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America’s roundup: Dollar gains as trade tensions grow, Gold hits 6-1/2 month low, Wall street ends up slightly, Oil falls as OPEC output rises, more production planned-july 3rd, 2018

America’s roundup: Dollar gains as trade tensions grow, Gold hits 6-1/2 month low, Wall street ends up slightly, Oil falls as OPEC output rises, more production planned-july 3rd, 2018

 

Market Roundup

• US Jun Markit Mfg PMI Final, 55.4, 54.6 previous.

• US Jun ISM Manufacturing PMI, 60.2, 58.4 forecast, 58.7 previous.

• US Jun ISM Mfg Prices Paid, 76.8, 77.0 forecast, 79.5 previous.

• US Jun ISM Manufacturing Employment Index, 56.0, 57.0 forecast, 56.3 previous.

• US Jun ISM Manufacturing New Orders Index, 63.5, 63.7 previous.

• US May Construction Spending MM, 0.4%, 0.5% forecast, 1.8% previous.

• Largest U.S. business group attacks Trump on tariffs.

• EU warns U.S. of boomerang effect if Trump imposes car levies.

• OPEC oil output climbs in June as Saudi opens taps – Reuters survey.

• Inflation gives people tough choices: BoE’s Haldane.

• Beating expectations, euro zone unemployment stable in May.

• Mexico’s Lopez Obrador commits to NAFTA after big election win.

Looking Ahead – Economic Data (GMT)

• 2 Jul 22:00 New Zealand Q2 NZIER Confidence, -11% previous

• 2 Jul 22:00 New Zealand Q2 NZIER QSBO Capacity, 93.5% previous

• 3 Jul 01:30 Australia May Building Approvals, 1.0% forecast, -5.0% previous

• 3 Jul 01:30 Australia May Private House Approvals, 0.1% previous

• 3 Jul 04:30 Australia Jul RBA Cash Rate, 1.50% forecast, 1.50% previous

Looking Ahead – Events, Other Releases (GMT)

• 07:30 Swedish Central Bank announces interest rate decision. Monetary policy report will be published in Stockholm

• 08:30 Bank of England’s Record of the Financial Policy Committee meeting held on June 19 will be published in London

• 09:00 Riksbank’s Stefan Ingves and Jesper Hansson will participate in a press conference on the interest rate decision in Stockholm

• 16:00 Keynote speech by ECB Chief Economist Peter Praet at Gala Dinner hosted by the National Bank of Romania in Bucharest, Romania

 

Currency Summaries

EUR/USD is likely to find support at 1.1525 levels and currently trading at 1.1619 levels. The pair has made session high at 1.1623 and hit lows at 1.1589 levels. Euro declined against the dollar on Monday after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy. Interior Minister Horst Seehofer, who has called for tougher border controls, said he was ready to step down as minister and as chair of his Christian Social Union (CSU), junior coalition partner in Merkel’s government. The euro earlier in European session rose to as high as $1.1698 in a knee-jerk reaction to the news, it quickly lost steam as Seehofer’s departure would be seen as making Merkel’s future even more uncertain. The common currency last stood traded at $1.1619, down 0.6 percent from late U.S. trade on Friday. Against the safe-haven Swiss franc, it fell 0.1 percent to 1.1560 franc. The euro had gained on Friday after European Union leaders hammered out an agreement on migration that investors hoped would eased pressure on Merkel. The dollar has been supported by the relative strength of the U.S. economy and the prospects of further rate hikes from the Federal Reserve. Data on Friday showed so-called core personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of U.S. inflation, rose 2.0 percent from a year earlier, the biggest gain since April 2012. That kept alive expectations that the Fed will raise rates at least once and possibly twice by the end of year.

GBP/USD is supported in the range of 1.3045 levels and currently trading at 1.3131 levels. It reached session high at 1.3145 and dropped to session low at 1.3091 levels. Britain’s pound declined to hit 8-month low against the dollar on Monday as stronger-than-expected manufacturing sector data failed to temper investors’ concerns about a Brexit cabinet meeting later in the week. The pound has slumped recently because of weakness in the economy, a resurgent U.S. dollar and fears that Prime Minister Theresa May will run out of time to agree a deal with the European Union for life after Britain leaves the bloc next year. The currency weakened more than 6 percent between April and June, its worst quarter since the 2016 referendum to leave the EU. British factories kept up a steady pace of growth in June, PMI data showed on Monday, but that did little to boost the pound. Instead, a broadly stronger dollar, and headlines about bickering within Prime Minister Theresa May’s party over plans for handling customs with the EU after Brexit, drove the currency lower. Sterling was down 0.7 percent against the dollar at $1.3121, close to an eight-month low of $1.3050 hit on Thursday. It traded flat against the euro. Data last week showed the economy’s slowdown in early 2018 was less severe than first estimated, but business and consumer surveys have painted a mixed picture of the second quarter.Markets are pricing in an 84-percent chance of a single 25-basis-point increase by the end of 2018 and a 60-percent chance of an August rate hike.

USD/CAD is supported at 1.3127 levels and is trading at 1.3196 levels. It has made session high at 1.3225 and lows at 1.3159 levels. The Canadian dollar weakened against its U.S. counterpart on Monday as drop in oil prices and rising concerns over an escalation in the trade dispute between the United States and its partners weighed on the Canadian dollar. Investors are also becoming wary of possible disruptions from the trade disputes triggered by U.S. President Donald Trump’s protectionist “America First” policy. Canada struck back on Friday at the Trump administration over U.S. steel and aluminium tariffs, imposing punitive measures on C$16.6 billion ($12.63 billion) worth of American goods, effective from Sunday. The United States has also threatened to impose duties on up to $450 billion of Chinese imports, with the first $34 billion portion set to go into effect on July 6.While economists expect the direct economic damage from those tariffs to be relatively contained, at least for now, many see the reversal of globalisation could have negative repercussions for many years to come, lowering companies’ longer-term growth expectations. Oil prices fell, reversing course from last week, as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia. The Canadian dollar was last trading at C$1.3193 to the greenback, down 0.5 percent.

USD/JPY is supported around 110.41 levels and currently trading at 110.84 levels. It peaked to hit session high at 110.92 and made session lows at 110.64 levels. The U.S. dollar edged higher against the yen on Monday as investors ramped up bets that escalating trade tensions between the U.S. and its trade partners will hurt the world’s biggest economy the least for now. Tension is growing ahead of a July 6 deadline when Washington is due to impose $34 billion of tariffs on Chinese exports, with two surveys of Chinese manufacturing out in the last few days showed a softening in activity, partly due to softness in exports. Rising trade tensions have hit stock markets from Germany to South Korea and prompted investors to hedge their exposure to relatively high-yielding currencies such as the Australian dollar and the Chinese currency. The dollar further extended gains after the Institute for Supply Management’s manufacturing index showed a reading of 60.2, higher than the market forecast of 60.2, while U.S. construction spending rose 0.4 percent in May. Investors awaited minutes of a June Federal Reserve meeting on Thursday and U.S. employment data on Friday. An aggressive tone by the Fed or strong jobs numbers could bolster the case for higher U.S. interest rates. Trading volume was light with the U.S. bond market set to close early at 2 p.m. (1800 GMT) on Tuesday and to stay shut on Wednesday for the U.S. Independence Day holiday.

Equities Recap

European shares fell on Monday as worries about U.S. trade policies and concerns about German Chancellor Angela Merkel’s coalition government weighed on sentiment.

UK’s benchmark FTSE 100 closed down by 1.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.6 percent, France’s CAC finished the day down by 0.9 percent.

U.S. stocks ended slightly higher on Monday as gains in Apple AAPL.O and other tech shares helped offset a slump in energy as well as concerns about an escalating trade war between Washington and its trading partners.

Dow Jones closed up by 0.15 percent, S&P 500 ended up by 0.30 percent, Nasdaq finished the day up by 0.77 percent.

Treasuries Recap

The U.S. yield curve held near its flattest level in over a decade on Monday as investor’s preferred longer-dated U.S. government debt over short-dated issues on worries that a global trade war would slow inflation and business activity worldwide.

The yield on 10-year Treasury notes edged up 1 basis point to 2.862 percent, while the 10-year German Bund yield was 0.5 basis point lower at 0.303 percent.

The five-year to 30-year part of the U.S. yield curve stood at 23.8 basis points, 1 basis point flatter than late on Friday. It hit 22.8 basis points on Friday, which was the flattest level since July 2007.

Commodities Recap

Global benchmark Brent crude fell Monday as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid escalating trade disputes with the United States.

Brent crude fell $1.42 to $77.81 a barrel by 12:37 p.m. EDT (1637 GMT), after earlier touching a session low of $77.59. U.S. light crude rose 7 cents to $74.23 a barrel.

The premium for U.S. crude for the front month compared with the second month widened to as much as $2.21 a barrel, the most since Aug. 20, 2014. The move indicates that the market expects supply shortages to be more severe in the short term.

Gold slipped more than 1 percent to its lowest in 6-1/2 months on Monday ahead of a U.S. holiday, and platinum headed to its lowest in nearly 10 years as the greenback strengthened and an ongoing U.S.-European Union trade spat pressured precious metals.

Spot gold was down 0.8 percent at $1,242.01 per ounce by 2:20 p.m. EDT (1820 GMT). U.S. gold futures for August delivery settled down $12.80, or 1 percent, at $1,241.70 per ounce.

Source: FXWire Media Round Ups

 

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