Americas Roundup: Dollar rebounds as Irma, North Korea worries ebb, Gold falls 1.2 percent, biggest drop since early July, U.S. bond yields rise sharply, US stocks climb-September 12th, 2017

Market Roundup

• US inflation weakness persists -NY Fed survey.

• CA House Starts, Annualized Aug, 223.2k, 212.0k forecast, 222.3k previous.

• Bank of Canada's silence leaves markets looking for more clues on rates.

• PBOC relaxes yuan hedging rules as currency strengthens, capital outflows ease.

• Florida reels after Irma's heavy punch, fresh floods in the north.

• Insurer stocks jump as Irma impact seen less severe than feared.

• ECB officials pave way for gradual policy tightening.

• UN Security Council to vote Monday on weakened N.Korea sanctions.

• Mexico's industrial output posts biggest drop in more than two years.

Looking Ahead – Economic Data (GMT)

• 01:30 Australia NAB Business Conditions Aug, 15 previous 

• 01:30 Australia NAB Business Confidence Aug, 12 previous 

Looking Ahead – Events, Other Releases (GMT)

• 13:45 ECB’s Constancio speaks at a conf. in Frankfurt

Currency Summaries

EUR/USD is likely to find support at 1.1930 levels and currently trading at 1.1951 levels. The pair has made session high at 1.1993 and hit lows at 1.1949 levels. The euro declined against the U.S. dollar on Monday as the greenback strengthened on relief that Hurricane Irma weakened to a tropical storm and North Korea did not conduct a nuclear test over the weekend as feared. The dollar index, which tracks the greenback against a basket of six major currencies, was 0.38 percent higher at 91.697.The index had hit a more than 2-1/2-year low of 91.011 on Friday as investors fretted about the short-term impact of Hurricane Irma on the U.S. economy and worried about simmering tensions between North Korea and the United States. Irma pounded heavily populated areas of central Florida over the weekend, but gradually lost strength and was downgraded to a tropical storm. Meanwhile, North Korea marked the anniversary of its founding without any further missile or nuclear tests. The United States and its allies had been bracing for another long-range missile launch in time for the 69th anniversary of North Korea's founding on Saturday. The single currency fell 0.57 percent to $1.1963, retreating from the 2-1/2-year high of $1.2108 hit on Friday.

GBP/USD is supported in the range of 1.3100 levels and currently trading at 1.3163 levels. It reached session high at 1.3220 and dropped to session low at 1.3160 levels. Britain's pound was little changed against the dollar on Monday as pound was helped by speculation that the Bank of England may sound more hawkish on interest rates this week in defence of the currency. Sterling hit a five-week high against the dollar last Friday after better-than-expected manufacturing numbers, and market data showed a month-long buildup of speculative bets against the currency stalled in the week to last Tuesday. That does not represent a full quelling of the unease that has gathered over sterling in the first months of Brexit negotiations. But it comes ahead of a Bank of England meeting on Thursday that some analysts and traders believe could show it is increasingly worried about the weak pound's effect on inflation. Sterling dipped 0.1 percent against the dollar, to $1.3165, less than half a cent away from a five-week high reached on Friday.

USD/CAD is supported at 1.2058 levels and is trading at 1.2119 levels. It has made session high at 1.2171 and lows at 1.2093 levels. The Canadian dollar strengthened against its U.S. counterpart on Monday as Canadian dollar was supported by further gains in Canada's bond yields after the country's central bank surprised some investors last week by raising interest rates. Wednesday’s rate hike, which was the second in three months, helped drive the loonie nearly 2 percent higher last week. Investors had expected that the Bank of Canada would wait until October to hike again after it increased rates in July for the first time in nearly seven years. The 2-year yield, which has jumped as much as 99 basis points since mid-May, on Monday hit its highest since June 2011 at 1.643 percent. The U.S. dollar gained ground as a revival in interest in riskier assets prompted some investors to cut short bets against the greenback before U.S. inflation data this week. The Canadian dollar was trading at C$1.2112 to the greenback, or 82.35 U.S. cents, up 0.1 percent. The currency traded in a range of C$1.2098 to C$1.2170. On Friday, the loonie touched its strongest since May 2015 at C$1.2063.

AUD/USD is supported around 0.8000 levels and currently trading at 0.8024 levels. It hit session high at 0.8055 and made session lows at 0.8016 levels. The Australian dollar edged lower on Monday in thin trading as the greenback bounced from a multi-year trough after North Korea steered clear of escalating tensions at its foundation day over the weekend. North Korean leader Kim Jong Un hosted a massive celebration on Saturday to congratulate his nuclear scientists and technicians who developed the country's sixth and largest nuclear test a week ago. Relief that it did not launch another missile as some South Korean officials had warned lifted the U.S dollar from its lowest since January 2015 against a basket of currencies. The Australian dollar fell from a 2-1/2 year peak of $0.8125 to $0.8031. The Aussie rose 1 percent last week for its fourth consecutive weekly gain. Immediate chart resistance lies at $0.8168 while critical support is seen around $0.8000.The Aussie has been on an uptrend since the beginning of June largely as the U.S. dollar went downhill on diminishing expectations of another Federal Reserve hike this year and geopolitical tensions around North Korea.

Equities Recap

European shares closed higher on Monday as insurers benefitted from a drop in the estimated cost of Hurricane Irma and investors breathed a sigh of relief that North Korea celebrated its founding day without a major missile test.

UK's benchmark FTSE 100 closed up by 0.04percent, the pan-European FTSEurofirst 300 ended the day up by 0.98 percent, Germany's Dax ended up by 1.3 percent, France’s CAC finished the day up by 1.1 percent.

The S&P 500 surged toward a record high on Monday with its strongest one-day performance since April after tropical storm Irma did less damage than expected in Florida, and North Korea did not test missiles over the weekend, which some had feared.

Dow Jones closed up by 1.18 percent, S&P 500 ended up 1.07 percent, Nasdaq finished the day up by 1.12 percent.

Treasuries Recap 

U.S. Treasury yields rose on Monday after a quiet weekend unmarred by expectations of negative news about North Korea that had pushed risk appetite higher, and a lackluster three-year note auction also pressured bond prices.

In late trading, benchmark 10-year Treasury yields rose to 2.123 percent, from 2.061 percent late on Friday. Ten-year yields earlier rose to 2.134 percent, a one-week high.

U.S. 30-year bond yields rose to 2.736 percent, up from 2.680 percent the previous session. Thirty-year yields climbed to one-week peaks of 2.752 percent.

Commodities Recap

Gold prices fell more than 1 percent on Monday from the previous session's 13-month high as relief that North Korea did not conduct a missile test over the weekend helped to lift global stocks, the U.S. dollar, and bond yields.

Spot gold was down 1.2 percent at $1,330.24 an ounce by 1:54 p.m. EDT (1754 GMT), on track for its biggest one-day drop since July 3. On Friday it touched $1,357.54, the highest since August last year. U.S. gold futures for December delivery settled down 1.2 percent at $1,335.70.

Oil prices edged up on Monday as the upward pressure from U.S. refinery restarts and Saudi talks to extend production cuts outweighed demand fears driven by Irma's continued pounding of Florida.

Brent crude oil futures were down 13 cents, or 0.2 percent, at $53.65 a barrel at 12:17 p.m. (1617 GMT) while U.S. West Texas Intermediate crude rose by 59 cents, or over 1 percent, to $48.07.


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