing warned it would fight back against with "qualitative" and "quantitative" measures. Investors have been concerned the trade spat between the two economic giants could slow global growth. Canada runs a current account deficit, so its currency tends to weaken when risk appetite sours. The country has its own trade feud with the United States and is in slow-moving talks with the U.S. and Mexico to revamp the North American Free Trade Agreement. The U.S. dollar index that tracks the greenback against the euro, yen, sterling and three other currencies reached 95.296, the highest since last July. It was last up 0.35 percent at 95.133. The Canadian dollar was last trading 0.5 percent lower at C$1.3280 to the greenback. The currency touched its weakest level since June 23, 2017 at C$1.3290.

AUD/USD is supported around 0.7346 levels and currently trading at 0.7378  levels. It hit session high at 0.7385 and made session lows at 0.7353 levels. The Australian dollar slipped to one-year low against dollar on Tuesday as intensifying trade tensions between the United States and China darkened the outlook for global growth, hitting commodities related currencies. The Aussie dollar AUD=D4 was pinned at $0.7408 having been as deep as $0.7394, the lowest since June last year. The next major support was a $0.7372 trough from early June in 2017, followed by a $0.7329/7333 double bottom from May that year. Beijing responded with tariffs of its own, leading Trump on Monday to threaten a 10 percent tariff on $200 billion of Chinese goods. China is Australia's single biggest export market and easily the largest buyer of its commodities, so any development that risks a slowdown in China is seen as negative for the Aussie. The currency is also used by investors as a liquid proxy for wagering on global growth and resource prices in general. Minutes of the Reserve Bank of Australia's (RBA) June policy meeting released on Tuesday showed policy makers were more optimistic on growth and wages, yet still in no rush to lift rates from all-time lows.

Equities Recap

European shares extended a sell-off on Tuesday as a trade war between the United States and China escalated, with autos, mining and technology stocks taking the brunt.

UK's benchmark FTSE 100 closed down by 0.36 percent, the pan-European FTSEurofirst 300 ended the day down by 0.66 percent, Germany's Dax ended down by 1.12 percent, France’s CAC finished the day down by 1.06 percent.

U.S. stocks fell on Tuesday as a sharp escalation in the trade dispute between the United States and China rattled the markets, though the three major indexes pared losses from earlier in the session.

Dow Jones closed down by 1.15 percent, S&P 500 ended down by 0.40 percent, Nasdaq finished the day down by 0.26 percent.

Treasuries Recap

U.S. Treasury yields retreated on Tuesday as trade tensions between China and the United States intensified after President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods while Beijing warned it would fight back.

U.S. benchmark 10-year yields fell to a three-week low of 2.853 percent, from Monday's 2.926 percent. They were last at 2.894 percent.

U.S. 30-year yields dropped to 2.991 percent, a three-week low as well, compared with 3.055 percent on Monday, Thirty-year yields last traded at 3.028 percent.

On the short end of the curve, U.S. two-year yields sank to a two-week low of 2.496 percent, compared with 2.558 percent late on Monday. Two-year yields last traded at 2.549 percent.

Commodities Recap

Oil fell on Tuesday ahead of a possible increase in OPEC crude supply, and as an escalating trade dispute between the United States and China unleashed sharp selloffs in many global markets.

Brent crude futures eased 60 cents, or 0.8 percent, to $74.74 a barrel by 11:31 a.m. EDT (1531 GMT), while U.S. West Texas Intermediate crude futures fell $1.01, or 1.6 percent, to $64.84 a barrel.

Gold fell to a near six-month low and platinum hit its lowest since February 2016 on Wednesday as a stronger greenback was overwhelmed by safe-haven buying, spurred by fears of a trade war between the world's two top economies.

Spot gold fell 0.1 percent at $1,276.19 per ounce by 1:43 p.m. EDT (1743 GMT), having touched its lowest since Dec. 22 at $1,270.

U.S. gold futures for August delivery settled down $1.50, or 0.1 percent, at $1,278.60 per ounce.
 

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