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America's Roundup: Dollar rises as risk appetite returns, Gold advances on technical buying,Oil up over 3 pct, breaks above $73 as supply concerns build-April 19th, 2018

Market Roundup

• U.S. economic growth on track despite tariff concerns -Fed report.

• Bank of Canada says more rate hikes coming, but holds for now at 1.25%.

• Fed's Dudley sees 'slightly restrictive' U.S. monetary policy on horizon.

• Trump hails Pompeo-Kim meeting, says N.Korea summit plans advancing.

• Trump contradicts himself over Comey firing.

• Surprise UK inflation drop muddies outlook for interest rates.

• British PM May dealt embarrassing Brexit defeat in parliament's upper house.

• Risks growing that could alter ECB's tightening plan -Villeroy.

• Inflation-busting pay hikes highlight German shift towards consumption.

• Merkel wants European Monetary Fund with national oversight -sources.

Looking Ahead - Economic Data (GMT)

• 18 Apr 22:45 New Zealand Q1 CPI, 0.5% q/q, 1.1% y/y forecast; 0.1%, 1.6% previous

• 18 Apr 23:50 Japan w/e Foreign Bond investment, -609.4 bln

• 18 Apr 23:50 Japan w/e Foreign Invest JP stock, 332.9 bln

• 19 Apr 01:30 Australia Mar Employment, 21.0k forecast, 17.5k previous

• 19 Apr 01:30 Australia Mar Unemployment Rate, 5.5% forecast, 5.6% previous

• 19 Apr 01:30 Australia Mar Participation Rate, 65.7% forecast, 65.7% previous

Looking Ahead - Events, Other Releases (GMT)

• 18 Apr 20:15 Fed’s Randal Quarles participates in discussion, "Navigating New Opportunities: Transatlantic Regulatory Reform" before the Bretton Woods Committee 2018 Annual Meeting, in Washington

• 19 Apr N/A ECB’s Draghi and Coeure participate in the 2018 Spring Meetings of the World Bank Group and the IMF in Washington D.C.

• 19 Apr 05:00 Bank of Japan to publish Financial Stability Report (April 2018) in Tokyo 

• 19 Apr 12:00 Federal Reserve Board Governor Lael Brainard speaks on "Regulatory Reform" before the 2018 Global Finance Forum, in Washington 

• 19 Apr 12:45 IMF’s Christine Lagarde holds a news conference ahead of the spring meeting of the IMF and World Bank in Washington, D.C. 

• 19 Apr 13:30 World Bank’s Jim Yong Kim holds a news conference ahead of the spring meeting of the IMF and World Bank in Washington, D.C.

• 19 Apr 15:00 ECB’s Angeloni speaks on “How Real is Europe’s Banking Union?” in Washington, D.C

• 19 Apr 16:30 BoE’s Dep Gov for Financial Stability Jon Cunliffe speaks in Washington at the 2nd Annual Global Finance Forum in London

• 19 Apr 16:30 Eurogroup head Mario Centeno speaks on "Completing the European Project" in Washington D.C.

• 19 Apr 18:45 Bank of Canada's Carolyn A. Wilkins participates in panel discussion at IMF in Washington D.C.

• 19 Apr 21:00 UK's finmin Philip Hammond and the South African President Cyril Ramaphosa speak at a dinner at Mansion House

Currency Summaries

EUR/USD is likely to find support at 1.2324 levels and currently trading at 1.2373 levels. The pair has made session high at 1.2397 and hit lows at 1.2370 levels. Euro was little changed against the dollar on Wednesday as fading concerns about a trade war fed broader appetite for risk-taking among investors. U.S. markets were buoyed by strong corporate earnings and that helped European equities on Wednesday as investors focused on economic data and put to one side worries about a global trade war. Markets in Asia picked up on a positive finish in the United States and were helped by China's decision to cut bank reserve requirements by 100 basis points for some commercial banks. The dollar has found support from economic indicators recently as perceived political risks recede, with Western strikes on Syria not expected to escalate. But caution over U.S.-China trade tensions continued to linger in the background, confining currencies to narrow ranges. The dollar index , which tracks the greenback against a basket of six currencies, gained 0.12 percent, to 89.626. It has moved between 88.253 and 90.932 since mid-February. While the euro was up 0.03 percent, at $1.2374.

GBP/USD is supported in the range of 1.4161 levels and currently trading at 1.4200 levels. It reached session high at 1.4246 and dropped to session low at 1.4186 levels. Sterling declined to hit four day low against the dollar on Wednesday as British inflation cooled unexpectedly, raising concerns that the Bank of England might not implement further increases to interest rates after next month's expected hike. But investors trimmed some short bets as they judged the fall was too excessive against a broader economic backdrop still supportive of a quarter-point increase to rates next month. A May increase already firmly baked into market expectations and a recent string of strong data and a Brexit transition agreement has prompted suggestions that the central bank will follow up with another increase in November. Wednesday's official data showed annual consumer price inflation fell to 2.5 percent in March, down from 2.7 percent in February and below economists' expectations. The British currency slid 0.8 percent to $1.4173 in London trading, its lowest since last Thursday and a striking reversal from Tuesday climb to $1.4377, its strongest since the Brexit referendum. It later trimmed some of those losses to stand only 0.4 percent down at $1.4233.

USD/CAD is supported at 1.2541 levels and is trading at 1.2626 levels. It has made session high at 1.2660 and lows at 1.2541 levels. The Canadian dollar weakened to a one-week low against its U.S. counterpart on Wednesday, pressured by a more dovish message on trade than some investors had expected from the Bank of Canada. The Bank of Canada flagged more interest rate hikes would be coming after it held its benchmark rate steady at 1.25 percent, but said it did not know when or how aggressive it would need to be to keep inflation in check. The central bank worried about more protectionist global trade policies despite recent indications that prospects have improved for a deal to revamp the North American Free Trade Agreement. Chances of a hike at the next interest rate decision in May slipped further below 40 percent, the overnight index swaps market indicated. The Canadian dollar is on course to strengthen in April for the eighth time in the last 10 years, a sequence strategists link to seasonal vitality in stocks and energy products, rewarding investors who trade on market patterns. The price of oil, one of Canada's major exports, was lifted by a decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel. The Canadian dollar was trading 0.6 percent lower at C$1.2630 to the greenback, or 79.15 U.S. cents. 

USD/JPY is supported around 106.89 levels and currently trading at 107.24 levels. It peaked to hit session high at 107.32 and made session lows at 107.10 levels. The U.S. dollar strengthened against the yen on Wednesday as solid company results and fading concerns about a trade war reduced demand for safe-haven assets like Japanese yen. After weeks of a hectic back-and-forth between China and the United States, the threat seems to have subsided, leading some investors to repurchase battered risky assets. A growing perception that Western strikes on Syria are unlikely to escalate also helped to boost optimism in global markets, though traders warned of lingering caution. Trading across U.S. government bond maturities was range-bound on Wednesday, with yields little changed in spite of gains in the equity market in the last few sessions. The dollar was also supported by a higher open on Wall Street, following the latest batch of earnings. Morgan Stanley shares rose 3 percent after the bank reported a 40 percent jump in quarterly profit, driven by its trading business. The Federal Reserve's latest Beige Book, released on Wednesday, showed the U.S. economy was growing at a modest to moderate pace in March through early April.The dollar index, which measures the greenback against a basket of currencies, was up 0.12 percent at 89.627.

Equities Recap

European shares rose to fresh seven-week highs on Wednesday, helped by well-received company results and a rally in mining stocks on the back of soaring metal prices.

UK's benchmark FTSE 100 closed up by 1.3 percent, the pan-European FTSEurofirst 300 ended the day up by 0.32 percent, Germany's Dax ended up by 0.09 percent, France’s CAC finished the day up by 0.50 percent.

Wall Street edged higher in a volatile trading session on Wednesday, with strong gains in the energy index partly offset by weakness in industry sectors such as technology and financials.

Dow Jones closed down by 0.15 percent, S&P 500 ended up by 0.09 percent, Nasdaq finished the day up by 0.20 percent.

Treasuries Recap

Trading across U.S. government bond maturities was range-bound on Wednesday, as the yield curve nevertheless continued to flatten for the ninth consecutive market day.

The spread between two- and 10-year Treasuries is at 42.9 basis points, and the spread between five- and 30-year yields is at 31.5 basis points, both below Tuesday's close.

Commodities Recap

Gold prices rose to a one-week high on Wednesday on technical trading and some safe-haven demand even as the dollar held on to gains and stocks rose on risk appetite.

Spot gold was up 0.2 percent at $1,349.71 per ounce by 1:48 p.m. EDT (1748 GMT), after touching its highest since April 11, while U.S. gold futures for June delivery settled up $4, or 0.3 percent, at $1,353.50 per ounce.

Oil futures jumped nearly 3 percent on Wednesday on a decline in U.S. crude inventories and after sources signalled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel.

Brent crude futures  settled at $73.48 a barrel, up $1.90, or 2.7 percent. U.S. West Texas Intermediate crude futures gained $1.95, or 2.9 percent, to settle at $68.47 a barrel, their highest since late 2014.

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