Americas roundup: Dollar index rises for fourth straight session, Euro slips on finance minister reports, ecb’s Nowotny comments, Wall St. ends lower, Gold slips as stronger Dollar pushes metals liquidation-february 8th 2018
• U.S. Congress leaders reach $300 bln budget deal.
• US Dec Consumer Credit, 20.00B forecast, 27.95B previous.
• US w/e MBA Mortgage Applications, 0.7%, -2.6% previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.50%, 4.41% previous.
• US w/e Mortgage Market Index, 416.3, 413.4 previous.
• US w/e MBA Purchase Index, 255.4, 255.5 previous.
• US w/e Mortgage Refinance Index, 1,299.3, 1,288.0 previous.
• Fed’s Evans says no rate hikes needed before mid-2018.
• Fed’s Kaplan: higher wages may not push up prices.
• Fed’s Dudley eyes risks of betting on volatility.
• Trump says stocks drop is “big mistake” amid strong economy.
• U.S. vows new N.Korea sanctions ahead of Olympics face-off.
• Britain tells business: We cannot guarantee your Brexit future.
• German economy to grow by 2.7 pct this year – DIHK.
• CA Dec Building Permits MM., 4.8%, 2.0% forecast, -7.7% previous, -7.3% revised
Looking Ahead – Economic Data (GMT)
• 7 Feb 20:00 New Zealand N/A Cen Bank Interest Rate, 1.75% forecast, 1.75% previous
• 7 Feb 23:50 Japan Jan Bank Lending YY, 2.5% previous
• 7 Feb 23:50 Japan w/e Foreign Bond Investment, 41.1B previous
• 7 Feb 23:50 Japan w/e Foreign Invest JP Stock, -300.5B previous
• 7 Feb 23:50 Japan Dec Current Account NSA JPY, 1,017.5B forecast, 1,347.3B previous
• 8 Feb 05:00 Japan Jan Economy Watchers Poll SA, 53.9 previous
• 8 Feb N/A China Jan Exports YY, 9.6% forecast, 10.9% previous
• 8 Feb N/A China Jan Imports YY, 9.8% forecast, 4.5% previous
• 8 Feb N/A China Jan Trade Balance USD, 54.10B, 54.69B previous
Looking Ahead – Events, Other Releases (GMT)
• N/A ECB’s Peter Praet, Bundesbank’s Jens Weidmann, Bank of France’s Francois Villeroy de Galhau and Fed’s Robert Kaplan will speak at a conference – Frankfurt
• 01:30 Bank of Japan board member Hitoshi Suzuki to speak at Wakayama, Japan – Tokyo
• 02:00 Fed’s Esther George speaks on the economic outlook before the Wichita Independent Business
Association – Kansas
• 08:30 Head of Swedish Financial Supervisory Authority (FSA) Erik Thedeen gives a speech at a conference – Stockholm
• 09:50 Fed’s Robert Kaplan participates in moderated question-and-answer session before the Global Interdependence Center “Central Banking Series: Frankfurt,” – Frankfurt
• 10:00 ECB’s Yves Mersch gives a city lecture in London – London
• 12:00 Bank of England releases its inflation report – London
• 12:00 Bank of England announces its rate decision and publishes the minutes of the meeting – London
• 13:00 Federal’s Patrick Harker speaks before the National Association of College and University Business Officers 2018 Endowment and Debt Management Forum – New York
• 14:00 Fed’s Neel Kashkari participates in a town hall meeting to discuss monetary policy, bank regulation and other issues, hosted by the Pierre Chamber of Commerce – South Dakota
• 18:00 Bank of Canada Senior Deputy Governor Carolyn Wilkins will give a speech – Quebec
EUR/USD is likely to find support at 1.2212 levels and currently trading at 1.2277 levels. The pair has made session high at 1.2346 and hit lows at 1.2242 levels. Euro declined against the dollar on Wednesday as euro slipped on disappointment over reports that the leader of Germany’s Social Democrats (SPD), Martin Schulz, would not be taking over as finance minister for Europe’s biggest economy. German Chancellor Angela Merkel’s conservatives and the SPD on Wednesday agreed to a coalition deal, taking the country closer to a new government after months of uncertainty that have unnerved allies and investors and investors alike. But although reports suggest that the SPD is likely to take the finance ministry, some investors were disappointed that the current mayor of Hamburg, Olaf Scholz, was slated to head up the ministry, and not Schulz. Much of the dollar’s advance stemmed from euro’s weakness in the wake of reports that the leader of Germany’s Social Democrats (SPD), Martin Schulz, would not be taking over as finance minister for Europe’s biggest economy. The euro’s fall accelerated after European Central Bank policymaker Ewald Nowotny told the German Wiener Zeitung newspaper the United States is deliberately weakening the dollar. The euro, which had been trading higher on the day before the news, lost around 0.82 percent to trade at $1.2275.
GBP/USD is supported in the range of 1.3832 levels and currently trading at 1.3880 levels. It reached session high at 1.3938 and dropped to session low at 1.3845 levels. The British pound slipped lower against the greenback on Wednesday, heading back towards a 2-1/2 week low hit in the previous session as a central bank meeting on Thursday kept investors wary of adding positions aggressively amid a broad dollar bounce. Currency bulls have been hit by a drip feed of weak economic data since the pound scaled a post Brexit referendum vote high above $1.43 in late January. Surveys this week showed growth in the world’s sixth-biggest economy looked set to slow in the first quarter of 2018 while housing prices fell unexpectedly last month indicating a struggling economy. While UK’s current account deficit has shrunk from a record seven percent of GDP in the fourth quarter of 2015, at 4.3 percent for the latest quarter ending September 2017, it remains well above a historical median of around one percent. Sterling eased 0.15 percent lower at $1.3926 but still well above a Tuesday low of $1.3838, its lowest since Jan 19. Britain is due to leave the EU in March, 2019 but remain in the single market during a transition period, set to run until the end of 2020.
USD/CAD is supported at 1.2481 levels and is trading at 1.2562 levels. It has made session high at 1.2578 and lows at 1.2505 levels. The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices and U.S. stock index futures fell, while the greenback broadly rose. World stocks clawed off two-month lows, though momentum was weak and U.S. futures suggested Wall Street could backslide again after rebounding from the biggest selloff in six years. Commodity-linked currencies, such as the Canadian dollar, tend to underperform when stocks fall, because of the signal that it sends on prospects for global economic growth. The loonie has retreated about 2 percent since stocks began to head sharply lower on Friday. One week ago, the currency touched its strongest in more than four months at C$1.2250.The price of oil, one of Canada’s major exports, fell as the boost from a report showing a drop in U.S. crude inventories last week was offset by evidence of soaring U.S. output. The U.S. dollar rose against a basket of major currencies as disappointment over reports that the leader of Germany’s Social Democrats would not be taking over as finance minister for Europe’s biggest economy weighed on the euro. The Canadian dollar was trading at 0.3 percent lower at C$1.2559 to the greenback.
USD/JPY is supported around 108.13 levels and currently trading at 109.63 levels. It peaked to hit session high at 109.66 and made session lows at 109.09 levels. The U.S. dollar strengthened against the yen on Wednesday as dollar rose, even as gains on Wall Street dimmed the greenback’s safe-haven allure after days of equities volatility. The dollar was 0.35 percent higher to 89.895 against a basket of six currencies after advancing for three straight sessions. On Friday it scored its best performance since Oct. 26.The dollar has benefited as investors sold off riskier assets for the relative safety of the greenback. On Monday, the Dow and S&P 500 U.S. stock indexes posted their biggest declines since August 2011.The U.S. dollar had reached a high of 109.72 yen earlier in the US session. But it drifted lower on anxiety over more weakness in U.S. share markets wobbled after week’s wild start. The greenback was last up 0.02 percent at 109.63 yen. The greenback has benefited as investors favored it over the euro and currencies of economies that are seen growing faster than the United States.
European shares broke a seven-day losing streak on Wednesday as investors took heart from a recovery on Wall Street and reduced volatility, returning their focus to some upbeat company earnings.
UK’s benchmark FTSE 100 closed up by 1.9 percent, the pan-European FTSEurofirst 300 ended the day up by 2.02 percent, Germany’s Dax ended up by 1.7 percent, France’s CAC finished the day down by 1.8 percent.
U.S. stocks closed lower in an up-and-down session on Wednesday, dragged down by tech and energy shares, as investors adjusted to a more volatile market following wild swings of the past few sessions.
Dow Jones closed down by 0.09 percent, S&P 500 ended down by 0.50 percent, Nasdaq finished the day down by 0.89 percent.
U.S. Treasury prices dropped on Wednesday after the Treasury Department sold new 10-year notes to soft demand and the U.S. Senate reached a budget deal, boosting expectations of stronger economic growth.
Benchmark 10-year notes were last down 21/32 in price to yield 2.845 percent, up from 2.766 percent on Tuesday.
Gold slipped on Wednesday as the U.S. dollar strengthened and global shares clawed their way off two-month lows, though bullion was underpinned by the view that the dollar’s bear run remains in place despite rate hike expectations.
Spot gold dropped 0.9 percent at $1,313.67 per ounce by 1:41 p.m. EST (1841 GMT), earlier hitting $1,311.66, its lowest since Jan. 10.
U.S. gold futures for April delivery settled down $14.90, or 1.1 percent, at $1,314.60 per ounce.
Oil prices fell to a one-month low on Wednesday after U.S. data showed a build in inventories and record high crude production, raising worries that the market could be in for more selling, exposing speculators that have bet big on upward momentum in crude.
U.S. West Texas Intermediate (WTI) crude dropped $1.87, or 3 percent, to $61.52 a barrel, as of 1:38 p.m. EST (1838 GMT). WTI hit a low of $61.33, the lowest level since Jan. 5.
Brent crude futures fell $1.44, or 2.2 percent, to $65.40 a barrel.
Source: FXWire Media Round Ups