Americas Roundup: Dollar recovers after strong unemployment, business data, Wall Street rebounds, Oil rises ahead of OPEC meeting, key producers pledging cuts-May 19th, 2017

Market Roundup

• US Initial jobless claims 232k v 240k forecast, 236k –previous.

• US Jobless claims 4-wk avg 240.75k, 243.50k – previous.

• US Philly Fed business index 38.8, 22.0 – previous.

• US Leading index change MM* 0.3% v 0.4% forecast, 0.3% – previous.

• Mexico Central bank raises benchmark interest rate to 6.75% from 6.50%.

• Fed’s Mester: She is comfortable with changing Fed's balance sheet policy this year.

• Fed’s Mester: Delaying rate hikes for too long risks recession.

• Car slams into Times Square pedestrians, killing one, injuring 22.

• Risk coming back on chatter that FBI Comey denies obstruction ever happened.

• Brazil announces extra local debt auctions to curb volatility.

• US House speaker Ryan: confident tax reform can get done in the calendar year 2017.

• US Treasury's Mnuchin: Treasury is studying ultra-long bonds of 50 years or even longer.

• US Trade representative Lighthizer: NAFTA negotiations to begin after August 16 .

• Brazil's supreme court authorizes an investigation into President Michel Temer –source.

• Incremental communication change could have strong signalling effect – ECB minutes.

• ECB'S Coeure: Credibility of forward guidance depends on its adjustment to facts.

Looking Ahead – Economic Data (GMT)

• 22:45 New Zealand Ext migration & visitors -0.20% – previous

• 22:45 New Zealand Perm/Long-Term Migration 6100 – previous

Looking Ahead – Events, Other Releases (GMT)

• No significant events

Currency Summaries

EUR/USD is likely to find support at 1.1043 levels and currently trading at 1.1106 levels. The pair has made session high at 1.1137 and hit lows at 1.1072 levels. The euro declined against the U.S. dollar on Thursday as the dollar recovered from its previous day's slide after stronger-than-expected U.S. economic data put the focus back on a widely anticipated increase in interest rates by the Federal Reserve. Expectations for a rate increase by the Fed had eased in the wake of lackluster data on U.S. inflation and growth in recent weeks, as well as news about President Donald Trump's firing of FBI Director James Comey and possible ties between members of his administration and Russia. On the data front, the number of Americans applying for jobless benefits fell to a 28-year low and the Philly Fed's business index came in at double economists' expectations The euro 0.45 percent against the dollar to $1.1105.The dollar index, which tracks the greenback against six currencies, rose 0.1 percent.

GBP/USD is supported in the range of 1.2878 levels and currently trading at 1.2940 levels. It reached session high at 1.3029 and dropped to session low at 1.2886 levels. Britain's pound initially strengthened against the dollar on Thursday as sterling was boosted by better-than-expected British retail sales, but reversed course to fall sharply as investors sold British pound after booking profits on pounds initial rally. Retail sales volumes jumped by 2.3 percent on the month in April – beating economists' average forecast of a 1.0 percent rise – after a sharp 1.4 percent fall in March that ended the weakest calendar quarter since 2010, the Office for National Statistics said on Thursday. The pound climbed to as high as $1.3048, its strongest since Sept. 29. That still left it around 13 percent weaker than the levels it was trading at before last June's Brexit referendum, but also more than 13 percent higher than a 31-year low plumbed in October during a flash crash.

USD/CAD is supported at 1.3568 levels and is trading at 1.3600 levels. It has made session high at 1.3631 and lows at 1.3580 levels. The Canadian dollar was little changed against its U.S. counterpart on Thursday, as higher oil prices offset broader gains for the greenback. The loonie on Wednesday had touched its strongest in nearly three weeks at C$1.3573, as worries that political uncertainty in Washington would undermine the Trump administration's ability to deliver a promised boost to U.S. growth weighed on the greenback. U.S. dollar rose against a basket of major currencies after stronger-than-expected U.S. economic data put the focus back on a widely anticipated increase in overnight interest rates by the Federal Reserve. Oil prices rose ahead of next week's Organization of the Petroleum Exporting Countries meeting as key producing countries suggested they would adhere to production cuts to reduce a global crude glut. The Canadian dollar was trading at C$1.3606 to the greenback, or 73.50 U.S. cents, nearly unchanged.

USD/JPY is supported around 110.20 levels and currently trading at 111.46 levels. It peaked to hit session high at 111.79 and made session lows at 110.68 levels. The U.S. dollar recovered someground against the Japanese yen on Thursday as stronger-than-expected U.S. economic data soothed nerves a day after U.S. biggest selloff in more than eight months. Robust U.S. economic data helped the U.S. dollar reverse early losses against Japanese yen as focus turned to a widely anticipated increase in overnight interest rates by the Federal Reserve. Still, reports that Trump had tried to intervene in an investigation into alleged Russian meddling in last year's U.S. presidential election, and that his aides had numerous undisclosed contacts with Russian officials kept market tensions high. The yen, which saw its biggest daily gain against the dollar since July on Wednesday, had touched a more than three-week high The dollar was last up 0.3 percent to 111.15 yen.

Equities Recap

European shares fell on Thursday, but ended off lows as jitters over political turmoil in the United States abated, while stocks exposed to Brazil were hit after a scandal embroiled the country's president.

UK's benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.51 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.6 percent.

Wall Street rebounded on Thursday from its biggest selloff in more than eight months with help from a move to loosen internet regulations and strong economic data.

Dow Jones closed up by 0.26 percent, S&P 500 ended up 0.36 percent, Nasdaq finished the day up by 0.71 percent.

Treasuries Recap 

U.S. Treasury yields rose from one-month lows on Thursday as stocks recovered from Wednesday’s dramatic drop, reducing demand for safe-haven bonds.

The 10-year notes were last down 5/32 in price to yield 2.23 percent, up from 2.22 percent late on Wednesday.

The yield curve between two-year notes and 10-year notes flattened to 95 basis points, its lowest since Oct. 27 as investors reached for longer-duration bonds.

Commodities Recap

Gold fell on Thursday as a bounce in the dollar prompted some buyers to cash in gains after its biggest one-day rally in nearly a year, though uncertainty over the outlook for the Trump presidency underpinned the metal near two-week highs.

Spot gold was down 1.1 percent at $1,246.92 an ounce by 2:32 p.m. EDT (1832 GMT), having touched its highest since May 1 at $1,265.04. It fell to a session low of $1,245.40, around the 200-day moving average, after five straight sessions higher.

U.S. gold futures for June delivery settled down 0.5 percent at $1,252.80.

Oil prices settled higher on Thursday, as key producing countries suggested they would extend supply cuts to reduce an ongoing global crude glut.

Brent crude settled up 30 cents at $52.51 a barrel, or half a percent. U.S. crude oil settled at $49.35 a barrel, up 28 cents, for the highest close since April 26.

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