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Americas Roundup: Dollar strengthens after Fed’s Dudley strikes hawkish tone, Sterling slips as Brexit talks get underway, Oil prices flat after weeks of steep declines-June 20th, 2017

Market Roundup

• Fed's Dudley: Wages, inflation should pick up; expects 3% wage growth over next year or two.

• Dudley: Unemployment and inflation levels "pretty good place to be".

• Dudley: Halting tightening cycle now would imperil economy.

• Rate-setter Forbes warns inflation could rise faster than BoE thinks-Bloomberg.

• UK Brexit minister: Long way to go in Brexit talks but off to a promising start.

• Britain, EU to discuss Brexit issues in July, September and October.

• Trade-focused academic Tenreyro picked as BoE policymaker.

• Euro zone banks still need to take swift action on bad debts: ECB.

• Brazil's central bank sees conditions for lower interest rates – Goldfajn.

• IMF says Japan needs to stick with fiscal, monetary stimulus.

• S.Africa public protector recommended constitution changes to force the central bank to promote economic growth rather than currency and price stability.

• Qatar says won't negotiate until economic boycott ends.

Looking Ahead - Economic Data (GMT)

• 23:00 Japan Reuters Tankan DI 24 previous

• 01:30 Australia Home Prices Index QQ Q1 2.2% forecast, 4.1% previous

Looking Ahead - Events, Other Releases (GMT)

• 23:00 Federal Reserve Bank of Chicago President Charles Evans speaks on current
economic conditions or monetary policy before the Money Marketeers of New York University

Currency Summaries

EUR/USD is likely to find support at 1.110 levels and currently trading at 1.1150 levels. The pair has made session high at 1.1183 and hit lows at 1.1140 levels. The euro declined against dollar on Monday as dollar gained ground after an influential U.S. Federal Reserve official expressed confidence that rising wages would help revive domestic inflation, which has shown signs of softening recently. New York Federal Reserve President William Dudley said U.S. inflation is a little low but should rise alongside wages as the labour market improves, allowing the Fed to continue gradually tightening U.S. monetary policy. Dollar has risen since the Fed on Wednesday increased interest rates for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year.An index , which gauges the dollar against six other currencies, was up 0.15 percent at 97.310.The euro was down 0.2 percent versus the greenback to $1.1174.

GBP/USD is supported in the range of 1.2675 levels and currently trading at 1.2730 levels. It reached session high at 1.2772 and dropped to session low at 1.2722 levels. Sterling declined against dollar on Monday as demand for sterling weakened on uncertainty over domestic politics and over Britain's economic future, as formal Brexit negotiations got under way. Britain and the European Union's chief negotiators began talks by stressing the need to quickly tackle uncertainties in the process and underlining their constructive attitude to reach a deal that is good for all. Sterling ticked gently lower throughout the day against the dollar, trading down around 0.2 percent at $1.2751 by 1900GMT, having opened the day slightly higher. That left it almost 2.5 percent lower than an eight-month high hit in May on the view that Prime Minister Theresa May's Conservative party would increase its majority in elections on June 8, giving Britain a strong position to negotiate with the EU. 

USD/CAD is supported at 1.3163 levels and is trading at 1.3222 levels. It has made session high at 1.3256 and lows at 1.3189 levels. The Canadian dollar declined modestly against its U.S. counterpart on Monday, as hawkish comments from Federal Reserve on US monetary policy boosted greenback. The U.S. dollar rose against a basket of major currencies, helped by comments from New York Federal Reserve President William Dudley suggesting the central bank remained on track to raise U.S. interest rates further despite recent disappointing inflation data. Oil prices managed to steady after four straight weeks of declines sparked by rising production in the United States, Libya and Nigeria, which had taken the edge off an OPEC-led initiative to cut output to support the market. The Canadian dollar was trading at C$1.3220 to the greenback, or 75.60 U.S. cents, down 0.1 percent. The currency traded in a range of C$1.3211 to C$1.3260. It touched its strongest in 3-1/2 months on Wednesday at C$1.3165.

AUD/USD is supported around 0.7565 levels and currently trading at 0.7595 levels. It hit session high at 0.7607 and made session lows at 0.7591 levels. The Australian dollar stood near 2-1/2 month peak against US dollar on Monday as Australian was aided by upbeat economic data and as the price of iron ore , the country's No. 1 export earner, steadied following steep falls in recent weeks. The Aussie held at $0.7593, not far from $0.7640 a level last seen on April 3. The Reserve Bank of Australia (RBA) has held interest rates at a record low 1.50 percent after last easing in August 2016, sounding optimistic about the economy despite a slow start to the year.RBA governor Philip Lowe on Monday expressed confidence economic activity will gain momentum, citing a recovery in global growth, upbeat surveys of local business sentiment and strength in employment. On the data front, Australian sales of new vehicles rose by the most in 11 months in May to hit the highest on record, a promising sign for a pick up in consumer spending in the second quarter. Monday’s data from the Australian Bureau of Statistics showed national sales rose a seasonally adjusted 2.9 percent in May, from April when they edged up 0.3 percent.

Equities Recap

French stocks outperformed upbeat European indices on Monday following a convincing parliamentary victory for President Emmanuel Macron, while banks rebounded following upgrades and retailers recovered from last week's losses.

The UK's benchmark FTSE 100 closed up by 0.9 percent, FTSEurofirst 300 ended the day up by 0.92 percent, Germany's Dax ended up by 1.1 percent, and France’s CAC finished the day up by 1 percent.

U.S. stocks rose on Monday, with the S&P 500 and the Dow Jones Industrial Average hitting record highs helped by a technology sector rebound and strength in healthcare and financial stocks.

Dow Jones closed up by 0.65 percent, S&P 500 ended up 0.81 percent, Nasdaq finished the day up by 1.38 percent.

Treasuries Recap 

U.S. Treasury yields jumped to session highs on Monday after New York Federal Reserve President William Dudley struck a hawkish tone on monetary policy, raising expectations that the U.S. central bank will continue tightening.

The 10-year notes were last down 4/32 in price to yield 2.17 percent.

Commodities Recap

Gold fell to a near five-week low on Monday as the dollar rose after hawkish comments from a top Fed official, but uncertainty created by the start of talks on the terms of Britain's departure from the European Union prevented deeper losses.

Spot gold was down 0.7 percent at $1,244.85 an ounce by 2:35 p.m. EDT (1835 GMT), after falling below the 100-day moving average to $1,244.27, its lowest since May 17. U.S. gold futures settled down 0.8 percent at $1,246.70.

Oil prices were flat on Monday after diving 13 percent since late May as rising production in the United States, Libya and Nigeria have foiled an OPEC-led effort to support the market by cutting production.

U.S. crude settled down 1.2 percent at $44.20 per barrel, its lowest since Nov. 14. BrentLCOcv1 settled 1 percent lower at $46.91.

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