America's Roundup: Dollar supported by solid U.S. data, S&P 500, Dow end lower, Gold steadies, Oil slips as trade worries weigh on market-August 10th, 2018

Market Roundup

• Russia denounces new U.S. sanctions as illegal, mulls retaliation.

• US Aug 4 w/e Initial Jobless Claims, 213k, 220k forecast, 218k previous, 219k revised.

• US Aug 4 w/e Jobless Claims 4-Wk Avg, 214.25k, 214.50k previous, 214.75k revised.

• US Jul PPI Final Demand y/y, 3.3%, 3.4% forecast, 3.4% previous.

• US Jul PPI exFood/Energy y/y, 2.7%, 2.8% forecast, 2.8% previous.

• Fed's Evans sees one or two more rate hikes in 2018 as reasonable.

• Atlanta Fed trims U.S. Q3 GDP growth forecast to 4.3 pct.

• Judge backs off comments to prosecutors in ex-Trump aide Manafort's trial.

• U.S. can't be trusted, Iran says, as North Korea slams continued U.S. pressure.

• Saudi Arabia reassures Canada on oil, Trudeau comments “positive”.

• CA Jul House Starts, Annualized, 206.3k, 219.5k forecast 248.1k previous, 246.2k revised.

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

• Mexico says working hard with U.S. on new NAFTA auto rules.

• Britain's Treasury readying Brexit contingency plans for finance industry.

Looking Ahead – Economic Data (GMT)

• 9 Aug 23:50 Japan Q2 GDP q/q, 0.3% forecast, -0.2% previous

• 9 Aug 23:50 Japan Q2 GDP q/q Annualised, 1.4% forecast, -0.6% previous

• 9 Aug 23:50 Japan Q2 GDP q/q Capital Expenditure, 0.6% forecast, 0.3% previous

• 9 Aug 23:50 Japan Jul Corp Goods Price m/m, 0.3% forecast, 0.2% previous

• 9 Aug 23:50 Japan Jul Corp Goods Price y/y, 2.9% forecast, 2.8% previous

Looking Ahead – Events, Other Releases (GMT)

• No major events are scheduled.

Currency Summaries

EUR/USD is likely to find support at 1.1500 levels and currently trading at 1.1526 levels. The pair has made session high at 1.1598 and hit lows at 1.1533 levels. The euro slipped lower against the dollar on Thursday as dollar strengthened as investors bet global trade tensions and a robust U.S. economy would continue to support the currency. Better-than-expected data on U.S. initial jobless claims and generally rising producer prices also helped the dollar hold its gains. The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting that a strong economy was helping the labor market weather ongoing trade tensions between the United States and a host of other countries. Other data on Thursday showed a solid increase in underlying producer prices in July. Labor market strength and rising inflation likely keep the Federal Reserve on track to raise interest rates in September for the third time this year. Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 213,000 for the week ended Aug. 4, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported. U.S. Consumer Price Index figures, which gauge inflation on consumer expenses, are expected early on Friday. The dollar index, which tracks the dollar versus a group of six currencies, was up 0.2 percent at 95.245. It rose to a year-high of 95.652 on July 19 but has since struggled to break much above the 95.5 level.

GBP/USD is supported in the range of 1.2761 levels and currently trading at 1.2823 levels. It reached session high at 1.2906 and dropped to session low at 1.2826 levels. Britain's pound declined sharply against the dollar on Thursday as sellers stepped in as investor feared Britain will leave the European Union without an agreement on its future relationship with the bloc. The pound traded as low as $1.2821, its weakest since Aug. 25 2017. It is now set for its biggest weekly loss since May. The recent slide began after the UK trade minister, Liam Fox, warned over the weekend that he saw a 60 percent chance of a no-deal Brexit. Most analysts believe Britain and the EU will strike a deal, but doubts are growing. The UK is staring at a few crucial months of negotiations in which it must make progress if it is to agree a deal before its scheduled exit date in March 2019. Economists give a median 25 percent chance of no agreement, according to a poll published on Thursday. Foreign exchange strategists believe sterling/dollar will rise to $1.31 in a month and to $1.34 by end-January. Without a deal, however, sterling would slide to $1.20.Traders say investors have rushed to hedge themselves against Britain's being locked out of trading freely with its largest export partner, the EU. The cost of protecting against price falls has risen, and three-month sterling volatility this week rocketed to a five-month high.

USD/CAD is supported at 1.2998 levels and is trading at 1.3043 levels. It has made session high at 1.3064 and lows at 1.3017 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices rose after a deep slide the day before and Saudi Arabia said its oil customers in Canada will not be affected by a diplomatic dispute. A row over human rights in Saudi Arabia will not have any impact on Saudi oil supplies to Canada, its energy minister said, reassuring customers after Riyadh froze new trade with Canada and ruled out mediation efforts. The loonie was buffeted on Wednesday by the diplomatic dispute, hitting a two-week low at C$1.3121. But it recovered as investors decided that potential Canadian asset sales by Saudi Arabia will have a short-lived impact on the currency. Oil prices were down slightly as the escalating China-U.S. trade dispute cast doubt on the outlook for crude demand. On the data front, Canadian new housing prices rose by 0.1 percent in June, the first gain in seven months, largely due to higher construction costs across the country, Statistics Canada said. Separate data showed that Canadian seasonally adjusted housing starts fell to 206,314 in July from a revised 246,200 units in June. The Canadian dollar was nearly unchanged at C$1.3038 to the greenback. The currency traded in a range of C$1.3009 to C$1.3064.

NZD/USD is supported around 0.6557 levels and currently trading at 0.7609 levels. It hit session high at 0.7683 and made session lows at 0.7606 levels. The New Zealand dollar slumped against dollar on Thursday after the country's central bank surprised the market by committing to holding rates at record lows until the end of 2020 as economic growth figures disappointed. The New Zealand dollar sank as deep as $0.6611, the lowest since March 2016, breaking below critical support at $0.6688. The falls came after the Reserve Bank of New Zealand (RBNZ) said it will keep rates at 1.75 percent through 2019 and into 2020 as it cut next year's forecasts for economic growth to 2.6 percent from 3.1 percent. The outlook was more dovish than the RBNZ's previous guidance when it predicted a small chance of a hike by September of next year. The kiwi fell deeper into the red after RBNZ Governor Adrian Orr told Reuters in an interview the bank will provide further stimulus if economic growth deteriorated. Further weighing on the kiwi, New Zealand dairy giant Fonterra requested a trading halt on its shares as it prepares its annual financial statements for the year-ended July 2018, raising fears earnings will disappoint. Fonterra said it was working to determine whether its results are remarkably different from its previous guidance. Dairy generates more than 7 percent of New Zealand's gross domestic product so any moves in prices and output directly affect the kiwi.

Equities Recap

European shares edged higher on Thursday as corporate earnings boosted consumer stocks, although worries over China-U.S. trade tensions and new sanctions against Russia kept gains muted.

The UK's benchmark FTSE 100 closed down by 0.4 percent, FTSEurofirst 300 ended the day up by 0.01 percent, Germany's Dax ended up by 0.3 percent, and France’s CAC finished flat.

The S&P 500 and Dow ended down slightly on Thursday as gains in Apple and Amazon  were offset by losses in energy shares.

Dow Jones closed down by 0.27 percent, S&P 500 ended down 0.12 percent, Nasdaq finished the day up by 0.06 percent.

Treasuries Recap

The U.S. 30-year Treasury bond's rally accelerated in late U.S. trading on Thursday, as the S&P 500 and Dow stock prices ended lower, adding some safe-haven bids to earlier demand following a fair $18 billion 30-year auction. 

The 30-year bond was up 30/32 in price for a yield of 3.069 percent, down nearly 5 basis points from late on Wednesday. This marked the steepest one-day yield decline for the 30-year bond since June 27.

Commodities Recap

Gold was near flat on Thursday after two straight sessions of gains as a stronger U.S. dollar index weighed on upside momentum, though the precious metal took some comfort from a steadier Chinese currency.

Spot gold was flat at $1,213.05 per ounce by 1:35 p.m. EDT (1735 GMT). U.S. gold futures for December delivery settled down $1.10, or 0.1 percent, at $1,219.90 per ounce.

Crude prices settled slightly lower on Thursday, extending the previous session's losses as the escalating China-U.S. trade dispute casts doubt over the outlook for oil demand.

Brent crude futures fell 21 cents to settle at $72.07 a barrel. U.S. crude fell 13 cents to $66.81 a barrel.

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