Americas Roundup: Dollar stays weak, but long-term outlook still upbeat, Oil prices steady but outlook more bearish, gold heads for first weekly gain in three as Fed hurts dollar-March 18th 2017

Market Roundup

•    US Feb Industrial production 0% v forecast 0.2%, -0.1% previous, Mfg production 0.5% v forecast 0.4%, 9.5% previous.

•    US Capacity Utilization 75.4% v 75.5% forecast 75.5% previous.

•    University of Michigan sentiment (prelim) Mar 97.6 v 97.0 forecast, 95.7 previous, expectations 86.7 v 85.7 previous.

•    University of Michigan 1-yr inflation (prelim) 2.4% v 2.8% previous, 5-yr 2.2% v 2.5% previous.

•    Fed's Kashkari: wants to plan on balance sheet before any more rate hikes, not clear gradual hikes now better than aggressive ones later; inflation short of the target, labor slack remains.

•    NY Fed’s Nowcast: US econ seen growing 2.83% in Q1 v 3.19% on Mar 10; Q2 growing at 2.53% v 3% on Mar 10.

•    Germany’s Merkel: hopes US & EU can resume discussions on trade agreement.

•    G20 finance heads to repeat FX assurances, no deal yet on rejecting protectionism.

•    ECB hike talk (Nowotny) sends German bond yields to 5-wk highs, Italy 10-yr yield highest since Jul 2015.

•    Le Pen extends lead over Macron in 1st round of French election – Opinionway poll.

•    Macron to beat Le Pen in French presidential run-off with 61.0 percent of votes- Ifop Fiducial poll.

•    Mexico Econ Minister: US BAT proposal would likely violate WTO rules.

Looking Ahead – Economic Data (GMT)

•    21:00 New Zealand Westpac Consumer Survey Q1 113.10-previous

Looking Ahead – Events, Other Releases (GMT)

•    No Significant Events

Currency Summaries

EUR/USD is likely to find support at 1.0681 levels and currently trading at 1.0745 levels. The pair has made session high at 1.0755 and hit lows at 1.0726 levels. The euro declined against the dollar on Friday as euro was weighted after a poll showed far-right anti-EU leader Marine Le Pen extending her lead over centrist Emmanuel Macron in the first round of France's presidential elections. The Opinionway poll also showed Le Pen, who has pledged to take France out of the euro, narrowing Macron's lead in the second round run-off. The Fed raised U.S. rates on Wednesday, as expected, but its earlier forecast of three rate increases this year remained unchanged, disappointing some investors who had hoped for hints of a possible fourth hike in 2017.With the Fed policy meeting out of the way, investors are now focused on the G20 financial leaders in Baden-Baden starting later on Friday. It will be one of the most closely-watched G20 meetings for the currency market. The dollar edged 0.04 percent lower to a fresh five-week low against a basket of currencies. The greenback remained under pressure for a third straight session after the Fed quashed hopes for a further bull run in the currency by keeping a gradual pace to its monetary tightening policy. The euro was down 0.2 percent at $1.0736 after two days of gains against the dollar.

GBP/USD is supported in the range of 1.2325 levels and currently trading at 1.2393 levels. It reached a session high at 1.2408 and dropped to a session low at 1.2355 levels. Sterling rose against the dollar on Friday, as sterling was supported by signs that some at the Bank of England may be leaning toward a rise in interest rates to support the currency. Minutes from the Bank's latest Monetary Policy Committee meeting shocked markets on Thursday by showing one outgoing official voting for a rise in rates, and others on the verge of doing so if inflation gets much higher. That seemed incongruous after a month where the hard numbers have finally begun to point to a weakening of economic growth, as consumers face the effect of a 20 percent fall in the pound, a weaker housing market and uncertainty over jobs and investment as the government gets ready to launch Brexit talks. The U.S. dollar slipped, continuing its slide in the wake of the Federal Reserve's decision on Wednesday to boost interest rates but maintain a gradual pace of hikes this year. Sterling traded as high as $1.2399 on Friday. Its strongest since March 1, 0.2 percent higher on the day. Against the euro, sterling climbed half a percent to 86.73 pence.

USD/CAD is supported at 1.3274 levels and is trading at 1.3345 levels. It has made session high at 1.3374 and lows at 1.3303 levels. The Canadian dollar strengthened on Friday against its U.S. counterpart, helped by higher oil prices and stronger-than-expected domestic manufacturing data. Canadian manufacturing sales rose for the third straight month in January as nondurable goods sales increased, led by the petroleum and coal industry, data from Statistics Canada showed. The 0.6 percent gain beat expectations for a 0.2 percent decline, while sales volumes were also solid, rising 0.7 percent. U.S. crude prices were up 0.76 percent at $49.12 a barrel, as investors weighed the impact of the Organization of the Petroleum Exporting Countries' production cuts against rising U.S. shale oil output and persistently high inventories. The greenback was pressured by the Federal Reserve's cautious interest rate outlook and investor concern over a potentially protectionist slant to a G20 meeting this weekend. The Canadian dollar was trading at C$1.3343 to the greenback, or 75.14 U.S. cents, stronger than Thursday's close of C$1.3347, or 74.92 U.S. cents.

AUD/USD is supported around 0.7635 levels and currently trading at 0.7676 levels. It hit a session high at 0.7687 and made session lows at 0.7662 levels. The Australian dollar strengthened against the dollar on Friday after oil prices surged and the dollar continued its fall for the third day in the wake of the Federal Reserve's decision on Wednesday to boost interest rates but maintain a gradual pace of hikes this year. The Australian dollar held steady at $0.7702, within sight of a three-week peak of $0.7720 touched on Wednesday. Since August, it tried around two dozen times to take a wall a resistance between $0.7707 and $0.7778.On the data front, U.S. factory output increased for a sixth straight month in February while consumer sentiment rebounded in early March, underscoring the economy's resilience even as growth appears to have slowed significantly in the first quarter. That was supported by other data on Friday showing a gauge of future economic activity rose in February to its highest level in more than a decade. The improving outlook backs the Federal Reserve's decision this week to raise interest rates.

Equities Recap

European shares edged higher on Friday, though weaker auto stocks euro zonebanks weighed.

UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 provisionally closes up by 0.07 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day up by 0.1 percent.

U.S. stocks dipped on Friday as bank shares fell alongside Treasury yields while Adobe helped buoy the S&P tech sector and the Nasdaq Composite.

Dow Jones closed down by 0.09 percent, S&P 500 ended down by 0.14 percent, Nasdaq finished the day down by 0.01 percent.

Treasuries Recap

U.S. Treasury yields edged lower on Friday after data showing low inflation in March suggested that the Federal Reserve could aim for a slower pace of interest rate hikes this year than it had forecast on Wednesday.

The Benchmark 10-year Treasuries were last up 6/32 in price to yield 2.502 percent, from a yield of 2.524 percent late Thursday.
Commodities Recap

Oil prices were largely steady on Friday, finishing the week with modest gains, but speculators sharply cut long positions during last week's rout, on concerns that an OPEC production cut was failing to reduce a global supply overhang.

Brent crude settled up 2 cents to $51.76 a barrel while U.S. light crude ended up 3 cents to $48.78 a barrel. Both benchmarks gained 0.8 percent for the week.

Gold rose on Friday and was on course for its first weekly gain in three as the U.S. Federal Reserve's cautious message on interest rates left the dollar around five-week lows, making bullion cheaper those holding other currencies.

Spot gold was up 0.2 percent at $1,229.40 an ounce by 2:53 p.m. EDT (1853 GMT), taking this week's gain so far to 2.1 percent. U.S. gold futures settled up 0.3 percent at $1,230.20.

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