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Americas Roundup: Dollar rises as Fed minutes back more U.S. rate increases,U.S. Treasury yields climb ,Gold dips, Oil largely steady amid forecast of U.S. crude build, stronger dollar-February 22nd 2018

Market Roundup

• Fed policymakers show rising confidence on inflation, economic outlook –minutes.

• As Wall Street boosts rate hike bets, Fed doubts remain.

• US Jan Existing Home Sales, 5.38M, 5.60M forecast, 5.57M previous, 5.56M revised.

• US Jan Exist. Home Sales % Change, -3.2%, 0.9% forecast, -3.6% previous, -2.8% forecast.

• US Feb Markit Comp Flash PMI, 55.9, 53.8 previous.

• US Feb Markit Mfg PMI Flash, 55.9, 55.4 forecast, 55.5 previous.

• US Feb Markit Svcs PMI Flash, 55.9, 54.0 forecast, 53.3 previous.

• US w/e MBA Mortgage Applications, -6.6%, -4.1% previous.

• US w/e Mortgage Market Index, 372.9, 399.4 previous.

• US w/e MBA 3-Yr Mortgage Rate, 4.64%, 4.57% previous.

• US w/e Redbook MM, -0.7%, -1.1% previous.

• US w/e Redbook YY, 3.7%, 2.8% previous.
• Bank of England rate rises could come faster than expected, chief economist warns.

• Eurozone businesses lose some steam but are still fired up.

• Leaders to discuss EU money, top jobs after Brexit.

• The final version of Trans-Pacific trade deal released, rules pushed by U.S. on ice.

Looking Ahead - Economic Data (GMT)

• 23:50 JP w/e Foreign Bond Investment, -973.2B previous

• 23:50 JP w/e Foreign Invest JP Stock, -429.5B previous

Looking Ahead - Events, Other Releases (GMT)

• N/A High-level conference on sustainable finance. Panel discussion with board of the Deutsche Bundesbank Prof. Dr. med.Joachim Wuermeling, title : "Has sustainable finance reached the financial policy mainstream?" - Berlin

• 01:15 Fed's Neel Kashkari participates in a question-and-answer session moderated by Mike McKee of Bloomberg - Minneapolis

• 05:15 Fed's Randal Quarles speaks on "10 years after the Global Financial Crisis: How has the world economy changed and where will it go?" before the 26th International Financial Symposium organized by the Institute for International Monetary Affairs - Tokyo

• 09:30 Speech by ECB's Yves Mersch at the European Banking Federation's executive committee meeting – Frankfurt

• 12:30 ECB releases minutes of January meeting - Frankfurt

• 15:00 Fed's William Dudley participates in an economic briefing to discuss the impact of hurricanes Irma and Maria on economic conditions in Puerto Rico and the Virgin Islands - New York

• 17:10 Fed's Raphael Bostic speaks on "Banking" before the 2108 Banking Outlook Conference hosted by the Atlanta's Fed Reserve - Atlanta

• 20:30 Fed's Robert Kaplan participates in moderated question-and-answer session before the event, "Greater Vancouver Board of Trade: Beyond NAFTA? Safeguarding our Trading Relationship" - Vancouver

Currency Summaries

EUR/USD is likely to find support at 1.2230 levels and currently trading at 1.2284 levels. The pair has made session high at 1.2359 and hit lows at 1.1850 levels. Euro declined on Wednesday as the dollar built on its recovery from last week's three-year lows, after minutes of the latest Federal Reserve meeting affirmed expectations of further rate increases this year. The Federal Reserve's rate-setting committee showed more confidence in the need to keep raising interest rates at its last policy meeting, with most believing that inflation would perk up. It added that recent information received by voting members on inflation along with prospects for a continued solid pace of economic activity provided support for the view that inflation would likely move up in 2018. The single currency initially gained against the U.S. dollar for a short time after the release of minutes from the U.S. Federal Reserve's January policy meeting but reversed course quickly. The euro was last trading down 0.31 percent at $1.2289 in the late the US session. The euro has been driven by dollar weakness and then the recent recovery, but investors remain long on the currency in anticipation the European Central Bank will soon begin unwinding its balance sheet.

GBP/USD is supported in the range of 1.3831 levels and currently trading at 1.3919 levels. It reached session high at 1.4008 and dropped to session low at 1.3903 levels. The British declined against the dollar on Wednesday as pound was knocked lower by data showing an unexpected tick-up in the jobless rate, and by news that more than 60 Conservative lawmakers had written to the prime minister demanding a quick, clean break from the European Union. More than 60 Conservative lawmakers have written to Theresa May demanding a quick, clean break from the European Union, adding pressure on the prime minister before her ministers meet to decide Britain's negotiating position. Members of the hard-line European Research Group, a faction in her Conservative Party, wrote the letter days ago and have been adding signatures to bolster demands for Britain to toughen its position in talks to unravel more than 40 years of union. Meanwhile, BoE Governor Mark Carney, appearing alongside Haldane and Deputy Governor Ben Broadbent, said there was no need to give a direct commitment on rates because markets, which have largely priced in an interest rate hike in May, had broadly understood the BoE's message. Sterling was last down 0.53% to 1.3919, from around 1.34008 earlier. Against the euro, sterling traded flat at 88.26 pence.

USD/CAD is supported at 1.2569 levels and is trading at 1.2690 levels. It has made session high at 1.2700 and lows at 1.2622 levels. The Canadian dollar weakened to a nearly two-week low against its U.S. counterpart on Wednesday as oil prices fell and the greenback made further gains after the release of the minutes from the Federal Reserve's January meeting. The price of oil, one of Canada's major exports, was weighed down by an expected rise in U.S. crude production and by a rebound in the U.S. dollar from three-year lows hit last week. The recent climb in U.S. Treasury yields helped the greenback gain ground against a basket of major currencies ahead of minutes of the Federal Reserve's most recent policy meeting. The recent climb in U.S. Treasury yields and after Fed minutes helped greenback gain ground against a basket of major currencies. Losses for the loonie came after recent data showed a drop in December manufacturing shipments and wholesale trade, which could dent prospects for monthly gross domestic product. Canada's retail sales report for December is due on Thursday and the country's January inflation report is set for Friday. The Canadian dollar was trading 0.3 percent lower at C$1.2689 to the greenback. The currency's strongest level of the session was C$1.2622, while it touched its weakest since Feb. 9 at C$1.2700.

USD/JPY is supported around 107.00 levels and currently trading at 107.68 levels. It peaked to hit session high at 107.89 and made session lows at 107.26 levels. The U.S. dollar gained against the Japanese yen on Wednesday after the Federal Reserve's rate-setting committee, at its last policy meeting, showed more confidence in the need to keep raising interest rates. A more upbeat take on inflation in the minutes of the Jan. 30-31 policy meeting bolstered expectations for rate hikes. U.S. short-term interest-rate futures continued to reflect firm expectations that the Fed will raise rates three times this year. The U.S. currency has been weighed down this year by concerns that Washington might pursue a weak-dollar strategy, and by the perceived erosion of its yield advantage as other countries start to scale back their easy-money strategies. Confidence in the dollar has also been shaken by mounting worries over the U.S. budget deficit. But the greenback finally appeared to be benefiting from rising U.S. bond yields, especially as the Treasury Department issues more debt in anticipation of increased federal spending and a higher deficit from last year's tax overhaul. The dollar index, which measures the greenback against a basket of six other major currencies, was up 0.37 percent at 90.046, after hitting a high of 90.134 earlier in the session. The dollar index initially slipped to a session low right after the release of the minutes but soon recovered.

Equities Recap

European shares closed in positive territory on Wednesday, recouping earlier losses as Wall Street opened higher and upbeat earnings published by Lloyds and Glencore gave a boost to financial stocks and miners.

UK's benchmark FTSE 100 closed up by 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.10 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day up by 0.2 percent.

U.S. stocks closed lower on Wednesday in a rocky session after the release of the minutes from the Federal Reserve's January meeting pushed yields on the benchmark 10-year U.S. Treasury note to a four-year high.

Dow Jones closed down by 0.67 percent, S&P 500 ended down by 0.53 percent, Nasdaq finished the day up by 0.20 percent.

Treasuries Recap

U.S. Treasury yields surged on Wednesday in choppy trading, after minutes of the latest Federal Reserve meeting affirmed expectations of further rate increases this year, with economic growth seen accelerating.

In late trading, U.S. 10-year Treasury yields were at 2.957 percent, their highest since January 2014. They were last at 2.946 percent, up from Tuesday's close at 2.893 percent.

The U.S. 30-year bond yield touched 3.233 percent, the highest since July 2015. It was last at 3.227 percent from Tuesday's 3.155 percent.

Commodities Recap

Gold dipped further on Wednesday, a day after its biggest daily slide in 2-1/2 months, but briefly bounced higher as the U.S. dollar slipped for a short time after the release of minutes from the U.S. Federal Reserve's January policy meeting.

Spot gold lost 0.4 percent at $1,324.16 per ounce by 3:03 p.m. EST (2003 GMT). It dropped as low as $1,322.70. U.S. April gold futures settled up 90 cents, or 0.1 percent, at $1,332.10 per ounce.

Oil prices were little changed on Wednesday ahead of data expected to show rising crude inventories in the United States and as the dollar strengthened from last week's three-year lows.

Brent crude futures settled 17 cents, or 0.3 percent, higher at $65.42 a barrel, after trading between $64.40 and $65.53.

West Texas Intermediate crude (WTI) futures fell 11 cents, or 0.2 percent, to end at $61.68 a barrel, after trading between $61.86 and $60.92.
 

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