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Americas Roundup: Dollar steadies as tax overhaul gets U.S. House nod, Wall Street rally, Gold dips, Oil extends losing streak on U.S. oversupply worries-November 17th 2017


Market Roundup

• U.S. House of Representatives approves tax package, shifts fight to Senate.

• Fed's Mester says not troubled by low inflation, confident it will pick up.

• U.S. Oct Industrial production m/m, 0.9%, 0.5% forecast, 0.3% previous 0.4% revised.

• U.S. Oct Capacity utilization m/m, 77.0%, 76.3% forecast, 76.0% previous 76.4% revised.

• U.S. Nov 11 w/e Initial Jobless claims, 249k, 235k forecast, 239k previous.

• U.S. Nov 11 w/e Jobless claims 4-Wk Avg, 237.75k, 231.25k previous.

• U.S. Nov 4 w/e Continued Jobless claims, 1.860 mln, 1.895 mln forecast, 1.901 mln prev 1.904 mln revised.

• U.S. Oct Import prices m/m, 0.2%, 0.4% forecast, 0.7% previous 0.8% revised.

• U.S. Oct Export prices m/m, 0.0%, 0.4% forecast, 0.8% previous 0.7% revised.

• U.S. Nov Philly Fed Business index, 22.7, 25.0 forecast, 27.9 previous.

• U.S. Nov NAHB Housing market index, 70, 68 forecast, 68 previous.

• CA Sept Manufacturing sales m/m, 0.5%, -0.3% forecast, 1.6% previous 1.4% revised.

• New ADP report shows Canada shed jobs in October.

• Canada's lower neutral rate may encourage risk-taking -central bank.

• Markets should not expect ECB to beef up bond buys: Mersch.

• Goldman CEO Blankfein calls for the second vote on Brexit.

• Britain's shoppers rein in spending, first yearly decline since 2013.

• China central bank adviser expects less forceful deleveraging in 2018.

Looking Ahead - Economic Data (GMT)

• 21:30 New Zealand Oct Manufacturing PMI, 57.5 previous

• 21:45 New Zealand Q3 Producer prices, 1.4% previous

• 21:45 New Zealand Q3 PPI output, 1.3% previous

Looking Ahead - Events, Other Releases (GMT)

• 08:30 ECB's Draghi, Bundesbank's Weidmann and Deutsche Bank's Cryan speak in Frankfurt, Germany

Currency Summaries

EUR/USD is likely to find support at 1.1739 levels and currently trading at 1.1762 levels. The pair has made session high at 1.1782 and hit lows at 1.1756 levels. Euro declined against the dollar on Thursday as the dollar rebounded after the U.S. House of Representatives passed their version of the tax overhaul bill. The dollar index, which measures the greenback against six rival currencies, was up 0.13 percent to 93.933.The U.S. House of Representatives approved a broad package of tax cuts affecting businesses, individuals and families on Thursday, moving Republicans and President Donald Trump an important step closer to the biggest tax code overhaul in a generation. The largely party-line 227-205 vote shifted the tax debate to the U.S. Senate, where that chamber's separate plan has already encountered resistance from some Republicans. No decisive Senate action was expected until after next week's Thanksgiving holiday. The dollar index, which hit 93.813 on Wednesday, its lowest since Oct. 20, was also boosted by a general improvement in risk appetite across financial markets. Euro had soared this week after data showed the German economy shifted into a higher gear in the third quarter, but gave up some gains after Wednesday's upbeat data on underlying inflation in the United States. The euro was 0.23 percent lower at $1.1764.

GBP/USD is supported in the range of 1.3128 levels and currently trading at 1.3182 levels. It reached session high at 1.3200 and dropped to session low at 1.3173 levels. Sterling rose against the dollar on Thursday an initiative by the European Council President Donald Tusk on Brexit negotiations was taken as mildly positive, on a day when currencies mostly stuck to well-worn trading ranges. Tusk will ask British Prime Minister Theresa May when they meet on Friday how she will meet EU conditions before a mid-December summit for opening post-Brexit trade talks, an EU source said on Thursday. Sterling extended gains, rising 0.25 percent to $1.3208. Against the euro, the pound was 0.2 percent up at 89.25 pence, still close to Wednesday's trough of 90.14 pence. Progress between European and British negotiators at the December summit in Brussels is seen as an important milestone in the Brexit talks, as businesses seek clarity on the terms of the divorce by the New Year, when many will make investment decisions. The pound fell to a four-week low against the rallying euro on Wednesday, after numbers showed UK wages still lagging well behind inflation, keeping pressure off the Bank of England to raise interest rates again after the first hike in a decade earlier this month.

USD/CAD is supported at 1.2690 levels and is trading at 1.2744 levels. It has made session high at 1.2762 and lows at 1.2726 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday as data showing a surprise rise in domestic manufacturing sales in September offset lower oil prices. The 0.5 percent increase in manufacturing sales topped economists' forecasts for a 0.3 percent decline, while volumes rose 0.7 percent. Prices of oil, one of Canada's major exports, dipped on rising U.S. crude production and inventories. Investors have also been focusing this week on the resumption of North American Free Trade Agreement renegotiations. NAFTA working groups began meeting on Wednesday in Mexico. Talks will begin on Friday and continue through Nov. 21.A cautious approach to monetary policy may be prudent during times of uncertainty like today, but caution has its limits because the trade-off can be financial instability, Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Wednesday. The Canadian dollar was last trading at C$1.2750 to the greenback, or 78.43 U.S. cents, up 0.1 percent. The currency traded in a narrow range of C$1.2726 to C$1.2785.

AUD/USD is supported around 0.7529 levels and currently trading at 0.7588 levels. It hit session high at 0.7632 and made session lows at 0.7564 levels. The Australian dollar edged lower against US dollar on Thursday as greenback recovered and a batch of neutral to solid economic reports put the Federal Reserve on track to raise interest rates in 2018. The Australian dollar was holding on at $0.7588, after delving as deep as $0.7567 overnight amid a general mood of risk aversion globally. Dealers reported support around $0.7570 but felt it needed to get back above $0.7640 to avoid a further correction to at least $0.7535.It won a reprieve from selling pressure when data showed Australia's jobless rate dipped to 5.4 percent in October, its lowest since early 2013.Employment missed estimates with a rise of just 3,700, but that was offset by a 24,300 gain in full-time work. In contrast, the Federal Reserve seems determined to raise U.S. rates in December and up to three more times next year, which would take the U.S. cash rate above Australia's for the first time since 2000. Traders see a 96.7 percent chance of the U.S Federal Reserve raising rates at its Dec. 13 meeting, CME Group's FedWatch showed. It would be the Fed's third rate increase this year.

Equities Recap

European shares enjoyed a recovery on Thursday, snapping their longest losing streak since October 2016 as the cyclical sectors which had driven a market-wide sell-off made a comeback, though oil was a weak spot.

UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.68 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.6 percent.

Wall Street's main indexes rose sharply on Thursday boosted by earnings-related gains in Wal-Mart and Cisco, while a tax bill expected to boost corporate earnings passed its first if smallest hurdle.

Dow Jones closed up by 0. 80 percent, S&P 500 ended up 0.82 percent, Nasdaq finished the day up by 1.29 percent.

Treasuries Recap

U.S. Treasury two-year yields hit a nine-year high on Thursday as risk appetite recovered globally and a batch of neutral to solid economic reports put the Federal Reserve on track to raise interest rates in 2018.

In late trading, the 10-year Treasury yield rose to 2.355 percent, from 2.335 percent late on Wednesday.

U.S. two-year yields climbed to a nine-year peak of 1.716 percent, from 1.691 percent on Wednesday. Two-year yields were last at 1.712 percent.

U.S. 30-year bond yields rose to 2.797 percent, from Wednesday's 2.781 percent.

Commodities Recap

Gold prices were slightly lower on Thursday, trading in a tight range as the U.S. House of Representatives passed its version of sweeping tax cuts and investors weighed possible changes in fiscal policy against the impact of an expected rise in U.S. interest rates.

Spot gold was down 0.1 percent at $1,277.80 an ounce by 2:09 p.m. EST (1909 GMT). On Wednesday, it touched a 3-1/2 week high of $1,289.09.

U.S. gold futures for December delivery settled up 50 cents, or 0.04 percent, at $1,278.20 per ounce.

Oil prices ended lower again on Thursday on increased concerns about growth in U.S. production and inventories, despite expectations that major world producers will extend a supply-cut deal later this month.

Brent crude futures settled 51 cents, or 0.8 percent, lower at $61.36 per barrel, running its streak of losses to five straight days. U.S. light crude fell for a fourth consecutive session, ending down 19 cents, or 0.3 percent, at $55.14 a barrel.

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