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America's Roundup: Dollar slips as China-U.S. trade worries ebb, Wall Street rises on trade talk optimism, Gold gains, Oil rises in session, but has weekly loss on trade worries-August 18th, 2018

Market Roundup

• Turkey's lira weakens 4 pct, Trump says won't take pastor's detention 'sitting down'.

• U.S.-Mexico bilateral NAFTA issues may be resolved next week –minister.

• US Aug U Mich Sentiment Pelim, 95.3, 98.0 forecast, 97.9 previous.

• US w/e ECRI Weekly Index, 147.4, 147.8 previous.

• US w/e ECRI Weekly Annualized, 0.3%, 0.6% previous.

• Canada  Jul CPI Inflation YY, 3.0%, 2.5% forecast, 2.5% previous.

• Canada Jul CPI BoC Core YY, 1.6%, 1.3% previous.

• Canada Jul CPI BoC Core MM, 0.2%, 0.1% previous.

• Trump: Mueller is conflicted, targets Justice official over clearance.

Looking Ahead - Economic Data (GMT)

No major economic data indicators scheduled

Looking Ahead - Events, Other Releases (GMT)

• 20 August 12:15 Bank of Canada Senior Deputy Governor Carolyn Wilkins speaks in Frankfurt

• 20 August 15:00 Federal Reserve Bank of Atlanta President Raphael Bostic speaks in Tennesse


Currency Summaries

EUR/USD is likely to find support at 1.1362 levels and currently trading at 1.1441 levels. The pair has made session high at 1.1444 and hit lows at 1.1398 levels. The euro rose for a second day in a row on Friday as hopes that next week's talks between the United States and China will ease trade tensions between the two limited dollar demand, although a fresh dive in the Turkish lira kept investors edgy.The euro has been under pressure in recent weeks on worries about euro zone bank exposure to Turkey after the lira crashed this month. Concerns that Italy's governing parties will agree a budget with high public spending have also weighed.The dollar has benefited as investors rush towards safety, helping the greenback extend its four-month long rally. The U.S. currency this week hit a more than 13-month high versus its major peers. The euro ticked 0.2 percent higher to $1.1440, while the dollar index   a measure of the dollar against a basket of major currencies   fell 0.2 percent to 96.437. China and the United States agreed on Thursday to hold a new round of trade talks on Aug. 21-22, supporting the yuan.The Chinese currency has slid in recent months, partly on the back of concerns about what a full-blown trade war with the U.S. would do to China's economy. Next week's lower-level trade talks between China and the United States offer some hope that the two countries will find a way to head off a full-blown trade war.

GBP/USD is supported in the range of 1.2686 levels and currently trading at 1.2748 levels. It reached session high at 1.2751 and dropped to session low at 1.2719 levels. Sterling inched higher against greenback on Friday as the dollar fell across the board, and some traders saw a buying opportunity after data this week pointed to the UK economy holding up relatively well. Worries about whether Britain can agree a trade deal with the European Union over coming months to avoid a sudden and disorderly exit from the bloc continue to keep most economists cautious about any sustained sterling strength. As trading in New York ended the pound was on course for a sixth straight week of losses against the dollar, its worst run since 2014.It has also set its longest daily losing streak against the U.S. currency since the height of the financial crisis in 2008, hitting a near 14-month low of $1.2662 on Wednesday, but has since bounced three quarters of a cent to $1.2748.Retail sales data on Thursday showed the British economy, while far from booming, has some momentum. British shoppers spent more than expected in July, pointing to a solid start to the third quarter for the economy, although data published earlier in the week showed a disappointing rise in wages that underlined the squeeze on consumers. With most of the month's UK economic data out of the way, the focus will shift back to Brexit as Britain heads towards several months of negotiations and several EU leaders summits.

USD/CAD is supported at 1.3034 levels and is trading at 1.3055 levels. It has made session high at 1.3091 and lows at 1.3049 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday after data showing a surge in domestic inflation triggered increased bets on another Bank of Canada interest rate hike as soon as September. Canada's annual inflation rate surged to 3.0 percent in July, its highest in nearly seven years, versus 2.5 percent the previous month as energy prices climbed. Economists had forecast 2.5 percent annual inflation. The CPI data came a day after a report that showed Canadian factory sales grew by 1.1 percent in June from May.The central bank raised its benchmark interest rate in July for the fourth time in a year, to 1.50 percent. Chances of another hike next month climbed to about 25 percent from less than 20 percent on Thursday, the overnight index swaps market showed. The loonie had lost ground against the U.S. dollar earlier in the week due to volatility in emerging market currencies. But it was on track to end the week 0.6 percent higher.Mexico's economy minister, Ildefonso Guajardo, said he hopes to conclude by the middle of next week outstanding bilateral issues with the United States surrounding the renegotiation of the North American Free Trade Agreement. Canada is also part of the NAFTA trade pact. The Canadian dollar was trading 0.8 percent higher at C$1.3058 to the greenback, or 76.58 U.S. cents. The currency traded in a range of C$1.3053 to C$1.3168.

AUD/USD is supported around 0.7248 levels and currently trading at 0.7313 levels. It hit session high at 0.7318 and made session lows at 0.7274 levels. The Australian dollar strengthened against dollar on Friday as China sought to stabilise its yuan and strains in emerging markets eased for a moment, though risks still looked to be loaded to the downside. The Aussie dollar edged up to $0.7270 and away from a 19-month trough of $0.7203 touched on Wednesday. It faces resistance at $0.7286/90 and a major chart barrier at $0.7311.The currency was still down 0.3 percent for the week so far, following a 1.4 percent drop the previous week. Its modest bounce came as the Turkish lira managed to steady and Beijing acted to stop the yuan from falling through a psychological bulwark at 7.0000 per dollar. Analysts, however, warned tensions in emerging markets and over global trade were unlikely to fade anytime soon, a mix that was benefiting the U.S. dollar. Recent U.S. data has been strong enough that markets remain almost fully priced for a Federal Reserve rate hike in September, despite all the risks to the global outlook. In contrast, Reserve Bank of Australia (RBA) Governor Philip Lowe used an appearance before lawmakers on Friday to underline his lack of urgency on rate hikes. He also said a lower currency would be helpful in supporting economic growth and inflation. 

Equities Recap

European shares slipped on Friday as investors licked their wounds after a tumultuous week, eyeing further turbulence in emerging markets and weakness in tech stocks.

The UK's benchmark FTSE 100 closed down by 0.04 percent, FTSEurofirst 300 ended the day down by 0.15 percent, Germany's Dax ended down by 0.2 percent, and France’s CAC finished the down by 0.1 percent.

U.S. stocks closed higher on Friday, with the S&P 500 and the Dow Jones Industrial Average extending gains and the Nasdaq turning positive on reports of progress in trade disputes between the United States and its trading partners China and Mexico.

Dow Jones closed up by 0.43percent, S&P 500 ended up 0.33 percent, Nasdaq finished the day up by 0.13 percent.

Treasuries Recap

U.S. Treasury yields were slightly lower on Friday, as risk aversion worsened slightly after the Turkish lira weakened again following warnings of further U.S. tariffs, reigniting worries about an emerging market currency crisis.

In afternoon trading, U.S. 10-year yields slipped to 2.869 percent, down from Thursday's 2.871 percent.

The 30-year yields were down at 3.027 percent, from 3.032 percent late Thursday. Earlier, 30-year yields fell as low 3.003 percent, the weakest in four weeks.

On the front end, U.S. 2-year yields fell to 2.616 percent from 2.620 percent on Thursday.

Commodities Recap

Gold recovered some ground on Friday as a weakening U.S. dollar relieved pressure on prices, but the precious metal remained near 19-month lows and looked poised for its biggest weekly drop since May 2017.

Spot gold added 0.31 percent to $1,177.21 ounce by 1:35 p.m. EDT (1735 GMT), but was down 2.7 percent this week in its sixth consecutive weekly loss. On Thursday, it touched $1,159.96, the lowest since January 2017.

U.S. gold futures for December delivery settled up 20 cents, or 0.02 percent, at $1,184.20 per ounce.

Crude prices rose on Friday, but declined on the week on worries that oversupply would weigh on the U.S. market while trade disputes and slowing global economic growth would dampen demand for oil.

Brent crude oil futures settled up 40 cents, or 0.6 percent, at $71.83 a barrel, after touching a high of $72.49 earlier in the session.

U.S. West Texas Intermediate crude futures (WTI) rose 45 cents , or 0.7 percent, to $65.91, after touching a session high of $66.39.
 

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