Americas roundup: Dollar edges down versus currency basket, Gold climbs as investors eye upcoming inflation reading, Oil prices flat amidst oversupply concerns-february 14th, 2018
• US Jan NFIB Business Optimism Index, 106.90, 104.90 previous.
• US w/e Redbook MM, -1.1%, 0.0% previous.
• US w/e Redbook YY, 2.8%, 3.0% previous.
• U.S. Senate Republican leader embraces Trump immigration plan.
• N.Korea warms to S.Korea after visit, volume down on border propaganda.
• Trump weighs tariffs, quotas on U.S. steel, aluminum imports.
• Powell says Fed will be vigilant for financial stability risks.
• Cleveland Fed’s Mester: market rout not impacting economic outlook.
• ECB’s Draghi says not his job to regulate Bitcoin.
• German SPD leader quits in bid to calm party after coalition deal.
• UK inflation sticks at nearly six-year high in January.
Looking Ahead – Economic Data (GMT)
• 21:45 New Zealand Jan Food Price Index, -0.8% previous.
• 23:30 Australia Feb Consumer Sentiment, 1.8% previous.
• 23:50 Japan Q4 GDP QQ, 0.2% forecast, 0.6% previous.
• 23:50 Japan Q4 GDP QQ Annualised, 0.9% forecast, 2.5% previous.
• 23:50 Japan Q4 GDP QQ Pvt Consumption Prelim, 0.4% forecast , -0.5% previous.
• 23:50 Japan Q4 GDP QQ Capital Expend., 1.1% forecast, 1.1% previous.
Looking Ahead – Events, Other Releases (GMT)
• N/A Bundesbank President Jens Weidmann and ECB’s Yves Mersch take part in a symposium on the role of cash – Frankfurt
• 08:30 Swedish central bank to publish the Executive Board’s interest rate decision followed by monetary policy report – Stockholm
• 10:00 The Riksbank will hold a press conference on the interest rate decision – Stockholm
• 10:20 ECB’s Yves Mersch speaks on “Trends in cash transactions in the Eurosystem” at Cash Symposium 2018 organised by Deutsche Bundesbank – Frankfurt
• 12:45 ECB’s Yves Mersch to participate in a panel discussion at Cash Symposium 2018 – Frankfurt
• 13:00 Bundesbank’s Andreas Dombret speaks in Berlin – Berlin
EUR/USD is likely to find support at 1.2282 levels and currently trading at 1.2349 levels. The pair has made session high at 1.2370 and hit lows at 1.2308 levels. Euro gained higher against the dollar on Tuesday as gains in global equity markets encouraged traders to sell the dollar and tiptoe back into riskier assets. The dollar was down as much as half a percent against a basket of currencies, reversing some of its gains of last week, when it enjoyed its performance since 2016. A sharp sell-off in stock markets last week drove traders to unwind one of the most popular bets of the year buying the euro on expectations the European Central Bank will scale back its stimulus later this year amid a strong recovery in the bloc’s economy. Although many market players remain bullish on the euro, the currency lacks clear catalysts for further gains as a March election in Italy and a fragile coalition deal in Germany create an uncertain political backdrop. Prospects of higher inflation globally have rattled investors this month and have helped drive equity market falls. Higher inflation could prompt the U.S. Federal Reserve to tighten policy faster than expected. Alternatively, if the Fed fails to act fast enough and falls behind the curve on policy, it could end up pushing up long-term bond yields. In either scenario, traders worry that U.S. economic growth could be hampered.
GBP/USD is supported in the range of 1.3834 levels and currently trading at 1.3886 levels. It reached session high at 1.3924 and dropped to session low at 1.3860 levels. Sterling firmed against the dollar on Tuesday after data showed British inflation unexpectedly stayed close to its highest levels in six years in January, firming up investors’ bets that the Bank of England will raise interest rates again in May.The BoE surprised financial markets last week by indicating that rates could move up faster than previously expected, as the Bank wanted to bring inflation back to its target of two percent within two years rather than three. This prompted markets to price in as much as a 70 percent chance of a quarter-point rise in interest rates by May, and a roughly 50 percent chance of a further increase in rates to one percent by the end of the year – a level last seen in 2009.Tuesday’s numbers showed consumer price inflation (CPI) held at an annual rate of 3.0 percent in January, unchanged from the month before and above a consensus forecast of 2.9 percent. Sterling jumped to as high as $1.3924 after the data, up from $1.3886 beforehand. It was trading at $1.3886 in the late US session, up 0.4 percent on the day, having climbed more than six percent against the dollar over the past three months.
USD/CAD is supported at 1.2553 levels and is trading at 1.2593 levels. It has made session high at 1.2625 and lows at 1.2583 levels. The Canadian dollar edged lower against its U.S. counterpart on Tuesday and underperformed versus other major currencies as oil prices and U.S. stock index futures fell. The price of oil, one of Canada’s major exports, declined after a forecasting agency estimated world crude supply could overtake demand this year, potentially undermining producer efforts to curb supply. U.S. stock futures pointed to another dip at the open for Wall Street, potentially halting two days of gains that had somewhat eased investors’ nerves about a burgeoning market correction. Commodity-linked currencies such as the Canadian dollar tend to underperform when stocks fall. The U.S. dollar lost ground against a basket of major currencies including the Japanese yen amid speculation the Bank of Japan could be close to dialling back record levels of monetary stimulus. The Canadian dollar was last trading at 0.1 percent lower at C$1.2593 to the greenback, or 79.42 U.S. cents. The currency traded in a range of C$1.2567 to C$1.2606.
USD/JPY is supported around 107.00 levels and currently trading at 107.79 levels. It peaked to hit session high at 107.78 and made session lows at 107.38 levels. Japanese yen rose to a five-month high against the greenback on Tuesday on the back of broad-based selling of the dollar and speculation the Bank of Japan could be close to dialling back record levels of monetary stimulus. The yen has gained 1.5 percent against the dollar this month, benefiting last week from a rush by investors into currencies deemed safer amid the rout in equity markets. But while risk appetite has recovered this week, investors have continued to sell dollars and buy yen. The dollar was down more than half a percent against a basket of six currencies, reversing some of its gains last week, when it enjoyed its best performance since 2016. The yen rose as much as 1.1 percent to 107.41 per dollar, close to the high it hit in September at 107.32 yen. If the yen breaks through that, it will hit its best level since late 2016.Prospects of higher inflation globally have rattled investors this month and have helped drive equity market falls. Investors will be closely watching the release of U.S. consumer price index data on Wednesday for signs of inflation.
European shares fell slightly on Tuesday as a flurry of corporate results failed to lift indexes and Wall Street pulled back ahead of Wednesday’s crucial data on U.S. inflation.
UK’s benchmark FTSE 100 closed down by 0.07 percent, the pan-European FTSEurofirst 300 ended the day down by 0.56 percent, Germany’s Dax ended down by 0.63 percent, France’s CAC finished the day down by 0.50 percent.
Wall Street climbed on Tuesday for a third straight session, buoyed by Amazon.com and Apple, while investors focused on upcoming inflation data that could upset the market’s fragile recovery.
Dow Jones closed up by 0.18 percent, S&P 500 ended down by 0.28 percent, Nasdaq finished the day up by 0.45 percent.
U.S. long-dated Treasury yields slipped on Tuesday in quiet, range-bound trading, as investors looked to Wednesday’s U.S. inflation report that could shed more light on the pace of future interest rate increases by the Federal Reserve.
In late trading, U.S. 10-year yields fell to 2.840 percent from 2.855 percent late on Monday. U.S. 10-year yields hit 2.902 percent on Monday, the highest since January 2014.
U.S. 30-year bond yields fell to 3.128 percent, from Monday’s 3.136 percent. The yield on the maturity touched an 11-month peak of 3.139 percent on Monday.
Gold prices rose on Tuesday as the U.S. dollar slipped and markets anticipated the release of impending U.S. inflation data that may offer some clues on the pace of future U.S. interest rate increases.
Spot gold was up 0.4 percent at $1,327.52 per ounce by 1:34 p.m. EST (1834 GMT), earlier hitting a one-week high of $1,330.89 while U.S. gold futures for April delivery settled up $4, or 0.3 percent, at $1,330.40.
Oil prices ended largely unchanged on Tuesday as a weaker dollar spurred a rebound from an early slide after the International Energy Agency forecast supply could outstrip demand.
Brent futures hit a two-month low early, but the benchmark settled at $62.72 a barrel, with a 13-cent or 0.2 percent gain. U.S. West Texas Intermediate crude futures closed 10 cents, or 0.2 percent, lower at $59.19 a barrel.
Source: FXWire Media Round Ups