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America's Roundup: Dollar eases as focus turns to Fed minutes, Wall Street dips ,Gold steadies, Brent rises on supply concerns, U.S.-China trade worries weigh-May 23rd,2018

Market Roundup

• Trump floats large fine, management changes for China's ZTE.

• Trump casts doubt on planned summit with North Korean leader .

• US May Rich Fed Comp. Index, 16, -3 previous.

• US May Rich Fed, Services Index, 11, 2 previous.

• US May Rich Fed Mfg Shipments, 15, -8 previous.

• US w/e Redbook YY, 3.2%, 4.9% previous.

• US w/e Redbook MM, 0.0%, 0.8% previous.

• U.S. small businesses report rising confidence, earnings: Fed regional survey.

• Americans report stronger finances in Trump's first year - Fed survey.

• CA Mar Wholesale Trade MM, 1.1%, 0.6% forecast, -0.8% previous.

• Ratings agencies sound alarm as Turkey's lira tumbles.

• Academic claims cast doubt on Italian premier candidate.

Looking Ahead - Economic Data (GMT)

• 01:30 Australia Q1 Construction Work Done, 1.0% forecast, -19.4% previous

• 12:30 Japan May Nikkei Mfg PMI Flash, 53.8 previous

Looking Ahead - Events, Other Releases (GMT)

• 07:30 Swedish Central Bank publishes The Financial Stability Report 2018:1 in Stockholm

• 07:30 Bank of Spain Governor Linde to open a Deloitte-ABC economy event in Madrid

• 09:00 Participation in a panel by ECB Supervisor Ignazio Angeloni at 2018 IIF Spring Meeting in Brussels, Belgium

• 09:00 Riksbank Governor Stefan Ingves and Head of the Department of Financial Stability Olof Sandstedt participate in a press conference on financial stability in Stockholm

• 10:00 Bank of Spain Governor Luis Maria Linde to give opening speech at event in Madrid

• 18:00 U.S. Federal Reserve's Federal Open Market Committee (FOMC) will release minutes from its May 1-2 policy meeting in Washington D.C

• 18:15 Minneapolis Fed's Neel Kashkari participates in a question-and-answer session on "New Energy Economic Reality" before the Williston Basin Petroleum Conference in Bismark, North Dakota

Currency Summaries

EUR/USD is likely to find support at 1.1715 levels and currently trading at 1.1781 levels. The pair has made session high at 1.1829 and hit lows at 1.1765 levels. The euro was little changed against US dollar on Tuesday as U.S. Treasury yields dipped and investors focus turned to the release on Wednesday U.S. Federal Reserve's latest policy meeting. The dollar's recent uptrend has been supported by generally upbeat U.S. economic data that has kept the Federal Reserve on track to raise interest rates at least two more times this year. In contrast, other major central banks such as the Bank of Japan are not in a tightening mode. In late trading, the dollar index was down 0.1 percent at 93.605, after hitting a five-month high on Monday. The index, which tracks the dollar against a basket of currencies, was on pace for its largest daily loss in two weeks. While, the euro dipped 0.1 percent against the dollar to $1.1778.The dollar was supported on Monday on signs the United States and China were making progress to resolve their trade conflict. On Tuesday, China said it would cut import tariffs for automobiles, opening greater access to the world’s largest auto market, in a further sign of easing trade tensions. Investors are now looking to the release on Wednesday of the Fed's minutes from its most recent meeting and analysts said there could be inflationary overtones.

GBP/USD is supported in the range of 1.3387 levels and currently trading at 1.3431 levels. It reached session high at 1.3455 and dropped to session low at 1.3411 levels. Britain's pound trimmed earlier gains after hitting a daily high against dollar on Tuesday as a top central bank official's upbeat note on the outlook for future interest rate increases was met by some market scepticism. Currency investors were burned by the Bank of England's decision to keep interest rates on hold last month after signalling a rate hike was on the cards until a few weeks earlier. That has left funds wary of pushing sterling sharply either way without any firm data to back those moves.  Sterling gave back most of its earlier gains and was broadly flat on the day at $1.3432.BoE policymaker Gertjan Vlieghe told the Treasury Committee of parliament that policy rates are set to rise 25 to 50 basis points every year over three years, a comment initially interpreted by markets as supportive for the pound. It also climbed 0.2 percent to a one-week high against the euro at 87.60 pence but later trimmed some gains. Interest rate markets were broadly unchanged by the relatively optimistic comments, with the probability of another quarter point rate hike holding at around 90 percent by the end of the year, the same levels as earlier this week. Gains were capped before important data on the British economy due out this week, including inflation on Wednesday and the gross domestic product figure on Friday.

USD/CAD is supported at 1.2728 levels and is trading at 1.2816 levels. It has made session high at 1.2820 and lows at 1.2741 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday, paring some of its earlier gains despite higher oil prices, as investors were worried about the North American Free Trade Agreement. The price of oil, one of Canada's major exports, notched a 3-1/2-year high, supported by concern that falling Venezuelan crude output and a potential drop in Iranian exports could further tighten global supply. U.S. Treasury Secretary Steven Mnuchin on Monday said major issues remained in talks between the United States, Mexico and Canada to renegotiate the North American Free Trade Agreement. Gains this week for the loonie have come as signs of easing trade tensions between the United States and China, the world's two largest economies, boosted global equity markets. On the data front, Canadian wholesale trade jumped by 1.1 percent in March, the largest month-on-month rise for five months, thanks largely to strength in the motor vehicle and parts subsector, Statistics Canada said on Tuesday. The increase  greater than the 0.6 percent advance forecast by analysts in a poll  was the largest since the 2.0 percent gain seen in October 2017. Statscan revised February's decline to 0.4 percent from an initial drop of 0.8 percent. The Canadian dollar was last trading 0.2 percent lower at C$1.2816 to the greenback, or 78.03 U.S. cents.

AUD/USD is supported around 0.7528 levels and currently trading at 0.7575 levels. It hit session high at 0.7600 and made session lows at 0.7562 levels. The Australian dollar gains faded against the US dollar on Tuesday as investors locked in recent gains while taking a cautious view of fresh U.S.-China comments. U.S. President Donald Trump on Tuesday said he was not pleased with recent trade discussions with China, reversing optimism about a warming relationship between the world's two largest economies that led to a strong rally the prior session. U.S. President Donald Trump on Tuesday said he was not pleased with recent trade discussions with China, reversing optimism about a warming relationship between the world's two largest economies that led to a strong rally the prior session. The president's comments come after U.S. Treasury Secretary Steven Mnuchin said over the weekend that the two countries had put the prospect of a trade war "on hold" and agreed to hold more talks to boost U.S. exports to China. The Aussie cracked above key chart resistance to go as high as $0.7600, a level not seen since late April. It was last trading around $0.7575. Oil prices rose on mounting supply concerns tied to Venezuelan crude output and a possible cut in Iranian exports that could further curb global supply. The concerns were exacerbated when Washington added sanctions against Venezuela following President Nicolas Maduro's disputed re-election over the weekend.

Equities Recap

European shares touched their highest level since the start of February on Tuesday as automaker and bank stocks climbed and Italian shares recovered as the anti-establishment coalition's government formation process stalled.

The UK's benchmark FTSE 100 closed up by 0.48 percent, FTSEurofirst 300 ended the day up by 0.46 percent, Germany's Dax ended up by 0.9 percent, and France’s CAC finished the up by 0.3 percent.

U.S. stocks ended lower on Tuesday as uncertainty lingered over trade talks between the United States and China and as energy and industrial shares fell.

Dow Jones closed down by 0.70 percent, S&P 500 ended down 0.31 percent, Nasdaq finished the day up by 0.20 percent.

Treasuries Recap

The U.S. Treasury Department sold $33 billion in two-year notes to fair demand on Tuesday, the first sale of $99 billion in coupon-bearing supply this week.

The two-year notes sold at a high yield of 2.59 percent, just below where they traded before the auction. Dealers took 45.37 percent of the sale, their largest share since Dec. 2016.

Commodities Recap

Gold steadied just above a 2018 low on Tuesday as the U.S. dollar fell from a five-month high, although risk appetite in the broader financial markets kept the metal's gains in check.

Spot gold was flat at $1,292.51 at 1:34 p.m. EDT (1734 GMT). U.S. gold futures for June delivery settled up $1.10, or 0.1 percent, at $1,292 per ounce.

Brent crude prices settled slightly higher on Tuesday after a volatile session in which potential supply concerns surrounding Venezuela and Iran jockeyed with comments from President Donald Trump saying he was not pleased with U.S.-China trade talks.

Brent crude futures rose 35 cents to settle at $79.57 a barrel, a 0.44 percent gain. Last week, the global benchmark topped $80 for the first time since November 2014.

U.S. West Texas Intermediate (WTI) crude futures fell 11 cents to settle at $72.13 a barrel, a 0.15 percent loss. They earlier touched $72.83 a barrel, the highest since November 2014.
 

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