Americas Roundup: Dollar Climbs As Upbeat U.s. Data Revives Rate Hike View, Gold falls on Stronger Dollar, US Stocks Ends

Market Roundup

  • USD gains as positive US data boosts rate hike view, Yen on track for biggest monthly gains in 7.5-yrs.
  • US fourth-quarter growth revised up to 1.0 percent vs forecast +0.4%, cons spend/PCE rising.
  • US Jan core PCE price Index y/y 1.7% vs 1.5% previous.
  • US U Mich consumer sentiment index final 91.7 in Feb vs 91.0 forecast, 92.0 in Jan.
  • German inflation turns negative (-0.2%) in February, hits one-year-low.
  • Fed’s Powell: data-driven approach to rates likely means surprises, sees dot plot as useful guidance.
  • Fed’s Williams: like sledgehammer, forward guidance is effective; most effective when explicit.
  • Fed’s Brainard flags low rate future, sees room for more global coordination, negative US rates not currently relevant.
  • Fed’s Brainard persistently low US PCE inflation means Fed must be cautious relying on historic Phillips curve.
  • ECB’s Praet: global economic growth is losing momentum.
  • G20-Germany’s Schaeuble says little room left for more monetary stimulus.
  • Japan’s Aso tells G20 world economy growing, uncertainties rising.
  • China talks up growth agenda at G20 amid lack of wider policy unity, says more room for monetary/fiscal policy.
  • UK’s Osborne warns of deeper spending cuts after growth falls short -BBC.
  • UK’s Osborne: Sterling’s fall shows EU referendum “no parlour game”.

Looking Ahead – Economic Data (GMT)

  • 21:45 New Zealand Building Consents* Jan 2.3%-previous
  • 21:45 New Zealand Terms of Trade – Exp Vol* Q4 3.7%-previous
  • 21:45 New Zealand Terms of Trade – Imports* Q4 7.3%- previous
  • 21:45 New Zealand Terms of Trade – Exports* Q4 3.4%- previous
  • 23:50 Japan Industrial output prelim mm *Jan forecast- 3.3%, -1.7%- previous
  • 23:50 Japan IP Forecast 1 Month Ahead* Jan 7.6%- previous
  • 23:50 Japan IP Forecast 2 Month Ahead* Jan -4.1%- previous
  • 23:50 Japan Retail Sales YY* Jan forecast 0.5%, -1.1%- previous
  • 00:00 Australia MI Inflation Gauge* Feb 0.2%-previous
  • 00:00 Australia HIA New Home Sales m/m*Jan 6%- previous
  • 00:00 New Zealand NBNZ Business Outlook*Jan 23%- previous
  • 00:00 New Zealand NBNZ Own Activity* Jan 34.4%- previous
  • 00:30 Australia Business Inventories*Q4 forecast 0.2%, 0.1%- previous
  • 00:30 Australia Private Sector Credit* Jan forecast 0.5%, 0.5%- previous
  • 00:30 Australia Housing Credit*Jan *0.5%- previous
  • 05:00 Japan Construction Orders YY* Jan 14.8%- previous
  • 05:00 Japan Housing Starts YY*Jan forecast 0%, -1.3%- previous

Looking Ahead – Events, Other Releases (GMT)

  • Meeting of G20 finance ministers & central bank governors/deputies- Shanghai, China (to Feb. 27)

Currency SummariesEUR/USD is likely to find support at 1.0900 levels and currently trading at 1.0926 levels. The pair has made session high at 1.0940 and hit lows at 1.0907 levels. The dollar rose against euro on Friday after upbeat U.S. economic data renewed hope that the Federal Reserve could raise interest rates again this year. Friday’s data showed that U.S. economic growth slowed in the fourth quarter, but not as sharply as anticipated, while consumer spending rose.. Gross domestic product increased at a 1.0 percent annual rate instead of the previously reported 0.7 percent pace, the Commerce Department said on Friday in its second GDP estimate. After the data release the dollar index rose 0.86 percent to a three-week high of 98.260. The euro was down 0.8 percent against the dollar at $1.0931 after falling to a three-week low of $1.0912.GBP/USD is supported in the range of 1.3854 and currently trading at 1.3870 levels. It reached session high at 1.3907 and hit low at 1.3885 levels. Sterling hit a seven-year low against the dollar on Friday, as  renewed worries about a possible British exit from the European Union weighted on the currency pair. Sterling fell 0.65 percent to $1.3867, on course for a 3.7 percent weekly fall. It lost ground in afternoon trade in London after data from the United States showed the economy grew at a much faster pace than earlier estimated in the fourth quarter. British voters will decide on June 23 whether to stay in the EU, and sterling has been hit by worries that a Brexit would threaten the huge foreign investment flows the country needs to balance its current account deficit, one of the biggest in the developed world at around 4 percent of output. The pound has also been undermined by expectations that an exit would push back the horizon for a Bank of England interest rate rise.NZD/USD is supported around 0.6600 levels and currently trading at 0.6628 levels. It hit session high at 0.6671and made session lows at 0.6615 levels. The New Zealand dollar declined against US dollar on Friday following upbeat US Q4 GDP data which printed better than expected figures. The New Zealand dollar initially powered up 0.6 percent and touched an eight-week peak of $0.6775. However, it declined sharply after US GDP data. It hit low at 0.6615 before recovering to trade at 0.6630 level. Meanwhile, the kiwi muscled up across the board, sending the already soggy pound to fresh 10-month lows at NZ$2.0617. Sterling has skidded nearly 5 percent so far this week on mounting fears Britain might leave the European Union. New Zealand government bonds gained, sending yields 2 basis points lower along most of the curve.USD/CAD is supported at 1.3500 levels and is trading at 1.3518 levels. It has made session high at 1.3557 and lows at 1.3505levels. The Canadian dollar strengthened against US dollar on Friday to hit  2-1/2-month high as crude oil prices and global stocks rallied. Crude oil prices rose as strong U.S. gasoline demand and hopes of OPEC action outweighed concerns over fundamental oversupply. Adding to support for the risk-sensitive commodity currency, stock markets inched higher for the third day in five as G20 policymakers meeting in Shanghai sought to find common ground on how to reboot a struggling global economy. While the U.S. dollar softened against the loonie, the greenback rose against a basket of major currencies, helped by an upward revision to U.S. fourth quarter growth. The currency’s touched its strongest level since Dec. 8 at C$1.3505, while its weakest was C$1.3564.Equities RecapEuropean equities rallied on Friday to reach a three-week high, as a jump in metals prices boosted miners and some encouraging company updates also supported the market.UK’s benchmark FTSE 100 closed UP by 1.43 percent, the pan-European FTSEurofirst 300 ended the day up by 1.72 percent, Germany’s Dax ended up by 2.04 percent, France’s CAC finished the day up by 1.57 percent.Wall Street ended lower on Friday in a feeble end to a beefy week after concerns about the timing of future interest rate hikes offset gains in materials and energy stocks.Dow Jones closed down by 0.36 percent, S&P 500 ended down by 0.20 percent, Nasdaq finished the day down by 0.16 percent.Treasuries Recap U.S. Treasury yields rose on Friday after data showed that inflation is rising and the recent U.S. economic slowdown isn’t as bad as previously thought.Benchmark 10-year notes fell 21/32 in price to yield 1.77 percent, up from 1.70 percent late on Thursday.Commodities RecapGold fell more than 1 percent on Friday, as the dollar and global shares rose, but fund buying persisted as investors expected a G20 summit would produce little in the way of a coordinated stimulus program.Spot gold was down 1 percent at $1,221.61 an ounce at 2:06 p.m. EST (1906 GMT), after falling as much as 1.9 percent. For the month, however, it was headed for gains of more than 9 percent, the biggest since January 2012, after safe-haven buying lifted prices to a one-year high on Feb. 11.U.S. April gold futures settled down 1.5 percent at $1,220.40 an ounce.Oil prices fell on Friday as investors cashed out big weekly profits after a rally driven by disruptions to crude supplies and Wall Street’s gains from U.S. economic data.Brent crude settled down 19 cents at $35.10. It hit a high of $37 earlier, a peak since Jan. 5.U.S. crude settled down 29 cents at $32.78 a barrel, after gaining almost $1.70 earlier.

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