America's Roundup: Dollar rises vs yen as risk appetite returns, Gold falls from 11-week high, Wall Street rises, Oil steady, near 3-year highs on Syria tensions, tighter supply-April 13th, 2018

Market Roundup

• China vows to fight back if U.S. escalates trade spat.

• U.S. w/e Initial Jobless Claims, 233k, 230k forecast, 242k previous.

• U.S. w/e Continued Jobless Claims, 1.871 mln, 1.848 mln forecast, 1.808 mln previous, 1.818 mln revised.

• U.S. w/e Jobless Claims 4-Wk Avg, 230.00k, 228.25k previous.

• U.S. Mar Import Prices MM, 0.0%, 0.2% forecast, 0.4% previous .

• U.S. Mar Export Prices MM, 0.3%, 0.2% forecast, 0.2% previous.

• Trump says decisions “fairly soon” on Syria.

• CA Feb New Housing Price Index, -0.2%, 0.0% previous .

• Global trade growth strong but at risk if conflict escalates, WTO says.

• ECB frets over euro strength, trade war risk: minutes.

• EU, Britain to start trade talks next week.

• Top bankers warn London's status as a global finance centre at risk from Brexit.

• Mexico central bank holds key rate steady as inflation cools.

Looking Ahead – Economic Data (GMT)

• 12 Apr 22:30 Australia Mar Manufacturing PMI, 53.4 previous

• 13 Apr N/A China Mar Exports YY, 10% forecast, 44.5% previous 

• 13 Apr N/A China Mar Imports YY, 10% forecast, 6.3% previous

• 13 Apr N/A China Trade Balance, 27.21 bln forecast, 33.74 bln previous, 33.75 bln revised

Looking Ahead – Events, Other Releases (GMT)

• 12 Apr 21:00 Fed's Neel Kashkari participates in Q&A session in Minneapolis

• 13 Apr 06:00 Swedish central bank's Martin Floden talks about Riksbank's balance sheet in Stockholm

• 13 Apr 11:00 ECB's Mario Draghi talks to winners of Generation Euro Students' Award in Frankfurt

• 13 Apr 11:30 Fed's Eric Rosengren speaks before Greater Boston Chamber Economic Outlook in Boston

• 13 Apr 13:00 Fed's James Bullard makes presentation at an event in St. Louis

• 13 Apr 17:00 Fed's Robert Kaplan participates in Q&A session in Odessa

Currency Summaries

EUR/USD is likely to find support at 1.2260 levels and currently trading at 1.2326 levels. The pair has made session high at 1.2352 and hit lows at 1.2297 levels. Euro declined against the dollar on Thursday as dollar rebounded after minutes from the European Central Bank's meeting in March showed that policymakers expressed concern over the risk of a full-fledged trade war with the United States and fretted over the potentially harmful impact of the euro's strength. With the euro zone economy growing for five straight years, policymakers are now debating how to wean the bloc off easy money and prepare investors for normalising policy a decade after the global financial crisis sent central banks into crisis mode. The ECB has so far moved by increments to dial back support. In March, it gave up a largely outdated pledge to raise asset buys if needed, a symbolic move that kept it on course to end its 2.55 trillion asset purchase programme by the end of this year. Investors have been wondering whether the ECB's carefully calibrated exit plan from its ultra-easy policy could be scuppered by a looming trade war between the United States and China although ECB policymakers have so far played down this risk. The dollar index was on track to snap a four-day losing streak as it rose 0.2 percent, with the euro down 0.28 percent to $1.2327.

GBP/USD is supported in the range of 1.4141 levels and currently trading at 1.4210 levels. It reached session high at 1.4246 and dropped to session low at 1.4227 levels. Sterling jumped higher against the dollar on Thursday after European Central Bank policymakers expressed concern about the impact of a trade war with the United States and the potentially harmful impact of the euro's strength. Investors are wondering whether the ECB's exit plan from its ultra-easy monetary policy could be scuppered by a looming trade war between the U.S. and China. ECB policymakers said the euro's firming in recent months was a “significant source” of uncertainty with some predicting a more negative impact on inflation, the minutes of meeting showed. The announcement helped sterling gain 0.37 percent against dollar at $1.4210. Traders are preparing for a flurry of data on British unemployment, wages and inflation numbers next week that could help shore up expectations of a May interest rate hike. Markets expect the Bank of England to raise rates next month as it tries to curb inflation, although the probability of a hike happening has fallen to 66 percent from more than 70 percent in previous weeks after some recent British economic data was weaker-than-expected. Most analysts still expect the bank to increase rates, as Brexit-related risks had subsided for now and wage data still pointed upwards.

USD/CAD is supported at 1.2500 levels and is trading at 1.2588 levels. It has made session high at 1.2617 and lows at 1.2566 levels. The Canadian dollar edged lower against its U.S. counterpart on Thursday, retreating from a seven-week high reached the day before, as the greenback broadly climbed and oil prices dipped.The U.S. dollar rebounded after a four-day losing streak as the threat of a clash between Western powers and Russia in Syria appeared to recede. Mideast tensions had boosted on Wednesday the price of oil, one of Canada's major exports, to its highest in more than three years. U.S. crude prices were down 0.40 percent on Thursday at $66.55 a barrel. On Wednesday, the loonie touched its strongest since Feb. 19 at C$1.2545. The currency has benefited recently from an upbeat business survey from the Bank of Canada, stronger-than-expected domestic jobs data and investor optimism over a deal to revamp the North American Free Trade Agreement. The Canadian dollar was last trading 0.1 percent lower at C$1.2587 to the greenback. The currency traded in a range of C$1.2566 to C$1.2617.

USD/JPY is supported around 106.60 levels and currently trading at 107.26 levels. It peaked to hit session high at 107.42 and made session lows at 107.07 levels. The U.S. dollar strengthened against the yen on Thursday as worries about the threat of a clash between Western powers and Russia in Syria faded. U.S. President Donald Trump warned on Wednesday of imminent military action in Syria over a suspected poison gas attack. On Thursday, he amended that warning, saying a military strike “could be very soon or not so soon at all. The threats had piled pressure on investors already rattled by a trade spat between the United States and China. The dollar was up  0.52 percent higher against the Japanese yen. The Japanese currency is often sought in times of global tension partly because the countries have big current account surpluses. On the data front, new applications for U.S. unemployment benefits fell last week, pointing to sustained labor market strength despite a sharp slowdown in job growth in March. Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 233,000 for the week ended April 7, the Labor Department said. Economists polled had forecast claims falling to 230,000 in the latest week.

Equities Recap

European shares rose on Thursday alongside a relief rally across global markets after U.S. President Trump signalled that military strikes in Syria may not be imminent.

The UK's benchmark FTSE 100 closed flat, FTSEurofirst 300 ended the day up by 0.68 percent, Germany's Dax ended up by 1 percent, and France’s CAC finished the up by 0.6 percent.

U.S. stocks climbed on Thursday as investors anticipated a strong earnings season and as U.S. President Donald Trump's suggestion that a military strike on Syria may not be imminent eased geopolitical worries.

Dow Jones closed up by 1.22 percent, S&P 500 ended up 0.84 percent, Nasdaq finished the day up by 1.02 percent.

Treasuries Recap

U.S. Treasury yields climbed on Thursday as risk appetite improved and geopolitical tensions eased after President Donald Trump said a possible attack on Syria may not be imminent, contrary to what he signaled on Wednesday.

The U.S. 10-year yields rose to 2.833 percent, from 2.79 percent late on Wednesday.U.S. 30-year yields climbed to 3.04 percent, from Wednesday's 3.005 percent.

On the front end of the curve, U.S. 2-year yields were up at 2.348 percent, compared with 2.311 percent on Wednesday.

Commodities Recap

Gold retreated from an 11-week high on Thursday, with investors booking profits as the U.S. dollar gained, but bullion's losses were limited as investors remained worried about rising military tensions in Syria and lingering concerns of a trade war with China.

Snapping a four-day winning streak, spot gold fell 1.1 percent at $1,337.55 per ounce by 1:40 p.m. EDT (1740 GMT). U.S. gold futures for June delivery settled down $18.10, or 1.3 percent, at $1,341.90.

Oil prices held steady on Thursday, remaining close to highs last reached in late 2014 on Middle East geopolitical tensions and shrinking global oil inventories.

Brent crude futures were at $71.84 a barrel by 2:01 p.m. EDT (1801 GMT), down 22 cents. U.S. WTI crude futures were up 3 cents at $66.85. On Wednesday, both crude benchmarks hit their highest levels since late 2014.


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