AMERICAS ROUNDUP: DOLLAR FALLS FROM THREE-WEEK HIGH AFTER FED MINUTES, US STOCK DIP, OIL EASES OFF ONE-MONTH HIGH ON SURPRISE U.S. CRUDE BUILD-APRIL 6TH,20175 April 2017, 23:44
• Fed Minutes: Most Fed policymakers see change to balance sheet policy later this year, provided the economy performs as expected.
• Fed Minutes: Members agreed that shrinking the balance sheet should be gradual and predictable and nearly all said that any altering of the policy “should be communicated well in advance of an actual change.”
• Fed Minutes: Participants generally preferred to change reinvestment of both Treasuries & MBS when the time comes.
• US ADP national employment +263k in Mar v 187k forecast, prior revised to 245k from 298k; increase highest since Dec ’14.
• US Markit Comp final Mar 53 v 53.2 previous, Svcs PMI final 52.8 v 52.9 previous.
• US ISM N-Mfg PMI Mar 55.2 v 57 forecast, 57.6 previous; Employment, prices paid & new orders all lower.
• Eurozone business activity at 6-yr high in broad recovery; Eurozone final Mar comp PMI 56.4, New order, employment, price growth accelerated.
• ECBs Weidmann would welcome smaller bond buys in a year.
• BoE’s Vlieghe (dove): UK consumer slowdown underway, caution needed on rates.
• Oil eases off one-month high on surprise U.S. crude build.
Looking Ahead – Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e -151.6b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -754.3b- previous
• 01:45 China Caixin Services PMI Mar 52.6- previous
• 05:00 Japan Consumer Confidence. Index Mar 43.1- previous
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
EUR/USD is likely to find support at 1.0600 levels and currently trading at 1.0671 levels. The pair has made session high at 1.0679 and hit lows at 1.0633 levels. The euro inched higher slightly in the US session on Wednesday as U.S. dollar tumbled from three-week highs as minutes of the latest Federal Reserve meeting suggested the outlook for interest rates had not changed from what the Fed indicated last month after its rate hike decision. In the minutes, the Fed said it should take steps to begin trimming its $4.5 trillion balance sheet later this year as long as economic data holds up. In late trading, the dollar index, which tracks the U.S. currency against a basket of six peers, fell 0.1 percent at 100.45, after hitting a three-week high. The euro was slightly higher at $1.0677.The dollar drew early support from data showing U.S. private-sector employers created more jobs than expected in March, suggesting a generally stable labor market. U.S. private employers added 263,000 jobs in March, more than their hirings in February and well above economists expectations, a report by a payroll processor showed on Wednesday. Economists had forecast the ADP National Employment Report to show a gain of 187,000 jobs, with estimates ranging from 110,000 to 225,000.
GBP/USD is supported in the range of 1.2421 levels and currently trading at 1.2489 levels. It reached session high at 1.2498 and dropped to session low at 1.2448 levels. Britains pound rose against the dollar on Wednesday as better than expected UK services data boosted sterling across the board. The Markit/CIPS Services Purchasing Managers Index (PMI), a closely watched gauge of Britains services industry, rose to a three-month high of 55.0 in March from 53.3 in February. That topped all forecasts of economists, whose median forecast was for a reading of 53.5. The pound, which had lost over 1 percent of its value against the dollar since Monday, bounced back after the purchasing managers index (PMI), rising to as high as $1.2497 in the early US session. That left it up almost half a percent on the day but down around 0.6 percent on the week. Before the datas release, the market has been rattled by political tension arising from an upcoming meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping. Trumps consistently harsh rhetoric on China has raised concerns about Thursdays summit, as has speculation that the U.S. president will face challenges implementing his promised growth-boosting policies after his administration failed to pass a healthcare overhaul.
USD/CAD is supported at 1.3375 levels and is trading at 1.3429 levels. It has made session high at 1.3433 and lows at 1.3382 levels. The Canadian dollar weakened against its U.S. counterpart on Wednesday as loonie was pressured by slight dip in oil prices, but further losses for loonie were restrained as caution prevailed in global markets before a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping this week. Oil prices dipped slightly from one-month highs, as support from an outage at the largest UK North Sea oilfield was offset by a surprise increase in U.S. crude inventories to a record high limited price gains. On Tuesday, the Canadian dollar hit a nearly three-week low against its U.S. counterpart at C$1.3455, pressured by a loss of risk appetite and domestic data showing an unexpected trade deficit. It has retreated 0.7 percent this week after finishing the first quarter with a 1 percent gain. The Canadian dollar was last trading at C$1.3424 to the greenback, weaker than Tuesdays close of C$1.3406, or 74.59 U.S. cents.
AUD/USD is supported around 0.7500 levels and currently trading at 0.7568 levels. It hit session high at 0.7580 and made session lows at 0.7557 levels. The Australian dollar declined against dollar on Wednesday after four straight sessions of losses, as traders viewed recent statement from Reserve Bank of Australia as slightly dovish. The Australian dollar was last trading at $0.7568, not far from a three-week low of $0.7545 hit on Tuesday after the Reserve Bank of Australias (RBA) monetary policy statement. Analysts see key chart support at $0.7500. RBA Governor Philip Lowe said an improvement in the labour market was needed, before the central bank can be confident the overall economy was strengthening. Tuesdays statement highlighted the RBAs apprehensions about a soft labour market with a new reference to rising unemployment. The jobless rate is at a 13-month peak while employment has been skewed toward part-time work. Lowes comments surprised many investors and attracted sellers. Elsewhere, Investors were concerned about an upcoming China-U.S. summit, as well as ongoing uncertainties about U.S. President Donald Trumps ability to implement his promised policies.
European shares ended little changed on Wednesday, as gains in commodity stocks were offset by weaker autos, but investors remained upbeat about prospects for the regions equities following solid economic data.
UKs benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day flat, Germanys Dax ended down by 0.6 percent, France’s CAC finished the day down by 0.6 percent.
U.S. stocks turned negative on Wednesday after meeting minutes showed that the Federal Reserve sees a change in its bond investment policy later this year, which reversed a rally after a strong jobs report earlier in the day.
Dow Jones closed down by 0.19 percent, S&P 500 ended down 0.30 percent, Nasdaq finished the day down by 0.57 percent.
U.S. Treasury yields fell on Wednesday, with three- and five-year yields touching more than five-week lows after traders viewed the latest Federal Reserve meeting minutes as indicating the central bank was maintaining an outlook for a gradual pace of interest rate increases.
Yields on Treasuries maturing in three and five years fell the most on the day and hit their lowest levels since Feb. 27 of 1.426 percent and 1.837 percent respectively.
Benchmark 10-year Treasuries were last up 4/32 in price to yield 2.334 percent, from a yield of 2.350 percent late Tuesday, while 30-year yields were down 1 basis point at 2.981 percent.
Oil prices settled a shade firmer on Wednesday, easing from one-month highs, as support from an outage at the largest UK North Sea oilfield was offset by a surprise increase in U.S. crude inventories to a record high limited price gains.
Brent futures ended the session up 19 cents, or 0.4 percent, at $54.36 a barrel after earlier touching $55.09, last traded on March 8. U.S. crude settled 12 cents, or 0.2 percent, higher at $51.15.
Gold fell from one-month highs on Wednesday after better-than-expected U.S. jobs data boosted U.S. bond yields and the dollar but losses were limited after minutes from the Federal Reserves March policy meeting were released.
Spot gold was down 0.3 percent at $1,251.74 an ounce at 2:57 p.m. EDT (1857 GMT), while U.S. gold futures ended the session 0.8 percent lower at $1,248.50 an ounce.