America's Roundup: Dollar extends rally to five-month high, euro weak, Wall Street gains, Gold rises on short-covering, Oil gains after report shows larger than expected U.S. stock draws-May 17th 2018

Market Roundup

• Italy's 5-Star, League on verge of govt deal; markets shudder.

• US Apr Industrial Production MM, 0.7%, 0.6% forecast, 0.5% previous.

• US Apr Capacity Utilization MM, 78.0%, 78.4% forecast, 78.0% previous.

• US Apr Manufacturing Output MM, 0.5%, 0.5% forecast, 0.1% previous.

• US Apr Housing Starts Number, 1.287 mln, 1.310 mln forecast,1.319 mln previous.

• US Apr House Starts MM Change, -3.7%, 1.9% previous.

• US Apr Building Permits: Number, 1.352 mln, 1.350 mln forecast,1.379 mln previous.

• US Apr Build Permits: Change MM, -1.8%, 4.4 % previous.

• US Mar Net L-T Flows, Exswaps, 61.8 bln, 49.0 bln previous.

• US Mar Foreign Buying, T-Bonds, -4.9 bln, 43.2 bln.

• US Mar Overall Net Capital Flows, -38.5 bln, 44.7 bln previous.

• US Mar Overall Net L-T Flows, Incl.Swaps, 48.4 bln, 35.8 bln previous.

• US w/e Mortgage Market Index, 376.5, 387.1 previous.

• US w/e MBA Mortgage Applications, -2.7%, -0.4% previous.

• US w/e MBA 30-Yr Mortgage Rate, 4.77%, 4.78% previous.

• CA Mar Manufacturing Sales MM, 1.4%, 1.2% forecast,, 1.9% previous.

• Trump says 'We'll see' on N.Korea summit, to insist on denuclearization.

• Trump tweets: China has 'much to give' in trade negotiations.

• Fed's Bullard says further rate hikes will restrict growth.

• U.S. pushing for NAFTA deal as Thursday deadline approaches.

Looking Ahead – Economic Data (GMT)

• 16 May 22:45 New Zealand Q1 Producer Prices – Inputs QQ, 0.9% previous

• 16 May 22:45 New Zealand Q1 PPI Output, 1.0% previous

• 16 May 23:50 Japan w/e Foreign Bond Investment, -363.7 bln previous

• 16 May 23:50 Japan w/e Foreign Invest JP Stock, -0.3 bln previous

• 16 May 23:50 Japan Mar Machinery Orders MM, -3.0% forecast, 2.1% previous

• 16 May 23:50 Japan Mar Machinery Orders YY, 0.3% forecast, 2.4% previous

• 17 May 01:30 Australia Apr Employment, 20.0k forecast, 4.9k previous

• 17 May 01:30 Australia Apr Full Time Employment, -19.9k previous

• 17 May 01:30 Australia Apr Unemployment Rate, 5.5% forecast, 5.5% previous

• 17 May 01:30 Australia Apr Participation Rate, 65.5% forecast, 65.5% previous

• 17 May 02:00 New Zealand Jan OBEGAL Forecast, 2.54 bln previous

• 17 May 02:00 New Zealand Jan Net Debt Forecast, 21.7% previous

• 17 May 02:00 New Zealand Jan Budget Cash Balance, -2.65 bln previous

Looking Ahead – Events, Other Releases (GMT)

• N/A ECB Vice President Vitor Constancio and Irish central bank chief Lane speak at a conference in Frankfurt

• 10:30 Closing remarks by the ECB’s Vitor Constancio at the Colloquium in his honor organized by the ECB in Frankfurt

• 12:00 ECB’s Vitor Constancio delivers the opening address at the third annual ECB macroprudential policy and research conference in Frankfurt

• 14:00 Beverly Hirtle, executive VP of the New York Fed speaks at Economic Press Briefing on Homeownership and Housing Wealth in new York

• 14:45 Minneapolis Fed’s Neel Kashkari participates in a question-and-answer session hosted by the Minnesota Housing Finance Agency in St. Paul

• 17:30 Dallas Fed’s Robert Kaplan speaks before the Richardson Chamber of Commerce Annual Meeting in Richardson, Texas

Currency Summaries

EUR/USD is likely to find support at 1.1734 levels and currently trading at 1.1801 levels. The pair has made session high at 1.1819 and hit lows at 1.1767 levels. Euro declined against the dollar on Wednesday as dollar was supported by relatively strong U.S. economic data in recent days, while the euro was hit by reports that a likely future Italian government would seek debt forgiveness from European creditors. The dollar index, which measures the greenback against a basket of six other currencies, was up 0.14 percent at 93.352, after rising as high as 93.632, its highest since December 19.The greenback has risen about 1.6 percent this month, boosted by a view that the Federal Reserve will outpace most major central banks in policy normalization. U.S. factory output rose in April, although new estimates of manufacturing and overall industrial production showed less growth in prior months than initially believed. The U.S. currency got a boost on Tuesday when strong U.S. consumer spending numbers sent 10-year Treasury yields surging to a seven-year peak of 3.095 percent. The euro was 0.25 percent lower against the greenback at $1.1807, its lowest since December, after reports that Italy's anti-establishment 5-Star Movement and anti-immigrant League may ask the European Central Bank to forgive 250 billion euros ($294.18 billion) of debt.

GBP/USD is supported in the range of 1.3419 levels and currently trading at 1.3486 levels. It reached session high at 1.3514 and dropped to session low at 1.3415 levels. Sterling fell against dollar on Wednesday back towards its weakest level of the year amid fresh worries about Britain's Brexit negotiations, a new leg higher in the dollar's rally and after relatively modest UK wage growth earlier in the week. Sterling fell 0.2 percent to $1.3480, not far from the 2018 low reached on Tuesday of $1.3452. It had touched as low as $1.3456 on Wednesday. A rally in the dollar and slashed expectations for British interest rate rises have caused what had been one of the best performing major currencies to give up all its 2018 gains. Versus the euro, the pound managed to gain 0.3 percent to 87.390 pence per euro as the single currency sold off across the board. The British government said on Tuesday it would publish detailed plans for its future relationship with the European Union next month in an attempt to break the deadlock in Brexit negotiations. Divisions within the government about what the relationship should look like, and repeated complaints from EU officials that Britain has not been clear on what it wants, has left investors convinced Brexit talks remain a real risk for the pound less than a year before Britain is due to leave the bloc.

USD/CAD is supported at 1.2747 levels and is trading at 1.2790 levels. It has made session high at 1.2855 and lows at 1.2775 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as domestic data showed stronger-than-expected growth in manufacturing sales and the Trump administration said it was pushing for a deal on a revamped NAFTA. Canadian factory sales rose 1.4 percent in March, surpassing the 1.2 percent gain expected by economists, and February's increase was upwardly revised to 2.7 percent from a previously reported 1.9 percent, Statistics Canada said. The United States is pushing for a deal in negotiations on a revised North American Free Trade Agreement and President Donald Trump is committed to getting a better agreement with Canada and Mexico, the White House said on Wednesday. The price of oil, one of Canada's major exports, eased after a rise in U.S. crude inventory added to signs demand may be slowing. U.S. crude prices were down 0.66 percent at $70.84 a barrel. The U.S. dollar resumed its powerful, month long rally as the euro slumped to a five-month low after reports that a likely future Italian government would seek debt forgiveness from European creditors. The Canadian dollar was trading 0.3 percent higher at C$1.2794 to the greenback. The currency traded in a range of C$1.2774 to C$1.2871.

USD/JPY is supported around 109.13 levels and currently trading at 110.33 levels. It peaked to hit session high at 110.31 and made session lows at 110.01 levels. The U.S. dollar edged higher against the yen on Wednesday as dollar was boosted by relatively strong U.S. economic data. Data on Wednesday supported traders' view that the U.S. economy is expanding but far from firing on all cylinders. They did not change the notion that the Federal Reserve would stay on its gradual interest rate hike path. U.S. industrial production increased solidly in April amid acceleration in manufacturing and mining output, the latest indication that the economy was gathering momentum early in the second quarter. The upbeat report from the Federal Reserve on Wednesday came on the heels of data on Tuesday showing a pickup in consumer spending in April. But a sharp drop in homebuilding and permits last month put a wrinkle on the brightening economic picture. Industrial production expanded 0.7 percent in April, matching March's increase, the Fed said. Manufacturing output, which accounts for more than 70 percent of industrial production, rose 0.5 percent as a 2.3 percent increase in machinery production offset a drop in production of primary metals and fabricated metal products. While, market barely responded to North Korea saying it might not attend the unprecedented June 12 summit with the United States if Washington continues to insist that it unilaterally give up its nuclear weapons. 

Equities Recap

European shares edged up on Wednesday, supported by strength among mining stocks and some solid earning updates, although a drop in Italian banks on fresh political worries weighed.

The UK's benchmark FTSE 100 closed up by 0.3 percent, FTSEurofirst 300 ended the day up by 0.25 percent, Germany's Dax ended up by 0.2 percent, and France’s CAC finished the up by 0.3 percent.

Retail and technology stocks led Wall Street higher on Wednesday as the small-cap Russell 2000 hit a record peak, even as U.S. bond yields touched near a seven-year high and investors fretted over geopolitics.

Dow Jones closed up by 0.24 percent, S&P 500 ended up 0.39 percent, Nasdaq finished the day up by 0.64 percent.

Treasuries Recap

U.S. Treasury yields ended slightly higher on Wednesday, with the 10-year yield touching near a seven-year high, following a bond market selloff spurred by signs the U.S. economy is on a stronger footing in the second quarter.

The 10-year Treasury yield was up 1.5 basis points at 3.096 percent after touching 3.098 percent, which was the highest level since July 2011, in late Wednesday trading, data showed.

The two-year yield, which is sensitive to traders' views on Fed monetary policy, was marginally higher at 2.589 percent, which was the highest level since August 2008.

Commodities Recap

Gold prices rebounded from a 4-1/2-month low on Wednesday on short-covering as the U.S. dollar came off its 2018 highs and U.S. bond yields sat near multi-year peaks.

Spot gold was 0.2 percent higher at $1,292.19 by 1:39 p.m. ET (1739 GMT), having gone as low as $1,286.20, its weakest since Dec. 27.

U.S. gold futures for June delivery settled up $1.20, or 0.1 percent, at $1,291.50 per ounce.

Oil prices gained on Wednesday, shaking off the effects of a strengthening dollar, after an inventory report showed U.S. crude and gasoline stocks fell more than expected.

Brent crude futures gained 85 cents to settle at $79.28 a barrel, while U.S. crude futures gained 18 cents to settle at $71.49 a barrel.

Simply the best forex trading platform. Mobile platform also available.

Start trading forex in 5 minutes. Get 20% deposit bonus.

Free $10000 forex virtual trading account. Practice makes perfect.

LiveZilla Live Chat Software