Americas Roundup: Dollar extends weakness on outlook for Fed, ECB policy, Wall Street dips, Gold steady near 1-year high, Oil falls on Hurricane Irma; Harvey to hit 3rd-quarter U.S. growth-September 9th, 2017

Market Roundup

• US Wholesale Inventories R MM Jul, 0.6%, 0.4% previous.

• US Wholesale Sales MM Jul, -0.1%, 0.4% forecast, 0.7% previous.

• CA Employment Change Aug, 22.2k, 19.0k forecast, 10.9k previous.

• CA Unemployment Change Aug, 6.2%, 6.3% forecast, 6.3% previous.

• CA Capacity Utilization Q2, 85.0%, 83.3% previous.

• US Congress approves Trump's aid and debt deal with Democrats.

• Too soon to predict the timing of next Fed rate hike –Dudley.

• Dudley: Warns against trimming bank capital, liquidity regulations since the crisis.

• ECB policymakers agree on cutting stimulus –sources.

• Mexico 2018 budget eyes primary surplus, ups 2017 GDP outlook.

• Venezuela's Maduro seeks debt negotiations after U.S. sanctions.

• Irma pummels Bahamas and Cuba on its track toward Florida.

Looking Ahead – Economic Data (GMT)

• 01:30 (Sep 9) China PPI YY Aug, 5.6% forecast, 5.5% previous

• 01:30 (Sep 9) China CPI YY Aug, 1.6% forecast, 1.4% previous

• 01:30 (Sep 9) China CPI MM Aug, 0.3% forecast, 0.1% previous

• 22:50 (Sep 10) Japan Machinery Orders MM Jul, 4.4% forecast, -1.9% previous

• 22:50 (Sep 10) Japan Machinery Orders YY Jul, -7.3% forecast, -5.2% previous

• 12:15 (Sep 11) Canada House Starts, Annualized Aug, 216.0k forecast, 222.3k previous

Looking Ahead – Events, Other Releases (GMT)

• No significant events

Currency Summaries

EUR/USD is likely to find support at 1.1930 levels and currently trading at 1.2029 levels. The pair has made session high at 1.2072 and hit lows at 1.2013 levels. The euro strengthened against the greenback on Friday as European Central Bank's comments did little to deter market bulls who ramped up bets the single currency remained broadly undervalued against its rivals. ECB President Mario Draghi's remarks that policymakers will decide on tapering this autumn, and that “probably the bulk of these decisions will be taken in October”, gave dollar bulls reason to be upbeat on the single currency's near-term outlook.But Draghi also said the ECB must take into account the weakening of inflation owing to the strong euro, with the central bank having opted to lower some of its inflation projections to reflect a firming common currency. Furthermore, the ECB reaffirmed its ultra-easy policy stance by retaining rates at record lows, even keeping the door open to increasing bond purchases if needed, despite the euro zone's best economic run since the global financial crisis. The euro was last trading at $1.2029 after vaulting to $1.2092 in early trades, its highest level since January 2015. It has gained nearly 15 percent so far this year and is the best performing currency so far this year in the G10 FX space. It has gained 1.8 percent on the week.

GBP/USD is supported in the range of 1.3119 levels and currently trading at 1.3198 levels. It reached session high at 1.3214 and dropped to session low at 1.3178 levels. Sterling edged up against the dollar on Friday as stronger-than-expected manufacturing data and a weaker dollar helped Britain's pound rise above $1.32 for the first time in five weeks as a wave of selling in the past month ran out of steam. Overall industrial output was in line with forecasts for a small 0.4 percent expansion on the year in July but manufacturing, bolstered by a weaker pound, did far better, expanding 1.9 percent compared to a forecast 1.7 percent. Neither number is likely to settle the unease that saw speculators double net bets against sterling in the last three weeks that data is available for. But traders say the weakness of the dollar and the possibility of a sign next week from the Bank of England that it is worried about the weak pound's effect on inflation have stalled the build-up of bets against the currency. By 1900 GMT, sterling was 0.7 percent higher against the euro on the day at 91.17 pence and 0.8 percent up against the dollar at $1.3202. It earlier hit $1.3223, its strongest since early August.

USD/CAD is supported at 1.2052 levels and is trading at 1.2139 levels. It has made session high at 1.2163 and lows at 1.2102 levels. The Canadian dollar was little changed against its broadly weaker U.S. counterpart on Friday, with the currency pulling back from an earlier 2-year high as investors weighed domestic jobs data. Canada's economy added 22,200 jobs in August, mostly in part-time employment, Statistics Canada said. The jobless rate fell to 6.2 percent from 6.3 percent in July, matching the most recent low of October 2008. Still, a pickup in wage growth could keep the door open to further interest rate increases from the Bank of Canada after the central bank hiked on Wednesday for the second time in three months. Prices of oil, one of Canada's major exports, declined after almost a week of sharp gains as Hurricane Irma, one of the most powerful storms in a century, drove towards Florida after tearing through the Caribbean. Its predecessor, Harvey, had shut a quarter of U.S. refineries and 8 percent of U.S. oil production. The Canadian dollar was trading nearly unchanged at C$1.2151 to the greenback, or 82.54 U.S. cents. The currency's weakest level of the session was C$1.2163, while it touched its strongest since May 2015 at C$1.2063.

USD/JPY is supported around 107.00 levels and currently trading at 107.30 levels. It peaked to hit session high at 108.07 and made session lows at 108.65 levels. The dollar edged down against the yen on Friday as dollar dipped on reduced expectations for another Federal Reserve rate increase this year. The dollar plunged to its weakest since early 2015, with the Federal Reserve expected to be more cautious after a rise in U.S. jobless claims and worries about the impact of hurricanes Irma and Harvey on economic growth. Stubbornly weak inflation continues to surprise Federal Reserve policymakers. In a speech on Thursday, New York Fed President William Dudley did not repeat an assertion from three weeks ago that he expects to raise rates once more this year. Also dampening the dollar and lowering the chances of another rate hike was an agreement in Congress to push U.S. debt ceiling talks three months down the road to December, coinciding with the Fed's policy meeting. The dollar index against a basket of six major currencies was down 0.26 percent at 91.30 after going as low as 91.011, its weakest since January 2015 and on track its biggest weekly loss in nearly 3-1/2 months.

Equities Recap

European shares ended little changed on Friday as the euro's rally dimmed appetite for regional stocks but talk about possible cuts to European Central Bank stimulus boosted banks.

UK's benchmark FTSE 100 closed down by 0.25 percent, the pan-European FTSEurofirst 300 ended the day up by 0.16 percent, Germany's Dax ended down by 0.04 percent, France’s CAC finished the day down by 0.04 percent.

The S&P 500 ended slightly lower on Friday as investors braced for potential damage from Hurricane Irma as it moved toward Florida, while a decline in big tech names like Apple and Facebook pushed the Nasdaq down more sharply.

Dow Jones closed up by 0.07 percent, S&P 500 ended down 0.14 percent, Nasdaq finished the day down by 0.58 percent.

Treasuries Recap 

U.S. long-dated Treasury yields rose from 10-month lows on Friday, in line with gains in Europe, after Reuters reported that European Central Bank policymakers at Thursday's meeting discussed reducing stimulus for the euro zone.

The benchmark 10-year Treasury yields rose to 2.064 percent, from 2.061 percent late on Thursday. Ten-year yields earlier dropped to 2.016 percent, a 10-month low.

U.S. 30-year bond yields rose to 2.684 percent, up from 2.678 percent the previous session. Thirty-year yields earlier dropped to a 10-month trough of 2.636 percent.

Commodities Recap

Gold held near its highest in more than a year on Friday as weak economic data lowered expectations of a December interest rate rise in the United States.

Spot gold  was down 0.1 percent at $1,347.8 by 3:43 p.m. EDT (1943 GMT) after hitting $1,357.54, its highest since August 2016. It was up 1.7 percent this week, notching a third consecutive weekly gain.U.S. gold futures for December delivery settled at $1,351.2.

Oil prices slid on Friday, with U.S. crude down more than 3 percent on worries that commerce and energy demand in Florida and the Southeast would be hit hard as Hurricane Irma, one of the most powerful storms in a century, drove toward the region.

U.S. light crude oil was down $1.53 or 3.12 percent at $47.56 a barrel by 1:47 p.m. EDT (1747 GMT). Brent crude was down 67 cents or 1.2 percent to $53.82 a barrel after reaching its highest level since April at $54.80.

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