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Americas Roundup: U.S dollar declines against Japanese yen on fears of a global economic slowdown, gold surges to 1-year high-February 12th,2016


Market Roundup

  • US Jobless Claims fell 16K To 269K in February 6 Week, vs 281k forecast.

  • Fed's Yellen: USD strength signal of US econ strength, economy creating jobs despite drag from strong USD.

  • Fed's Yellen: Weak oil mostly negative on US econ growth so far, on balance good for economy.

  • Fed's Yellen: Still evaluating negative rates, not automatic would be workable in US.

  • UAE energy ministers ready to cooperate on production cuts (WSJ) oil rallies off lows.

  • Yen surges 2 percent vs dollar as global worries deepen, intervention worries mount.

  • USD/JPY rallies to flash high above 113.00 from 111.00 low, BOJ has no comment on intervention.

  • U.S. Treasury yields plunge, fed fund futures price out any move by Fed in 2016.

  • Moody's: High-yield turmoil of 2015 to carry on as market volatility persists.

  • Bank and resources slump sees European shares slide to 2-1/2 year low.

  • USD/MXN rises to high 19.4480 despite 2 rounds of intervention, reverses after UAE production cut story.

Looking Ahead - Economic Data (GMT)

  • 23:50 Japan Foreign Bond Investment *w/e -85.4b-previous

  • 23:50 Japan Foreign Invest JP Stock* w/e -364.1b- previous

  • 00:30 Australia Housing Finance* Dec forecast 3%, 1.80%- previous

  • 00:30 Australia Invest Housing Finance* Dec 0.70%- previous

  • 02:00 Japan TR IPSOS PCSI* Feb 42- previous

  • 02:00 Australia TR IPSOS PCSI* Feb 51.2- previous

Looking Ahead - Events, Other Releases (GMT)

  • 22:30 Australia RBA Governor Stevens appears before the House of Representatives' Standing Committee on Economics in his twice yearly parliamentary testimony

Currencies summary

EUR/USD is likely to find support at 1.1275 levels and currently trading at 1.1335 levels. The pair has made session high at 1.1375 and hit lows at 1.1264 levels. The U.S. dollar declined against euro on Thursday as risk aversion due to global economic growth concerns helped euro gain against US dollar. Investors took refuge in safe heaven assets as renewed slump in banking and mining stocks weighed on European markets. Markets have worried this week that negative rates have hit banks 'ability to earn margins on interest rates. In times of economic stress, countries or regions running current account surpluses such as Japan, the euro zone and Switzerland are seen as safer compared with those that have deficits and rely on foreign capital to finance the gap. The euro rose against the dollar, touching a fresh 3-1/2-month high at $1.1368.

GBP/USD is supported in the range of 1.4349 and currently trading at 1.4469 levels. It reached session high at 1.4480 and hit low at 1.4482 levels. Sterling fell against dollar on Thursday, as investors feared about slowing global growth prospects and their impact on the UK economy, with some pricing in risks of an interest rate cut in Britain. Also weighing on sterling were falling bank stocks in Britain and elsewhere in Europe. Britain's huge banking and financial sector helps in plugging the country's current account gap, and any risks to the sector weigh on the pound. The pound has shed around 10 percent against the single currency over the last two months amid worries about the possibility that a coming referendum on Britain's EU membership could lead to a so-called Brexit. Sterling was down 0.5 percent against the dollar at $1.4464, while the euro was nearly 1 percent stronger at 78.43 pence, having struck a 13-month high of 78.975 pence .

USD/CAD is supported at 1.3780 levels and is trading at 1.3940 levels. It has made session high at 1.4017 and lows at 1.3903 levels. The Canadian dollar slipped lower against US dollar on Thursday as a drop in crude oil prices and selloff in global stocks weighed on the risk-sensitive commodity-linked currency. U.S. crude plumbed a new 2003 low and Brent fell below $30 a barrel after data showing strong, steady growth in U.S. and global oil inventories. With stock prices down, oil prices falling towards 12-year lows hit last month, and European bank stocks slumping to new multi-year lows, investors increasingly supported the view that the Federal Reserve will not raise interest rates again this year. On the day Canadian dollar suffered more losses against safe-haven currencies such as the Japanese yen and the Swiss franc. The currency's strongest level of the session was C$1.3884, while its weakest was C$1.4013.

USD/JPY is supported around 110.82 levels and currently trading at 112.21 levels. It hit session high at 112.21 and made session lows at 110.82levels. The U.S. dollar declined sharply to hit 15-month low against the yen on Thursday, as worries of a global economic slowdown and concerns about stress in the banking system, increased demand for safe-havens. On Thursday the pair posted its biggest single day loss since 2008 financial crisis. However yen pared some gains against both the U.S. dollar and euro on speculation about Bank of Japan intervention though, but the BOJ had no comment. Sharp decline in US and European stocks has forced traders out of risky positions, leading to the unwinding of the carry trade and repayment of cheap yen funds. The U.S. dollar was down 0.85 percent against the yen during early US session, falling to 112.38 yen.

Equities Recap

European stocks ended sharply lower on Thursday, as the stocks were led down by broad sell off in bank and commodity stocks and investors remained highly about global economic growth.

UK's benchmark FTSE 100 closed down 2.2 percent, the pan-European FTSEurofirst 300 ended the day down by 3.40 percent, Germany's Dax closed down at 2.66 percent, and France's CAC finished the day down by 3.8 percent.

US stocks ended lower on Thursday as bank shares dragged Wall Street lower on concerns the slowing global economy will continue to pressure down interest rates, while energy shares pared losses on a report that OPEC may move to cut oil production.

Dow Jones closed down by 1.64 percent, S&P 500 ended the day down by 1.28 percent, Nasdaq finished the day down by 0.44 percent.

Treasuries Recap

U.S. Treasury prices rose sharply on Thursday, with long-dated yields plunging to record lows as worries over global economic growth and the effectiveness of central bank policy fueled demand for safe haven assets.

The benchmark 10-year note was last up 23/32 in price to yield 1.630 percent, down from 1.708 percent late on Wednesday.

The 30-year bond price was up a 1-05/32 in price to yield 2.478 percent, down from 2.529 percent on Wednesday.

Commodities Recap

Gold vaulted more than 5 percent on Thursday to a one-year high, on track for its biggest daily jump in more than seven years as financial uncertainty, a lower dollar and tumbling stock prices around the world prompted investors to seek refuge in bullion. 

Spot gold was up 5 percent at $1,257.26 an ounce at 2:40 p.m. EST (1940 GMT), after surging 5.3 percent to $1,260.60, the highest since February 2015. 

U.S. gold futures for April delivery settled up 4.5 percent at $1,247.80 per ounce, with unusually heavy options activity in March and April calls at $1,250 and $1,300.

 

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