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Americas Roundup: Euro stronger ahead of ECB meeting, dollar index weak, US Stocks hits record high, Oil ends higher after volatile trade on dollar, Libya output-January 23rd 2018

Market Roundup

• US Senate moves to end government shutdown.

• US shutdown seen a threat to economy, not rating -Moody's.

• US, EU discordant notes on Jerusalem underline Mideast policy rift.

• US needs to pay attention to relationship with Britain, Tillerson says.

• Germany's SPD wants Merkel to sweeten coalition deal.

• UK government under fire for leaving finance sector in dark on Brexit.

• IMF raises global growth forecast, sees Trump tax boost.

• CA Nov Wholesale Trade MM, 0.7%, 1.0% forecast, 1.5% previous, 1.6% revised.

• NAFTA's fate uncertain ahead of talks in Montreal.

Looking Ahead - Economic Data (GMT)

• 04:00 JP N/A BOJ rate decision, -0.10% forecast, -0.10% previous

Looking Ahead - Events, Other Releases (GMT)

• N/A EU Economic and Financial Affairs Council meeting - Brussels

• N/A ECB Vice President Vitor Constancio attends an ECOFIN meeting - Brussels

• 08:00 The Riksdag Committee on Finance is holding a hearing on financial stability and macroprudential policy. – Stockholm

• 15:00 Senate Banking Committee holds a hearing on the nomination of Marvin Goodfriend to be a member of the Fed's Board of Governors - Washington


Currency Summaries

EUR/USD is likely to find support at 1.2102 levels and currently trading at 1.2256 levels. The pair has made session high at 1.2263 and hit lows at 1.2215 levels. The euro edged higher against US dollar on Monday, as market participants awaited the outcome of the European Central Bank's meeting on Thursday for possible clues to future shifts in the bank's monetary policy. The ECB unlikely to ditch a pledge to keep buying bonds at next week's meeting as rate setters need more time to assess the outlook for the economy and the euro, three sources close to the matter have said. The greenback had a slightly weaker tone on the day but did not concede too much ground against most major currencies as a government shutdown in Washington largely failed to worry the market. The dollar index, which measures the greenback against six rival currencies, was down 0.16 percent at 90.428, close to a three-year low, as the U.S. government shutdown weighed on sentiment. Investors were also focused on a Bank of Japan policy announcement on Tuesday. The U.S. government shutdown took effect at midnight on Friday after Democrats and Republicans failed to agree on a last-minute deal to fund government operations.

GBP/USD is supported in the range of 1.3835 levels and currently trading at 1.3984 levels. It reached session high at 1.3988 and dropped to session low at 1.3912 levels. Britain's pound strengthened against the dollar on Monday as sterling was boosted on optimism that Britain will reach a favourable divorce deal with the European Union. French President Emmanuel Macron said on Saturday that Britain would be able to have a bespoke deal with the trading bloc - one of Prime Minister Theresa May’s objectives - though London’s financial centre could not enjoy the same level of access to the EU under May’s current Brexit plan. Sterling climbed to as high as $1.3970, its strongest since June 24 2016. Against the euro, too, which has proved more resilient against the pound in recent weeks, sterling broke through the 88 pence level to trade at its strongest in five weeks at 87.70 pence per euro. Data published on Friday showed speculators increased their net-long positions on sterling or bets that it would rise - to the highest level in 3-1/2 years in the latest week, on the view that Brexit talks had so far gone relatively well and that the economy was ticking along better than some had expected. Although it is still down around 7 percent since the day of the ballot, the pound is now trading higher against the dollar than during a dip four months before the EU referendum, when the currency briefly touched as low as $1.3836.

USD/CAD is supported at 1.2397 levels and is trading at 1.2453 levels. It has made session high at 1.2471 and lows at 1.2427 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday, gravitating toward the middle of this year's range ahead of the resumption of talks to renegotiate NAFTA and as investors weighed domestic data showing an increase in wholesale trade. The value of Canadian wholesale trade rose for the second month in a row in November on broad gains across sectors, data from Statistics Canada showed. The 0.7 percent increase was shy of economists' forecasts for a 1 percent gain, while volumes rose 0.5 percent. The sixth and penultimate round of talks on renegotiating the North American Free Trade Agreement is due to take place in Montreal from Jan. 23-29.The future of NAFTA was the most significant downside risk the economy faced, the Bank of Canada said last week as it raised its benchmark interest rate, as expected, but tempered expectations for additional increases over the coming months. Separately, the member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), also known as TPP 11, gathered in Japan for two days of talks to try to forge a trade pact. The Canadian dollar was trading 0.3 percent higher at C$1.2459 to the greenback, or 80.26 U.S. cents. The currency traded in a range of C$1.2432 to C$1.252. Since the start of the year, the range has been C$1.2355 to C$1.2590.

AUD/USD is supported around 0.7936 levels and currently trading at 0.8012 levels. It hit session high at 0.8025 and made session lows at 0.7994 levels. The Australian dollar held near recent peak against the US dollar on Monday as news of U.S. senators striking a deal to lift a three-day government shutdown failed to give a lasting boost to the weak dollar. Thousands of federal employees breathed a sigh of relief on Monday after U.S. senators reached a deal to end a three-day government shutdown, turning their brief time away from work into what one scientist described as a "lunch break. “During shutdowns, nonessential government employees are furloughed, or placed on temporary unpaid leave. Those deemed essential, including those in public safety and national security, keep working. The dollar pared losses against a basket of currencies and U.S. stocks surged in afternoon trading after senators reached the deal, ending the 2-1/2-day shutdown that world markets had largely taken in stride. The Australian dollar stood at $0.7812, off last week's four-month high at $0.8023 and having failed to hold atop the $0.8037 chart barrier for three sessions running.

Equities Recap

A flurry of merger activity among European stocks drove strong moves on Monday as regional indexes notched up new records, with investors shrugging off the U.S. government shutdown as global stocks "melt-up" continued to grip European markets.

UK's benchmark FTSE 100 closed down 0.3 percent, FTSEurofirst 300 ended the day up by 0.28 percent, Germany's Dax ended up by 0.01 percent and France’s CAC finished the day up by 0.2 percent.

Wall Street's main indexes hit record closing highs on Monday in the wake of a deal by U.S. senators deal to end the federal government shutdown.

Dow Jones closed up by 0.55 percent, S&P 500 ended up 0.81 percent, Nasdaq finished the day up by 0.97 percent.

Treasuries Recap 

Treasury yields rose on Monday after U.S. lawmakers reached a deal to reopen the federal government, three days into the shutdown.

Benchmark government yields hit 2.672 percent, the highest since July 2014, and were 2.665 percent above its last close at 2.639 percent. The 10-year maturity on Friday broke through its 2017 high of 2.64 percent, a key technical support level.
The U.S. 2-year note yield was at 2.073 percent, after hitting 2.082 percent earlier in the day, its highest since September 2008.

Commodities Recap

Gold steadied on Monday as the dollar hovered near three-year lows, but bullishness in the wider financial markets as the U.S. government shutdown ended capped the metal's gains.

Spot gold edged up 0.05 percent at $1,332.13 per ounce by 1:47 p.m. EST (1847 GMT). The precious metal fell 0.5 percent last week, its first weekly decline in six weeks, after hitting four-month highs last Monday.

U.S. gold futures for February delivery settled down $1.20, or 0.1 percent, at $1,331.90 per ounce.

Oil settled higher on Monday after dollar fluctuations and the restart of some Libyan oil fields caused the market to vacillate, with prices testing lower before rallying to levels just below three-year highs.

Brent crude futures for March delivery settled up 42 cents, or 0.6 percent, at $69.03 a barrel, after earlier rallying to $69.51. U.S. crude rose 25 cents, or 0.4 percent, to close at $63.62 a barrel.
 

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February 20 21:00 UTC Released

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