Americas Roundup-Dollar extends gains, inflation data in focus, Gold falls to 1-1/2-week low, Oil rises as IEA forecast overshadows U.S. crude build-September 14th 2017

Market Roundup

• US PPI Final Demand YY Aug, 2.4%, 2.5% forecast, 1.9% previous.

• US PPI Final Demand MM Aug, 0.2%, 0.3% forecast, -0.1% previous.

• US PPI ExFood Energy YY Aug, 2.0%, 2.1% forecast, 1.8% previous.

• US PPI ExFood Energy MM Aug, 0.1%, 0.2% forecast, -0.1% previous.

• US TR IPSOS PCSI Sep, 60.77, 59.54 previous.

• US Federal Budget Aug, -108.00B, -119.50B forecast, -43.00B previous.

• US MBA Mortgage Application w/e, 9.9%, 3.3% previous.

• Trump steps up talks with Democrats on taxes as timetable set.

• Juncker: grab Brexit chance to forge a tighter EU.

• ECB's chief economist calls for “steady hand” on easy policy.

• Canada TR IPSOS PCSI Sep, 54.33, 55.61 previous.

• Canada home price growth cools in Aug as Toronto declines.

Looking Ahead – Economic Data (GMT)

• 23:01 UK RICS Housing Survey Aug, 0 forecast, 1 previous

• 01:30 Australia Employment Aug, 15.0k forecast, 27.9k previous

• 01:30 Australia Participation Rate Aug, 65.1% forecast, 65.1% previous

• 01:30 Australia Unemployment Rate Aug, 5.6% forecast, 5.6% previous

• 02:00 China urban Investment (YTD) YY Aug, 8.2% forecast, 8.3% previous

• 02:00 China Industrial Output YY Aug, 6.6% forecast, 6.4% previous

• 02:00 China Retail Sales YY Aug, 10.5% forecast, 10.4% previous

• 04:30 Japan Industrial Output rev Jul, -0.8% previous

• 04:30 Japan Capacity Utility Index Chg MM Jul, 2.1% previous

Looking Ahead – Events, Other Releases (GMT)

• 07:30 Swiss National Bank (SNB) monetary policy assessment

• 11:00 BOE announces its rate decision and publishes the minutes of the meeting

• 15:30 Germany’s Weidmann will deliver a lecture in Frankfurt

• 16:00 ECB’s Mersch to participate in closing session at Eurofi Financial Forum in Tallinn 

• N/A ECB's Jan Smets and Bostjan Jazbec speak at conf. in Ljubljana, Slovenia

Currency Summaries

EUR/USD is likely to find support at 1.1800 levels and currently trading at 1.1880 levels. The pair has made session high at 1.1989 and hit lows at 1.1869 levels. The euro declined against the U.S. dollar on Wednesday as greenback rose after a report showed U.S. producer prices rebounded in August and as traders turned their focus to consumer inflation data due on Thursday that will be closely watched by the U.S. Federal Reserve as it considers when to next raise interest rates. The dollar index, which tracks the currency against a basket of six major rivals, was up 0.69 percent at 92.512. The index rose after the U.S. Labor Department said its producer price index for final demand increased 0.2 percent in August after slipping 0.1 percent in July. The rebound was driven by a surge in the cost of gasoline. Inflation is being closely watched for clues on the timing of the next interest rate increase. The dollar, which rallied to its strongest levels in a decade and a half at the start of 2017, has faltered since on the view that the pro-growth, pro-inflation policies promised by U.S. President Donald Trump had not materialized, as well as a pushing back of Fed rate hike expectations. The dollar index fell to 91.011, its lowest since January 2015 last week, on worries linked to Hurricane Irma and North Korea, but has recovered as risk aversion has ebbed significantly.

GBP/USD is supported in the range of 1.3156 levels and currently trading at 1.3200 levels. It reached session high at 1.3273 and dropped to session low at 1.3181 levels. Sterling declined against the dollar on Wednesday after posting its biggest daily gain in more than two months the previous day as investors took profits before a central bank meeting on Thursday that will have to grapple with divergent data in recent days. Two members of the Bank's Monetary Policy Committee are already voting for higher rates. Any more defections when the MPC meets on Thursday could push sterling higher, and there has been talk chief economist Andy Haldane might shift to that camp. But with the economy struggling, many traders doubt the Bank's will raise rates at all. Markets are expecting only one rate increase by the end of next year. On the data front, inflation surged above the central bank's 2 percent target in August, rising to its highest in more than five years, a report on Tuesday showed. But wage growth in the three months to July undershot market expectations, another report showed on Wednesday. The pound slipped from a one-year high of $1.3329 to trade at 0.4 percent lower at 13200 in the late US session. But it was broadly flat on the day against a weaker euro at 89.98 pence per euro.

USD/CAD is supported at 1.2080 levels and is trading at 1.2188 levels. It has made session high at 1.2221 and lows at 1.2126 levels. The Canadian dollar edged higher against its U.S. counterpart on Wednesday as oil prices rose and after Canada's finance minister indicated he could live with a more robust currency. Finance Minister Bill Morneau told Reuters in an interview late on Tuesday that the recent rise of the currency reflected the country's economic strengths. The Canadian dollar has rallied more than 13 percent against the U.S. greenback since early May and touched its strongest in more than two years on Friday. Prices of oil, one of Canada's major exports, rose after the International Energy Agency (IEA) said the global oil surplus was starting to shrink due to robust demand and an output drop from major producers. Gains for the loonie came as data showed that lending to Canadian small businesses climbed to the highest level in 1-1/2 years in July, pointing to a pickup in corporate spending that could help underpin recent economic strength. The Canadian dollar was trading at C$1.2182 to the greenback, or 82.26 U.S. cents, up 0.1 percent.

USD/JPY is supported around 109.82 levels and currently trading at 110.68 levels. It peaked to hit session high at 110.68 and made session lows at 110.07 levels. The U.S. dollar strengthened against the yen on Wednesday as the dollar rose after U.S. producer prices rebounded in August, sparking bets on accelerating inflation that could drive the Federal Reserve to raise U.S. interest rates again this year.A surge in the cost of gasoline drove U.S. producer prices 0.2 percent higher in August after slipping 0.1 percent in July, and there were also signs of a pickup in underlying producer inflation. The increase fueled expectations that consumer inflation data due on Thursday could surpass analysts' expectations, bringing some comfort to the U.S. central bank that the pace of price hikes may be advancing toward its target of 2 percent. The dollar index, which tracks the currency against a basket of six major rivals, was up 0.69 percent at 92.512 while, the Japanese yen weakened 0.44 percent versus the greenback at 110.64 per dollar.

Equities Recap

European shares steadied on Wednesday as a global equity rally flagged, with Apple suppliers hit after the new iPhone release disappointed with a later than expected shipping date.

UK's benchmark FTSE 100 closed down by 0.14 percent, the pan-European FTSEurofirst 300 ended the day up by 0.10 percent, Germany's Dax ended up by 0.32 percent, France’s CAC finished the day up by 0.27 percent.

All three major Wall Street indexes ended with record closes on Wednesday as gains in consumer discretionary and energy stocks offset losses in Apple.

Dow Jones closed up by 0.17 percent, S&P 500 ended down 0.07 percent, Nasdaq finished the day down by 0.08 percent.

Treasuries Recap 

 U.S. Treasury yields rose on Wednesday with 10-year yield reaching a 2-1/2 week high as investors reduced their bond holdings to make room for this week's government and corporate debt supply.

The 10-year yield was at a 2-1/2 week peak of 2.195 percent, up more than 2 basis points on the day.

The 30-year bond yield hovered near a three-week high at 2.792 percent, up nearly 2 basis points, following a $12 billion auction of long bond supply.

Commodities Recap

Gold fell to a 1-1/2-week low on Wednesday, erasing earlier gains as the dollar index jumped, though a retreat in global stocks after Tuesday's record high prevented deeper losses.

Spot gold was down 0.65 percent at $1,322.91 an ounce by 2:34 p.m. EDT (1834 GMT), after falling to the lowest since Sept. 1 at $1,320.51.U.S. gold futures for December delivery settled down 0.4 percent at $1,328.

Crude oil prices rose on Wednesday after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink, even though U.S. data showed another big increase in domestic inventories due to Hurricane Harvey.

U.S. crude settled up $1.07, or 2.2 percent, to $49.30 per barrel and Brent crude was up 89 cents to $55.16 a barrel.

U.S. crude futures added to gains late in the session, boosted by expectations that recovering refineries will process more crude.

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