Americas Roundup: Dollar surges against loonie on tariff announcement, yen sinks, Oil breaks losing streak ahead of U.S. inventory data-April 26th, 2017

Market Roundup

•    US Redbook y/y 1.7% v 2.3% previous.

•    US Monthly home price y/y Feb 6.4% v 5.7% previous; m/m 0.8% v 0.2% previous.

•    US CaseShiller 20y/y Feb 5.9% v 5.7% forecast, 5.7% previous.

•    US Consumer confidence 120.3 v 122.5 forecast, 124.9 previous.

•    US New home sales +5.8% v -0.8% forecast, 0.3% previous; new 8-month high.

•    Trump to make major tax announcement on Wednesday, Nasdaq hits 6k, Dow surges as earnings impress.

•    French relief sets up ECB for change of tack in June, No change expected Thursday, but language tweak likely in June.

•    Euro, goverment bond yields lifted by hints of ECB policy shift.

•    CAD slumps to 14-month low after U.S. sets lumber duties.

•    Mexico’s Videgaray: Mexico would take legal steps against any measures in US fiscal plan that violates WTO rules.

•    Turkey’s Erdogan: No early elections on Turkey’s agenda at the moment.

Looking Ahead - Economic Data (GMT)

•    01:30 Australia CPI QQ* forecast 0.6%, 0.50%-previous

•    01:30 Australia CPI YY* forecast 2.2%, 1.50%- previous

•    01:30 Australia RBA Weighted Median CPI YY* forecast 1.8%, 1.50%- previous

•    01:30 Australia RBA Trimmed Mean CPI YY* forecast 1.8%, 1.60%- previous

•    01:30 Australia CPI Index Number* 110- previous

Looking Ahead - Events, Other Releases (GMT)

•    --:-- Japan-Bank of Japan starts its two-day monetary policy meeting (to April 27)

Currency Summaries

EUR/USD is likely to find support at 1.0861 levels and currently trading at 1.0932 levels. The pair has made session high at 1.0948 and hit lows at 1.0877 levels. Euro rose against dollar on Tuesday as euro was boosted on relief over the French election and the possibility of more hawkish European Central Bank policy in June. The euro hit $1.0950, its highest level against the dollar in five and a half months, as traders digested centrist candidate Emmanuel Macron's victory in the first round of France's presidential election on Sunday. Sources close to the ECB's Governing Council told on Tuesday that with the fading of the threat of a run-off between two eurosceptic candidates in France, and with the economy on its best run in years, many rate setters see scope for sending a small signal in June towards reducing monetary stimulus. On the data front, U.S. consumer confidence fell from a more than 16-year high in April, but a surge in new home sales to an eight-month high last month suggested underlying strength in the economy despite an apparent sharp slowdown in growth in the first quarter. The Commerce Department said new home sales jumped 5.8 percent to a seasonally adjusted annual rate of 621,00 units last month, the highest level since July 2016. New home sales were up 15.6 percent compared to March 2016.

GBP/USD is supported in the range of 1.2756 levels and currently trading at 1.2830 levels. It reached session high at 1.2844 and dropped to session low at 1.2798 levels. Sterling gained against the dollar on Tuesday as continued relief from the outcome of the first phase of French elections supported the sterling. Sterling has almost hit six-month highs versus the dollar after British Prime Minister Theresa May called a snap election last week. Investors expect her Conservatives to win by a landslide, giving her a clear domestic mandate that may increase her room for manoeuvre as Britain heads into exit negotiations with the European Union. Sterling sharp rally has largely stalled, however, since the initial moves on May's announcement and positioning data still points to a large market bias against the pound built up in a shattering few months after last June's Brexit referendum.EU leaders will warn Britain it cannot assume its big financial services industry will be included in any free trade deal after Brexit, diplomats said on Monday after fixing negotiating terms in a draft document.

USD/CAD is supported at 1.3511 levels and is trading at 1.3572 levels. It has made session high at 1.3624 and lows at 1.3564 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday after the United States said it would impose preliminary anti-subsidy duties averaging 20 percent on imports of Canadian softwood lumber. The move, which affects some $5.66 billion worth of imports of the construction material, sets a tense tone as the two countries and Mexico prepare to renegotiate the 23-year-old North American Free Trade Agreement. News of the tariffs sent the U.S. dollar sharply up against the Canadian dollar to hit an almost four-month high. Canada denounced the U.S. action and vowed to protect its lumber interests through litigation. Oil prices edged up in choppy trade on Tuesday as U.S. crude inventory data that was forecast to show a drawdown faced doubts about OPEC's ability to reduce a global glut.  The Canadian dollar was trading at C$1.3564 to the greenback, or 73.56 U.S. cents, weaker than Monday's close of C$1.3516, or 73.99 U.S. cents.

USD/JPY is supported around 110.30 levels and currently trading at 111.06 levels. It peaked to hit session high at 111.06 and made session lows at 110.56 levels. The U.S. dollar rose against the Japanese yen on Tuesday as markets became less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for greenback. The dollar surged about 1 percent against the yen to a two-week high of 110.84 yen as traders abandoned the safe-haven currency on relief over centrist candidate Emmanuel Macron's victory in the first round of Sunday's election in France. Meanwhile, investors awaited President Donald Trump's announcement on tax reform on Wednesday and remained optimistic that the government would avert a shutdown. Last week, Trump promised a "big announcement" on reforming the U.S. tax code, which was pledged during his campaign. An administration official, however, said over the weekend that the announcement will consist of "broad principles and priorities. The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.3 percent at 98.838.

Equities Recap

Deal-making and earnings underpinned European stock markets on Tuesday as the focus shifted back to fundamentals and away from politics, for now, with the pan-European STOXX 600 index scoring its fifth straight session of gains.

The STOXX 600 ended up 0.3 percent, UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.25 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day up by 0.2 percent.

The Nasdaq Composite hit a record high on Tuesday, while the Dow and S&P 500 brushed against recent peaks as strong earnings underscored the health of corporate America.

Dow Jones closed up by 1.12 percent, S&P 500 closed up  0.61 percent, Nasdaq finished the day up by 0.70 percent.

Treasuries Recap 

U.S. Treasury yields rose on Tuesday as President Donald Trump indicated he would compromise on a budget that, if passed, would avert a government shutdown and as investors prepared for new Treasury supply.

Benchmark 10-year notes were last down 8/32 in price to yield 2.30 percent, up from 2.27 percent late on Monday. The yields hit five-month lows of 2.17 percent last Tuesday as concerns grew about France’s vote.

Commodities Recap

Oil prices edged up in volatile trading on Tuesday, rebounding from six days of losses, ahead of U.S. crude inventory data forecast to show a drawdown.

U.S. crude futures settled up 33 cents to $49.56 a barrel, breaking a streak that saw the benchmark lose 7.4 percent. Brent crude settled up 50 cents at $52.10 a barrel.

Gold prices fell to a two-week low on Tuesday as markets became less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for risky assets such as stocks while denting bullion.

Spot gold was down 0.9 percent at $1,264.25 an ounce by 2:53 p.m. EDT (1853 GMT), on track for its weakest one-day performance since March 2. It fell earlier to $1,261.41, the lowest since April 11. U.S. gold futures settled down 0.8 percent at $1,267.20.