Americas Roundup: Euro falls as ECB's president rings cautious note, Wall Street gains, Gold slips, Oil slumps as rising U.S. supply weighs-March 9th 2018

Market Roundup

• Trump sticks to tariff level pledge as Mexico, Canada reject pressure.

• U.S. Initial Jobless Claims w/e, 231k, 220k forecast, 210k previous.

• U.S. Jobless Claims 4-Wk Avg w/e, 222.50k, 220.50k previous.

• U.S. Continued Jobless Claims w/e, 1.870 mln, 1.921 mln forecast, 1.931 mln previous, 1.934 mln revised.

• U.S. Feb Challenger Layoffs, 35.369k, 44.653k previous.

• CA Feb House Starts, Annualized, 229.7k, 216.6k forecast, 216.2k previous, 215.3K revised.

• CA Jan Building Permits MM, 5.6%, 1.3% forecast,4.8% previous, 2.5% revised.

• CA Jan New Housing Price Index, 0.0%, 0.1% forecast, 0.0% previous.

• Africa should avoid forfeiting sovereignty to China over loans –Tillerson.

• South Koreans in Washington to brief on talks with N.Korea's leader.

• ECB gives up on bigger bond buys en route to stimulus exit.

• UK border stance threatens to stall Brexit talks -EU's Tusk.

• German industrial orders plunge in “horrible start” to year.

• Japan punishes seven cryptocurrency exchanges over regulatory lapses.

Looking Ahead – Economic Data (GMT)

• 8 Mar 21:45 New Zealand Feb Electronic Card Retail Sales, 1.4% previous

• 8 Mar 21:45 New Zealand Feb Elec Card Retail Sales YY, 3.4% previous

• 8 Mar 23:30 Japan Jan All Household Spending YY, -1.2% forecast, -0.1% previous

• 8 Mar 23:30 Japan Jan All Household Spending MM, -0.4% forecast, -2.5% previous

• 9 Mar 00:00 Japan Jan Overtime Pay, 0.9% previous

• 9 Mar 01:30 China Feb PPI YY, 3.8% forecast, 4.3% previous

• 9 Mar 01:30 China Feb CPI YY, 2.5% forecast, 1.5% previous

• 9 Mar 01:30 China Feb CPI MM, 0.8% forecast, 0.6% previous

• 9 Mar 04:00 Japan BOJ rate decision, -0.10% forecast, -0.10% previous

Looking Ahead – Events, Other Releases (GMT)

• 8 Mar 20:35 Bank of Canada Deputy Governor Timothy Lane speaks at Greater Vancouver Board of Trade- Vancouver

• 8 Mar 23:45 New Zealand Finance Minister Grant Robertson speaks at an event hosted by Auckland's Chamber of Commerce with Massey University on his government's plans for implementing social spending program – Auckland

• 9 Mar 06:30 BOJ's Haruhiko Kuroda speaks to reporters at the end of the central bank policy meetings – Tokyo

• 9 Mar 08:30 ECB's Benoit Coeure speaks at strategic high-level meeting on Cyber Resilience for Pan-European Financial Market Infrastructures organized by the ECB – Frankfurt

• 9 Mar 08:45 ECB's Sabine Lautenschlager speaks at strategic high-level meeting on Cyber Resilience for Pan-European Financial Market Infrastructures organized by the ECB – Frankfurt

• 9 Mar 13:00 Irish Central Bank Governor Philip Lane gives speech on the state of the economy – Dublin

• 9 Mar 17:40 Fed's Eric Rosengren speaks before the “Outlook 2018” luncheon hosted by the Springfield Regional Chamber – Springfield, Massachusetts

• 9 Mar 17:45 Fed's Charles Evans speaks on current economic conditions and monetary policy before the Manhattan Institute Shadow Open Market Committee – New York

Currency Summaries

EUR/USD is likely to find support at 1.2257 levels and currently trading at 1.2301 levels. The pair has made session high at 1.2446 and hit lows at 1.2301 levels. The euro slipped lower against the U.S. dollar on Thursday as the European Central Bank signalled caution on inflation and protectionism, while world stock markets edged higher as U.S. President Donald Trump vowed flexibility with his plan to impose steep import tariffs. While the ECB took a small step towards weaning the euro zone economy off protracted stimulus by dropping its easing bias, ECB President Mario Draghi said monetary policy would remain “reactive” and that underlying inflation was subdued. The euro was down 0.68 percent to $1.2328, while the dollar index rose 0.44 percent. The dollar, which is seen a safe haven on trade war fears, had dipped on prospects for a softening stance on the tariffs before gaining on perceived dovish remarks from Draghi.The greenback had weakened following the resignation on Tuesday of Gary Cohn, Trump's top economic adviser, who was seen as a bulwark against protectionism in the White House. The index, which tracks the greenback versus a basket of six currencies, rose 0.38 point or 0.42 percent, to 90.017.The euro was last down 0.65 percent at $1.2307.With the ECB in the rear-view mirror, traders await news from the Bank of Japan's policy meeting and the U.S. government's payrolls report for February.

GBP/USD is supported in the range of 1.3753 levels and currently trading at 1.3814 levels. It reached session high at 1.3899 and dropped to session low at 1.3805 levels. Britain's pound declined  against the dollar on Thursday as concern increased that disagreement over the European Union's draft guidelines for a trade pact with Britain would prevent a transition deal being reached at a summit later this month. British Finance Minister Philip Hammond said on Wednesday that a transition deal would be concluded this month. Uncertainty about whether that is feasible has weighed on the pound since the EU published its guidelines that same day. Sterling slid nearly a third of a percent on Thursday to $1.3861. Against the euro, it was broadly flat on the day ahead of a European Central Bank policy decision due later on Thursday. Sterling was struggling due to a risk-off mood across markets on the back of worries about a trade war led by U.S. President Donald Trump's administration, and on concerns about the effect, such a trade war might have on Britain. Sterling was last trading down 0.7 percent on the day at $1.3803, not far from a 1 1/2-month low of $1.3712 hit last week.

USD/CAD is supported at 1.2842 levels and is trading at 1.2894 levels. It has made session high at 1.2952 and lows at 1.2879 levels. The Canadian dollar was little changed against its U.S. counterpart on Thursday as lower oil prices and concerns of a global trade war kept investors away from the market. Oil prices fell and were setting up for a second consecutive weekly drop as the dollar strengthened and concerns over rising U.S. crude production continued to mount on signs of an inventory build at a key U.S. storage hub. On Wednesday, the Bank of Canada called trade policy an “important and growing source of uncertainty for the global and Canadian outlooks,” as it left its benchmark interest rate unchanged at 1.25 percent. The central bank has raised interest rates three times since July and Canada's employment report for February can help guide expectations for further hikes. Economists in a poll expect jobs to rebound 20,000 after slumping 88,000 in January. Data from Statistics Canada on Thursday showed that the value of Canadian building permits jumped 5.6 percent in January from December, while new home prices were flat for a second month in a row. The Canadian dollar was little changed at C$1.2900 to the greenback or 77.47 U.S. cents. The currency traded in a range of C$1.2878 to C$1.2952. On Wednesday, the loonie matched Monday's low at C$1.3002, its weakest since July 5.

AUD/USD is supported around 0.7933 levels and currently trading at 0.7997 levels. It hit session high at 0.7997 and made session lows at 0.7954 levels. The Australian dollar dipped against its U.S. counterpart on Thursday as concerns of a global trade war hurt demand for commodity-linked currencies like the Australian dollar. Nervousness around U.S. President Donald Trump's recent plan to slap tariffs on steel and aluminum exports has kept a lid on gains in markets as investors refrained from making risky investments. The Antipodean currencies are often sold during times of stress because both Australia and New Zealand have open economies leveraged to commodity prices and global growth. The White House said late Wednesday that Canada, Mexico and possibly other countries may be exempted from the tariffs on the basis of national security. That helped pare some losses in risk assets overnight. Yet sentiment was still shaky after the resignation of a top White House economic adviser, Gary Cohn, who had been an advocate for free trade. Already, the European Union has said it would apply 25 percent tariffs on about $3.5 billion of imports from the United States if Trump carried out his threat. China said it did not want a trade war with the United States but will defend its interests, warning that policies based on “mistaken assumptions” will damage bilateral relations. The Australian dollar was last trading at $0.7787, slightly lower from late Wednesday and drifting up from a two-month trough of $0.7713 set earlier in March.

Equities Recap

European shares ended on a high Thursday, buoyed by a weaker euro on the back of cautious comments from ECB President Mario Draghi on inflation, while M&A news sparked some sizeable stock moves.

UK's benchmark FTSE 100 closed up 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 1.03 percent, Germany's Dax ended up by 1 percent, France’s CAC finished the day up by 1.4 percent.

The three major U.S. stock indexes closed higher on Thursday after President Donald Trump appeared to soften his stance on trade tariffs, easing trade war fears that had the market on edge for a week.

Dow Jones closed up by 0.36 percent, S&P 500 ended up by 0.43 percent, Nasdaq finished the day up by 0.40 percent.

Treasuries Recap

The yield on the U.S. benchmark government bond rose on Thursday, tracking its German counterpart as the European Central Bank dropped its easing bias, but its move was more muted, compressing the spread between the two.

The 10-year yield was last at 2.854 percent, above yesterday's close at 2.883 percent. The two-year yield was last at 2.246 percent below its last close at 2.254 percent. The 30-year yield was last at 3.117 percent, 3.4 basis points below Wednesday's close.

Commodities Recap

Oil prices fell on Thursday, headed for a second straight weekly drop on a stronger dollar, signs of an inventory build at the U.S. storage hub in Cushing, Oklahoma, surging U.S. crude production and investor jitters about a potential trade war.

Brent crude futures fell  73 cents, or 1.1 percent, to settle at $63.61 per barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.03, or 1.7 percent, to settle at$60.32 per barrel.

Gold prices fell on Thursday as the U.S. dollar bounced from a near three-week low against the euro after European Central Bank President Mario Draghi signaled that any policy normalization in the eurozone would be very gradual.

Spot gold was down 0.4 percent at $1,320.67 per ounce by 1:34 p.m. EST (1834 GMT). It touched a one-week high of $1,340.42 on Wednesday before closing 0.6 percent lower. U.S. gold futures for April delivery settled down $5.90, or 0.4 percent, at $1,321.70 per ounce.

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