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America's Roundup: Dollar drops off 11-month peak after weak Philly Fed data, Gold edges up, Wall Street slumps, Oil falls as OPEC struggles for deal to raise output-June 22nd, 2018

Market Roundup

• OPEC strives for deal to raise oil output as Iran resists.

• Fed's Kashkari: Uncertain if tax cuts will lead to sustainable growth.

• US Jun Philly Fed Business Indx, 19.9, 29.0 forecast, 34.4 previous.

• US Jun Philly Fed 6M Index, 34.80, 38.70 previous.

• US w/e Initial Jobless Claims, 218k, 220k forecast, 218k previous.

• US w/e Jobless Claims 4-Wk Avg, 221.00k, 224.25k previous.

• US w/e Continues Jobless Claims, 1.723 mln, 1.730 mln forecast, 1.697 mln previous.

• US Apr Monthly Home Price YY, 6.4%, 6.7% previous.

• US Apr Monthly Home Price MM, 0.1%, 0.1% previous.

• US Apr Monthly Home Price Index, 262.5, 261.7 previous.

• US May Leading Index Change MM, 0.2%, 0.4% forecast, 0.4%revious.

• U.S. top court lets states force online retailers to collect sales tax.

• BoE chief economist votes for rate rise, boosting chance of Aug move.

• IMF to revise down euro zone growth, sees Brexit, Italy risks.

• CA Apr Wholesale Trade MM, 0.1%, 1.1% previous.

• Mexico hikes rates to avoid inflation risks from peso slump.

Looking Ahead - Economic Data (GMT)

• 21 Jun 22:45 New Zealand May Ext Migration & Visitors, -9.00% previous

• 21 Jun 22:45 New Zealand May Perm/Long-Term Migration, 4,930 previous

• 21 Jun 23:30 Japan May CPI, Core Nationwide YY, 0.7% forecast, 0.7% previous

• 21 Jun 23:30 Japan May CPI, Overall Nationwide, 0.6% previous

• 21 Jun 23:30 Japan May CPI Index Excluding Fresh Food, 100.9 previous

• 22 Jun 00:30 Japan Jun Nikkei Mfg PMI Flash, 52.8 previous

Looking Ahead - Events, Other Releases (GMT)

• N/A Vice President of ECB Luis de Guindos participates in the ECOFIN meeting in Luxembourg City

• 07:00 South Africa's minister of finance, Nhlanhla Nene, will hold a journalist briefing during an investment conference in London

• 13:00 New York Fed's Beverly Hirtle speaks at the event "The Effects of Post-Crisis Banking Reforms" hosted by the Federal Reserve Bank of New York, in New York 

• 16:50 Former Fed governor Daniel Tarullo speaks at the "The Effects of Post-Crisis Banking Reforms" conference

Currency Summaries

EUR/USD is likely to find support at 1.1506 levels and currently trading at 1.1618 levels. The pair has made session high at 1.1633 and hit lows at 1.1573 levels. The euro rose against the greenback on Thursday after data showed Philadelphia Federal Reserve's gauge of U.S. Mid-Atlantic business activity fell to a near 1-1/2 year low, spurring profit-taking on the greenback. The euro recovered from its weakest level since July 2017 which was tied to bets on a protracted period of monetary policy divergence between the U.S. and European central banks. The single currency was pressured earlier after the Italian government appointed two eurosceptics to head key finance committees, reigniting worries about anti-euro voices in the euro zone's third-largest economy. The Philadelphia Fed said its barometer on U.S. Mid-Atlantic business activity fell from 34.4 in May to 19.9 in June, its lowest since November 2016. The index's sharpest drop since January 2014 came amid escalation in a U.S.-China trade conflict, which has underpinned safe-haven support for the dollar in recent days. An index that tracks the dollar against the euro, yen, sterling and three other slipped 0.3 percent to 94.926 after touching 94.84 earlier Thursday, which was its highest since mid-July 2017. The euro rebounded from an 11-month low to $1.1592.

GBP/USD is supported in the range of 1.3100 levels and currently trading at 1.3248 levels. It reached session high at 1.3269 and dropped to session low at 1.3100 levels. The Sterling rebounded against the dollar and the euro on Thursday after the Bank of England kept interest rates on hold but a vote for a hike by its chief economist heightened expectations that it could tighten policy at its next meeting in August. Investors had been pessimistic about the chances of the British central bank offering strong guidance about a rate hike in the near future because of uncertainty over Brexit and the state of the economy. But the BoE's Monetary Policy Committee voted 6-3 to keep rates at 0.5 percent, with chief economist Andy Haldane unexpectedly joining those calling for rates to rise to 0.75 percent, citing concerns that recent pay deals could push wages up faster than expected. The pound rose off a seven-month low to hit as much as $1.3256, from $1.3139 before the announcement, settling up 0.7 percent on the day.  That briefly put the British currency on course for its biggest one-day rise since mid-April. Markets now see a 45 percent likelihood of the MPC raising interest rates in August by 25 basis points and a 95 percent chance of one more rate hike by the end of 2018.Markets had priced in a 38 percent chance of an August hike before Thursday's vote and will probably want to see a run of decent economic data before raising August expectations much further.

USD/CAD is supported at 1.3223 levels and is trading at 1.3305 levels. It has made session high at 1.3333 and lows at 1.3278 levels. The Canadian dollar was little changed against its U.S. counterpart on Thursday after hitting its weakest in nearly one year earlier in the session, with lower oil prices and an uncertain outlook for trade weighing on the currency. The price of oil, one of Canada's major exports, fell as crude exporters in OPEC appeared to be nearing a deal to increase production. U.S. crude prices were down 1.1 percent at $65.01 a barrel. The loonie has also been pressured recently by slow-moving talks to renegotiate the North American Free Trade Agreement and a trade feud between the United States and Canada. Canadian Prime Minister Justin Trudeau on Wednesday said he doubted whether U.S. President Donald Trump would carry out a threat to impose tariffs on autos, given the economic damage such a move would cause.On the data front, wholesale trade increased by 0.1 percent in April from March, as higher sales in the machinery, equipment and supplies subsector were largely offset by declines in the motor vehicle and parts subsector, Statistics Canada said. The Canadian dollar was last trading nearly unchanged at C$1.3305 to the greenback. The currency touched its weakest level since June 22, 2017 at C$1.3336.

USD/JPY is supported around 109.59 levels and currently trading at 109.83 levels. It peaked to hit session high at 110.31 and made session lows at 109.82 levels. The dollar weakened against the dollar on Thursday as investors flocked to safe heaven yen after weak economic data and on worries about a U.S.-China trade war. The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to a further tightening of labor market conditions. Other data on Thursday showed a moderation in factory activity in the mid-Atlantic region in June amid a decline in new orders. Firms, however, continued to report overall increases in employment this month. The robust labor market, which is underpinning economic growth, likely will pave the way for the Federal Reserve to raise interest rates two more times this year. The U.S. central bank last week increased borrowing costs for a second time this year and forecast two more rate hikes by the end of 2018. Meanwhile, a developing trade war between the United States and China is weighing on business confidence and could force central banks to downgrade their outlooks, some of the world's most powerful monetary policymakers said on Wednesday at a meeting in Portugal of central bank heads. The dollar index fell 0.3 percent, the Japanese yen strengthened 0.42 percent versus the greenback at 109.96 per dollar.

Equities Recap

uropean shares ended the day deep into the red after an early bounced on Thursday, shaken by the appointment of eurosceptics at key positions in the Italian parliament and after German carmaker Daimler warned higher tariffs would hit profits.

UK's benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.12percent, Germany's Dax ended down by 1.5 percent, France’s CAC finished the day down by 1.1 percent.

U.S. stocks dipped on Thursday as a U.S. Supreme Court ruling on state sales tax collection pulled Amazon and other online retailers lower while industrials continued to falter on concerns over trade war concerns.

Dow Jones closed down by 0.80 percent, S&P 500 ended down by 0.64 percent, Nasdaq finished the day down by 0.88 percent.

Treasuries Recap

U.S. Treasury yields fell on Thursday on worries about a continuing U.S. trade battle with China that prompted German carmaker Daimler AG  to cut its 2018 profit forecast, and as U.S. data fell below expectations.

In afternoon trading, U.S. 10-year yields fell to 2.904 percent, from Wednesday's 2.928 percent.

U.S. 30-year yields slid to 3.05 percent, compared with 3.064 percent on Wednesday.
On the short end, U.S. two-year note yields slipped to 2.545 percent, from 2.562 percent late on Thursday.

Commodities Recap

The price of gold rose slightly on Thursday, lifted off an early six-month low as the U.S. dollar fell from an 11-month high, with traders saying they heard Russia had bid for bullion.

Spot gold was up 0.2 percent at $1,265.4 an ounce at 1501 GMT but off a low of $1,260.84, its weakest level since Dec. 19.

U.S. gold futures for August delivery settled down $4, or 0.3 percent, at $1,270.50 per ounce.

Global benchmark Brent crude fell more than 2 percent on Thursday ahead of a meeting of the Organization of the Petroleum Exporting Countries, where producers were expected to boost output to stabilise prices.

Brent crude fell $1.69 to settle at $73.05 a barrel.U.S. West Texas Intermediate crude  for August delivery, the new front month, fell 17 cents to $65.54 a barrel, and was down 68 cents from the July contract's expiry on Wednesday at $66.22.

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