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America's Roundup: U.S. dollar holds near strongest since November, Wall Street ends modestly lower, Gold steadies ,Oil rises ahead of OPEC, China tariffs loom over U.S. prices-June 19th,2018

Market Roundup

• Fed's Bostic: Economy in "pretty good place" to let rate rises continue.

• Argentina peso snaps skid as cenbank hikes reserve requirements.

• ECB rate hike decision likely around autumn of 2019: Vasiliauskas.

• US Jun NAHB Housing Market Indx, 68, 70 forecast, 70 previous.

• Bank of Canada sees enhancements to rate benchmark.

• Bavarians put Merkel on notice to win EU migrants deal.

• PM May's Brexit laws rejected by parliament, Wednesday showdown looms.

Looking Ahead - Economic Data (GMT)

• 01:30 Australia Q1 Home Price Index, -1.0% forecast, 1.0% previous

Looking Ahead - Events, Other Releases (GMT)

• N/A ECB's Draghi, Praet, St Louis Fed's James Bullard and Central Bank of Ireland chief Philip Lane speak at the ECB Forum on Central Banking in Sintra, Portugal

• N/A Bank of Finland governor and European Central Bank governing council member Erkki Liikanen is due to hold a press conference in Helsinki, Finland

• 08:00 Introductory speech by ECB President Mario Draghi at ECB Forum on Central Banking in Sintra, Portugal 

• 08:30 ECB chief economist Peter Praet chairing Session 1 "Macroeconomics of price and wage-setting" at ECB Forum on Central Banking in Sintra, Portugal 

• 09:00 Former Federal Reserve Chairman Paul Volcker and Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig talk about new research that discusses how American banks maneuver through and around derivatives regulation 10 years after the financial crisis, in New York City

• 10:15 ECB Member of the Supervisory Board Pentti Hakkarainen delivers SAFE Policy Lecture at House of Finance, Goethe University, in Frankfurt 

• 11:00 Federal Reserve Bank of St. Louis President James Bullard gives presentation on "Macroeconomics of Price and Wage Setting" before panel at the 2018 ECB Forum on Central Banking in Sintra, Portugal

• 11:00 ECB chief economist Peter Praet chairing Panel "Macroeconomics of price and wage-setting" at ECB Forum on Central Banking in Sintra, Portugal 

• 13:00 Introductory statement by ECB bank supervisory chief Daniele Nouy at the ECON Hearing at the European Parliament in Brussels, Belgium

Currency Summaries

EUR/USD is likely to find support at 1.1541 levels and currently trading at 1.1617 levels. The pair has made session high at 1.1621 and hit lows at 1.1615 levels. The euro was little changed against US dollar on Monday as the escalating threat of a global trade war and a dispute in Germany's governing coalition kept investors cautious. After suffering a big fall last week when the European Central Bank struck a dovish tone, the euro was last trading at $1.1617 not far from its recent lows of $1.1543. A decision by the United States on Friday to enact tariffs on $50 billion in Chinese goods was the latest move in a trade dispute between the world's biggest economies. Soon afterward, China's official Xinhua news agency said Beijing would impose 25 percent tariffs on 659 U.S. products, ranging from soybeans and autos to seafood. The worry for some investors is that these tit-for-tat developments will eventually hurt global growth and particularly Europe, given President Donald Trump has signalled that he wants to slap tariffs on automotive exports. Investors were also worried as Chancellor Angela Merkel's Bavarian allies may defy her by implementing a plan to limit immigration at the German border and risk destabilising her three-month-old coalition. The dollar index rose 0.2 to 94.966, within a whisker of a 7-month peak touched on Friday after the Federal Reserve last week gave a hawkish signal on interest rates.

GBP/USD is supported in the range of 1.3200 levels and currently trading at 1.3240 levels. It reached session high at 1.3263 and dropped to session low at 1.3224 levels. Britain's pound declined against the dollar on Monday as traders reluctant to buy sterling before a Bank of England policy meeting this week and another expected parliamentary confrontation over the government's Brexit plans. With an escalating trade dispute between the United States and China keeping broader currency markets cautious, and little in the way of major British economic data scheduled for the next few days, analysts said the pound was expected to remain in a narrow range before Thursday's central bank meeting. Prime Minister Theresa May's Brexit plans face the prospect of rejection by parliament's upper chamber later on Monday, setting the stage for a high-stakes confrontation with rebel lawmakers later in the week. Sterling fell a quarter of a percent to $1.3240 versus the dollar, not far from the seven-month low of $1.3205 hit late last month. The currency has been stuck in a downtrend since April, hit by receding expectations that the Bank of England will follow the U.S. Federal Reserve in tightening monetary policy and by concerns about a British economic slowdown at a time when the country's relationship with the European Union is still unclear. The pound also fell against the euro, dipping by 0.2 percent to 87.62 pence.

USD/CAD is likely to find support at 1.3116 levels and is trading at 1.3197 levels. It has made intraday high at 1.3236 and lows at 1.3154 levels. The Canadian dollar steadied against its U.S. counterpart on Monday as oil prices rose and investors weighed the threat of a trade war that could slow global growth. The price of oil, one of Canada's major exports, rose ahead of an OPEC meeting this week that is widely expected to increase global crude supply and as investors assessed the impact of a trade dispute between the United States and China. Markets fear a trade war could damage global growth. Canada runs a current account deficit, so its currency could be hurt by souring of risk appetite. The country has its own trade feud with the United States and is also in slow-moving talks with the United States and Mexico to revamp the North American Free Trade Agreement. The Canadian dollar was last trading nearly unchanged at C$1.3197 to the greenback. The currency, which fell 2 percent last week, traded in a narrow range between C$1.3160 and C$1.3208.On Friday, it touched its weakest level in nearly a year at C$1.3236.

 AUD/USD is supported around 0.7366 levels and currently trading at 0.7417 levels. It hit session high at 0.7453 and made session lows at 0.7411 levels. The Australian dollar softened to multi-month lows against its U.S. counterpart on Monday as worries of a U.S.-China trade war weighed on Australian dollar.A global trade war will be particularly bad for export-heavy and commodity-dependent economies of Australia and New Zealand. The concerns took the Australian dollar as low as $0.7411, a level not seen since early May. The currency fell more than 2.1 percent last week, its worst weekly performance since early February. Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, laying out a list of more than 800 strategically important imports from China that would be subject to a 25 percent tariff starting July 6, including cars. China said it would respond with tariffs "of the same scale and strength" and that any previous trade deals with Trump were "invalid." China's retaliation list expanded more than six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted. The rising trade tensions came after the Fed raised interest rates last week by 25 basis points and signaled two more hikes this year. The dollar was slightly firmer and near its strongest since November against a basket of currencies

Equities Recap

European shares fell for a second day on Monday as worries over a trade war between the United States and China continued to keep investors on the edge, while cable maker Nexans plummeted after a profit warning.

UK's benchmark FTSE 100 closed down 0.05 percent, the pan-European FTSEurofirst 300 ended the day down by 0.79 percent, Germany's Dax ended down by 1.3 percent, France’s CAC finished the day down by 1 percent.

The Dow and S&P fell modestly on Monday, ending well off session lows, as gains in energy shares helped curb declines stemming from trade war concerns after China's retaliation to U.S. tariffs.

Dow Jones closed down by 0.41 percent, S&P 500 ended down by 0.21 percent, Nasdaq finished the day up by 0.01 percent.

Treasuries Recap

U.S. long-dated Treasury yields drifted higher on Monday, as Wall Street shares trimmed losses, in a lull after a hectic week when the Federal Reserve struck an upbeat tone on the U.S. economy.

The U.S. 10-year yields were up at 2.927 percent, from Friday's 2.924 percent.U.S. 30-year yields rose to 3.056 percent, compared with 3.047 late on Friday.

On the short end, U.S. two-year yields were at 2.557 percent, up slightly from 2.553 percent on Friday.The yield curve steepened, with the spread between U.S. 2-year and 10-year notes widening to 37.7 basis points
Commodities Recap

Oil prices rose on Monday in volatile trade as market participants lowered their expectations for how much OPEC might increase production and investors assessed the impact of a trade dispute between the United States and China.

U.S. crude oil rose 79 cents a barrel to settle at $65.85. The contract traded at a two-month low of $63.59 early in the session. Brent crude jumped $1.90 to $75.34 a barrel.U.S. crude's discount to Brent widened to as much as $9.75 a barrel, after narrowing on Friday.

Gold on Monday held close to 5-1/2-month lows, with a strong dollar offsetting the upward influence of an escalating trade dispute between the United States and China.

Spot gold was flat at $1,278.18 an ounce by 1:33 p.m. EDT (1733 GMT), while U.S. gold futures for August delivery settled up $1.60, or 0.1 percent, at $1,280.10 per ounce.
 

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