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Americas Roundup: Dollar touches 10-month low against currency basket, Gold up, Oil eases on signs of steady output from some producers-July 18th,2017


Market Roundup

• US NY Fed Manufacturing Jul 9.8, 15.00 forecast, 19.80 previous.

• Fed credit survey shows decline in "discouraged" consumers.

• BlackRock CEO Fink sees the US falling short of 3% growth.

• NY Fed's Empire State current business conditions index +9.8 in July (consensus 15.0) vs +19.8 in June.

• NY Fed's Empire state employment index at +3.9 in July vs +7.7 in June.

• US Federal Reserve fines BNP Paribas $246 mln for foreign exchange fixing.

• Euro zone June inflation slowdown confirmed, but core rate rises.

• Bank of England wants less Libor-centric financial world.

• France has "unique window of opportunity" to reform – IMF.

• As London feuds, full Brexit negotiations open in Brussels.

• China's Xi: Will accelerate market opening, expand imports – media.

• Xi: Will keep Yuan basically stable, within reasonable range – State Radio.

• Brazil's 2018 inflation forecast 4.20% vs 4.24% previous week – w/e central bank survey

Looking Ahead - Economic Data (GMT)

• 01:30 China- China House Prices YY Jun, 10.4% previous

• 01:30 Australia- New Motor Vehicle Sales Jun, 2.9% previous

• 03:00 New Zealand- RBNZ Offshore Holdings Jun 58.7% previous

Looking Ahead - Events, Other Releases (GMT)

• No significant data

Currency Summaries

EUR/USD is likely to find support at 1.1428 levels and currently trading at 1.1478 levels. The pair has made session high at 1.1488 and hit lows at 1.1460 levels. The euro inched higher against the dollar on Monday as greenback slumped on the back of data that pointed to weak U.S. inflation and dampened prospects for rate hikes. The dollar index tumbled to 10 months lows on Friday as a round of weak U.S. data dimmed expectations for an interest rate hike in December. Expectations for another Fed rate hike this year have been pared to less than a 50-percent probability after the latest U.S. inflation print on Friday. With no top-tier data this week, markets have plenty of time to mull the repeated disappointment on inflation, which has cast a question mark over the Fed's confidence that prices would soon rebound. The dollar index, which measures the greenback against a basket of six major rivals, touched its lowest since last September of 95.018. While it was last flat on the day at 95.149, it was not far from that 10-month trough. The euro was last up 0.1 percent against the dollar at $1.1479 after touching a session high of $1.1487 earlier. That was just below a more than one-year high touched last week of $1.1489.

GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3054 levels. It reached session high at 1.3077 and dropped to session low at 1.3048 levels. Sterling dipped against the dollar on Monday as Sterling attracted sellers as Brexit negotiations began in Brussels. Four days of Brexit negotiations began in Brussels on Monday with the UK papers full of warnings from academics, commentators and former senior civil servants of the chaos that the process may generate for British government and business. The pound jumped almost 2 cents on Friday to hit $1.3113, its strongest since last September, after U.S. inflation and retail sales data came in weaker than expected, putting into doubt the prospect of a further rate hike from the Federal Reserve this year. But Sterling started the week by edging down from those highs, trading down 0.36 percent on the day at $1.3055. Investors will be watching the talks closely, with any signs that Britain will lose preferential access to Europe's single market likely to weigh on the currency.

USD/CAD is supported at 1.2624 levels and is trading at 1.2684 levels. It has made session high at 1.2695 lows at 1.2624 levels. The Canadian weakened slightly against the dollar on Monday as oil prices eased and domestic data showed a big drop in home sales. Resales of Canadian homes fell 6.7 percent in June from May, the largest monthly drop since 2010 and the third straight monthly decline as Toronto sales plunged, the Canadian Real Estate Association said on Monday. In other domestic data, foreign investors ramped up purchases of Canadian securities in May to C$29.5 billion, the second largest amount on record. Prices of oil, one of Canada's major exports, eased as output increases in some top producers eased as output increases in some top producers eased, but investors continued to await strong indications that an OPEC-led effort to drain a glut was proving effective. Last week, the loonie rose 1.8 percent as the Bank of Canada raised rates for the first time in seven years and signaled it will hike again over the coming months. The currency has gained more than 6 percent since the central bank turned hawkish in June. The Canadian dollar was last trading slightly higher at C$1.2690 to the greenback. The currency's weakest level of the session was C$1.2624, while it touched its strongest since May 2016 at $1.2641.

AUD/USD is supported around 0.7752 levels and currently trading at 0.7800 levels. It hit session high at 0.7838 and made session lows at 0.7793 levels. The Australian dollar held near two-year high on Monday as risk-on sentiment dominated amid diminishing worries of aggressive policy tightening in the United States. The Aussie has been climbing tirelessly since last week following comments from the U.S. Federal Reserve Chair Janet Yellen that sounded less hawkish than some had feared. That sent a green light for risk-taking, boosting carry trades where investors favour high-yielding currencies such as the Aussie and the Kiwi over safe haven assets. Aussie bulls were also motivated by stronger-than-expected economic data from China, Australia's No.1 trading partner. China reported second-quarter gross domestic product expanded 6.9 percent on the year, driven by strong industrial output, exports, retail sales and investment. The Australian dollar climbed to $0.7839, a level last seen on June 2015, after breaching major chart resistance in the $0.7700/7778 range. The Aussie was last trading at $0.7793 with bulls targeting the 200-week moving average around $0.8026.

Equities Recap

European shares gave back early gains in thin volumes on Monday, as a busy few weeks of earnings reports from top regional and U.S. firms got underway.

The UK's benchmark FTSE 100 closed down by 0.5 percent, FTSEurofirst 300 ended the day up by 0.04 percent, Germany's Dax ended down 0.3, and France’s CAC finished the day flat.

U.S. stocks were little changed on Monday as gains in utilities and consumer stocks offset declines in healthcare, with earnings news separating winners and losers across the board.

Dow Jones closed down by 0.03 percent, S&P 500 ended flat, Nasdaq finished the day up by 0.03 percent.

Treasuries Recap 

U.S. Treasury yields drifted lower on Monday, trading in narrow ranges, after falling the previous session on soft U.S. inflation and retail sales data ahead of the Federal Reserve's monetary policy meeting next week.

In late trading, U.S. 10-year yields fell to 2.310 percent from 2.319 percent late on Friday.

U.S. 30-year bonds were yielding 2.896 percent, down from 2.910 percent on Friday.

U.S. two-year yields were up slightly at 1.359 percent, from Friday's 1.355 percent

Commodities Recap

Gold climbed on Monday and was likely to see further gains after the dollar slumped to multi-month lows on the back of data that pointed to weak U.S. inflation and dampened prospects for rate hikes.

Spot gold was up 0.5 percent at $1,234.61 an ounce by 2:53 p.m. EDT (1853 GMT), while U.S. gold futures for August delivery settled up 0.5 percent at $1,233.70.

Oil prices were about 1 percent lower on Monday as investors continued to await strong indications that an OPEC-led effort to drain a glut was proving effective but output increases in some top producers eased, keeping losses in check.

Brent crude fell 49 cents, or 1 percent, to settle at $48.42 a barrel. U.S. crude ended the session 52 cents, or 1.1 percent lower at $46.02. Prices had earlier touched their highest since July 5.

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