America's Roundup: Dollar strengthens against yen, euro retraces losses, Gold prices slip, Oil climbs with equities, supply disruptions persist-July 11th, 2018

Market Roundup

• US May JOLTS Job Openings, 6.638 mln, 6.583 mln forecast, 6.698 mln previous.

• US Jun NFIB Business Optimism Index, 107.20, 107.80 previous.

• US Redbook YY w/e, 5.2%, 4.4% previous.

• May presses on with Brexit plan after high-profile resignations.

• UK economy brightens as Bank of England nears rate decision.

• Trade row won't stop Bank of Canada rate hike, at least not yet.

• CA Jun House Starts, Annualized, 248.1k, 210.0k forecast, 195.6k previous.

• CA May Building Permits MM, 4.7%, -4.6% previous.

• ECB defends stimulus scheme from German court challenge.

• Trade tensions send German investor morale to six-year low.

Looking Ahead – Economic Data (GMT)

• 10 Jul 23:50 Japan Jun Corp Goods Price MM, 0.1% forecast, 0.6% previous.

• 10 Jul 23:50 Japan Jun Corp Goods Price YY, 2.8% forecast, 2.7% previous.

• 10 Jul 23:50 Japan May Machinery Orders MM, -5.5% forecast, 10.1% previous.

• 10 Jul 23:50 Japan May Machinery Orders YY, 8.6% forecast, 9.6% previous.

• 11 Jul 00:30 Australia Jul Consumer Sentiment, 0.3% previous.

• 11 Jul 01:30 Australia May Housing Finance, -1.9% forecast, -1.4% previous.

• 11 Jul 01:30 Australia May Invest Housing Finance, -0.9% previous.

Looking Ahead – Events, Other Releases (GMT)

• 07:00 ECB's Francois Villeroy de Galhau speaks at an annual financial services conference in Paris

• 07:00 Opening address by ECB President Mario Draghi at 9th ECB Statistics Conference “20 years of ESCB statistics: What's next?” in Frankfurt

• 07:30 ECB's Peter Praet participates in chairing Session 1 of 9th ECB Statistics Conference “20 years of ESCB statistics: What's next?” in Frankfurt

• 11:00 French Finance Minister Bruno Le Maire gives an annual address to the financial sector at a conference in Paris

• 12:00 ECB's Yves Mersch participates in chairing Session 1 of 9th ECB Statistics Conference “20 years of ESCB statistics: What's next?” in Frankfurt

• 14:00 Deputy Governor of the Bank of England Sam Woods will speak to the Treasury Select Committee in London

• 14:00 Bank of Canada key policy interest rate announcement and monetary policy report in Ottawa

• 15:00 Austrian Finance Minister Hartwig Loger speaks at the European Parliament in Brussels

• 15:15 Bank of Canada's Stephen Poloz and Carolyn Wilkins will hold a press conference to discuss the contents of the Monetary Policy Report in Ottawa

• 15:30 ECB's Daniele Nouy gives Concluding remarks at 9th ECB Statistics Conference “20 years of ESCB statistics: What's next?” in Frankfurt

• 15:30 Bank of England's Mark Carney speaks at a conference on the Global Financial Crisis hosted in Massachusetts by the United States' National Bureau of Economic Research in Boston

• 17:00 French Economy Minister Bruno Le Maire and his German counterpart Peter Altmaier hold a joint news conference after talks in Paris

• 20:30 Fed's John Williams participates in a Brooklyn Town Hall on issues related to the local economy and efforts around community and workforce development in Brooklyn, New York

• N/A ECB Governing Council meeting. No interest rate announcements scheduled in Frankfurt

Currency Summaries

EUR/USD is likely to find support at 1.1669 levels and currently trading at 1.1746 levels. The pair has made session high at 1.1746 and hit lows at 1.1689 levels. The euro strengthened against US dollar on Tuesday after European Central Bank Governing Council member Ewald Nowotny said the bank could decide this month to end bond buying by the end of this year. Ewald Nowotny said on Monday, the European Central Bank will take a “wait and see” approach to any tightening of monetary policy after it keeps negative rates on hold through the summer of 2019.The ECB decided month to end its 2.6 trillion euro bond purchase programme by the close of the year but said rates would stay unchanged at least until next summer, a wording that pushed back rate hike expectations by three months to September 2019. The dollar's index against a basket of six major currencies was up 0.4 percent at 94.47 after dropping to its lowest since mid-June on Monday. Investors were awaiting developments on the trade war between China and the United States. China and the United States hit each other's goods with tariffs on Friday, the focus now is on whether the dispute would ratchet up further or if officials in Beijing and Washington will find a way to ease off the tense trade relations.

GBP/USD is supported in the range of 1.3185 levels and currently trading at 1.3276 levels. It reached session high at 1.3287 and dropped to session low at 1.3225 levels. Sterling firmed against the dollar on Tuesday as Prime Minister Theresa May sought to shore up her authority after two ministers quit over her hard-fought Brexit blueprint. The pound's gains were limited, however, after official gross domestic product data proved in line with forecasts and a stronger dollar weighed on the currency. Markets had welcomed May's official Brexit plans unveiled on Friday  because they believe it makes a softer Brexit, in which Britain retains close trade ties with the European Union after its exit next year, more likely. But the resignations of Foreign Secretary Boris Johnson and Brexit minister David Davis rattled May's grip and stirred talk of a leadership challenge less than nine months before Britain is due to depart the EU. Sterling tumbled more than a cent. On Tuesday the currency regained its poise, and moves were mostly muted. Sterling rose to as high as $1.3301 roughly where it was on Friday before the resignations  until the weaker data and rallying dollar knocked it back to $1.3269, 0.1 percent up the day. Against the euro, sterling extended gains, spurred on by weakness in the common currency. The pound stood 0.3 percent stronger at 88.350 pence per euro.

USD/CAD is supported at 1.3062 levels and is trading at 1.3113 levels. It has made session high at 1.3143 and lows at 1.3109 levels. The Canadian dollar was little changed against its U.S. counterpart on Tuesday as oil prices were choppy, while investors braced for a potential Bank of Canada interest rate hike on Wednesday. The U.S. dollar strengthened across the board as investors bought riskier assets, encouraged by signs that trade tensions have yet to hurt economic momentum. Money markets expect the Bank of Canada to raise its benchmark interest rate on Wednesday for the fourth time since last summer, from a current 1.25 percent. On the data front, the value of Canadian building permits rose 4.7 percent in May from April, reversing the decline of the prior month, as strong intentions to build houses outweighed weakness in the non-residential sector, Statistics Canada said. Separate data from the Canada Mortgage and Housing Corp showed that Canadian housing starts surged in June as groundbreaking on multiple unit urban homes jumped 46.4 percent, offsetting a small decline in single detached urban starts. Oil prices were choppy as price gains on supply concerns in Norway and Libya were tempered by the United States' indication that it would consider requests for waivers from Iranian oil sanctions. The Canadian dollar was last trading at C$1.3113 to the greenback. The currency, which on Monday touched its strongest intraday level in nearly four weeks at C$1.3066, traded in a range of C$1.3109 to C$1.3143.

USD/JPY is supported around 111.00 levels and currently trading at 111.25 levels. It peaked to hit session high at 111.32 and made session lows at 111.14 levels. The U.S. dollar strengthened against the yen on Tuesday as investors bought riskier assets, encouraged by signs that trade tensions have yet to hurt economic momentum. Investors appear to be shrugging off the deepening trade conflict between the United States and China and focusing instead on the positive outlook for second-quarter corporate earnings, which kick off this week. Wall Street banking stalwarts Citigroup, JPMorgan and Wells Fargo report results on Friday. The greenback could get a further boost if U.S. consumer price inflation figures come in higher than expected when they are published on Thursday, possibly prompting the Federal Reserve to speed up the pace of rate hikes, which would increase the value of the dollar. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.4 percent to a session high of 94.475 after falling on Monday to 93.713, its lowest since mid-June. Against the Japanese yen, a currency usually bought in times of geopolitical uncertainty, the greenback was up 0.5 percent at 111.25 yen, approaching a six-month high.

Equities Recap

European shares edged higher on Tuesday as investors shifted from worrying about a trade war to focussing on a corporate earnings season expected to deliver solid results.

UK's benchmark FTSE 100 closed up by 0.10 percent, the pan-European FTSEurofirst 300 ended the day up by 0.44 percent, Germany's Dax ended up by 0.55 percent, France’s CAC finished the day up by 0.69 percent.

The S&P 500 extended recent gains to post its highest close since Feb. 1 on Tuesday as strong results from PepsiCo Inc boosted optimism about the earnings season.

Dow Jones closed up by 0.57 percent, S&P 500 ended up by 0.34 percent, Nasdaq finished the day up by 0.04 percent.

Treasuries Recap

U.S. Treasury yields rose on Tuesday after a weak 3-year note auction causing the yield to flatten further with the spread between U.S. Treasury 5-year and 30-year yields contracting to under 20 basis points. 

Benchmark 10-year notes last fell 2/32 in price to yield 2.8674 percent, from 2.86 percent late on Monday.

Commodities Recap

Gold prices fell on Tuesday, weighed down by a stronger U.S. dollar, and may re-test a seven-month low after a failed attempt to break higher in the previous session.

Spot gold was down 0.2 percent at $1,255.09 an ounce by 1:33 p.m. EDT (1733 GMT), after retreating from its highest since June 26 at $1,265.87 in the previous session.

U.S. gold futures for August delivery settled down $4.20, or 0.3 percent, at $1,255.40 per ounce.

Oil rose on Tuesday, supported by gains in equities and supply concerns in Norway and Libya, though gains were tempered by the United States' indication that it would consider requests for waivers from Iranian oil sanctions.

Brent crude futures gained 79 cents to settle at $78.86 per barrel. Earlier, the global benchmark hit a session high of $79.51.U.S. crude futures rose 26 cents to settle at $74.11, after hitting a high of $74.70

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