Americas Roundup: Dollar gains as euro falls before Jackson Hole meeting, Gold eases, Wall Street rises, Oil prices rebound ahead of U.S. inventory data-August 23rd 2017

Market Roundup

• US Monthly Home Price Jun, 0.1% m/m/, 6.5% y/y; 0.4%, 6.9% previous.

• US Monthly Home Price index Jun, 249.3, 249.1 revised.

• US Redbook w/e, -0.2% m/m, 3.2% y/y; -0.4%, 2.5% previous.

• US Rich Fed Comp Index Aug, 14, 14 previous.

• US bank profits climb 10.7 pct on interest income, low costs –FDIC.

• South Korea, US at odds over next steps on free trade deal revisions.

• Fed banks unanimous in keeping discount rate unchanged in July –minutes.

• German investor morale plunges as emissions scandal bites.

• ECB policy may temporarily ease Europe's inequality.

• Britain posts first July budget surplus in 15 years, outlook darker.

• Canadian retail sales cool in June; rate hike still expected.

• Mexico's economic growth cools slightly in the second quarter.

• US targets Chinese and Russia entities over North Korea.

Looking Ahead – Economic Data (GMT)

• No significant events

Looking Ahead – Events, Other Releases (GMT)

• 07:00 Keynote speech by ECB’s Draghi in Lindau, Germany

Currency Summaries

EUR/USD is likely to find support at 1.1700 levels and currently trading at 1.1752 levels. The pair has made session high at 1.1771 and hit lows at 1.1742 levels. The euro fell against the dollar on Tuesday, retracing most of its overnight gains as a broadly resurgent greenback prompted investors to square positions in a thin market before a central bank conference this week. The single currency slipped 0.6 percent against the greenback to $1.1750, retracing most of its overnight gains when it posted its biggest single day rise so far this month. Friday's speech by European Central Bank President Mario Draghi is among the set-piece events at the Jackson Hole symposium, where remarks by his Federal Reserve counterpart Janet Yellen on the same day will be the main focus. With speculative bullish bets on the euro still near its biggest in five years, according to latest positioning data, some investors think the euro's strength may likely fade given the central bank's recent cautious stance about the currency. Since hitting a 2-1/2 year high near $1.1910 in early August, the common currency has lost some steam, as investors took on board the cautious tone struck by ECB policymakers revealed in the minutes of their July meeting. The euro's losses were also exacerbated by a broad bounce in the dollar against most of its rivals in mid-morning trades.

GBP/USD is supported in the range of 1.2795 levels and currently trading at 1.2824 levels. It reached session high at 1.2844 and dropped to session low at 1.2806 levels. Sterling declined against the dollar on Tuesday as sterling came under selling pressure as investors grew more bearish about Britain's economic outlook that has quashed expectations of a rise in Bank of England interest rates. The pound has fallen more than 3 percent since the start of August, driven by a perceived change in tack at the Bank's latest policy meeting and a broader recovery for the U.S. currency. Fears over Brexit negotiations, and how much the two-year process may hamper already slowing growth, have fed into a bleak mood and sterling is also at a more than 10-month low against the euro. The pound was down a third of a percent on the day at $1.2854, compared to last week's low of $1.2832. It traded flat at 91.58 pence per euro. Investors are waiting for speeches by European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen at Jackson Hole, Wyoming, for clues to the direction of interest and currency rates.

USD/CAD is supported at 1.2500 levels and is trading at 1.2512 levels. It has made session high at 1.2591 and lows at 1.2522 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as robust domestic retail sales data for June bolstered expectations the Bank of Canada could raise interest rates in October. Retail sales, which hit a record C$48.99 billion ($38.88 billion), were up in six of the 11 sectors and grew by 1.1 percent when weak auto sales and lower gasoline prices were excluded. The U.S. dollar rebounded broadly against major currencies ahead of the annual central banking conference in Jackson Hole, Wyoming, later this week, with investors hoping to glean more insight into the monetary policy outlook. Oil prices rose. Benchmark Brent crude was up 1 cent at $51.67 a barrel, while U.S. light, sweet crude was 17 cents higher at $47.54 a barrel. The currency touched C$1.2526 to the U.S. dollar, or 79.83 U.S. cents, after the data was released, its strongest level since August 1.At (1900 GMT), the Canadian dollar was last trading at C$1.2563, or 79.73 U.S. cents, up 0.1 percent.

USD/JPY is supported around 108.00 levels and currently trading at 109.46 levels. It peaked to hit session high at 109.52 and made session lows at 109.11 levels. The U.S. dollar strengthened against the yen on Wednesday as dollar benefited from the euro's decline following weaker-than-expected euro zone data as well as investors adjusting positions ahead of a global central bankers' conference later this week. On Tuesday, the U.S. currency was on track to post its largest daily percentage gain in a week against a basket of six major currencies, led by its gains against the euro which fell after an index on German investor confidence fell in August. In late morning trading, the dollar index rose 0.4 percent against a trade-weighted basket of its currencies to 93.492. Investors awaited speeches by European Central Bank President Mario Draghi and U.S. Federal Reserve Chair Janet Yellen on Friday at Jackson Hole, Wyoming, for clues to the direction of interest and currency rates. Tensions between North Korea and the United States, which began long-planned joint military drills with South Korea on Monday, are also in focus. North Korea said the drills were a step towards nuclear conflict. 

Equities Recap

A flurry of results for heavyweight mining stocks and a plunge in Provident Financial shares injected some energy into European shares on Tuesday, with the region's benchmark indexes ending a three-day losing.

UK's benchmark FTSE 100 closed up by 0.92 percent, the pan-European FTSEurofirst 300 ended the day up by 0.91 percent, Germany's Dax ended up by 1.34 percent, France’s CAC finished the day up by 0.93 percent.

U.S. stocks rose higher on Tuesday, with each of the three major indexes on track for their best one-day percentage gains in over a week, as investors responded positively to lawmakers' comments on tax reform and the debt ceiling.

Dow Jones closed up by 0.90 percent, S&P 500 ended up 1.35 percent, Nasdaq finished the day up by 0.99 percent.

Treasuries Recap 

U.S. Treasury yields rose on Tuesday as investors awaited speeches by top central bankers later in the week for signals about monetary policy, and in the absence of major economic data.

Benchmark 10-year notes were last down 10/32 in price to yield 2.22 percent, up from 2.18 percent on Monday. The yields fell to 2.16 percent on Friday, the lowest level since June 27.

Commodities Recap

Gold prices fell on Tuesday, pressured by the stronger U.S. dollar ahead of an annual meeting of central bankers this week, while palladium fell from its highest level since February 2001.

Spot gold was down 0.4 percent at $1,285.25 an ounce by 2:15 p.m. EDT (1815 GMT), holding near last week's peak at $1,300.80, its highest since early November. U.S. gold futures settled down 0.4 percent at $1,291.

Oil inched up on Tuesday, lifted by expectations of another crude stockpile drawdown in the United States but price gains were limited amid the reopening of Libya's largest oil field.

Brent crude rose 21 cents, or 0.4 percent, to settle at $51.87 a barrel. U.S. crude futures for September delivery settled 27 cents, or 0.6 percent, higher at $47.64 while the more active October contract ended the session up 30 cents at $47.83.


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