Americas Roundup: Dollar steadies near 6-week low as Fed rate outlook continues to weigh, Oil prices drop on rise in U.S. drilling-March 21st, 2017

Market Roundup

• US National activity Index Feb 0.34 vs -0.02 previous.

• Canada January wholesale sales jumps +3.3% v forecast 0.5% 0.3% previous; on stronger autos.

• Britain's May to launch EU divorce proceedings on March 29, May says will negotiate for whole of UK.

• EU's Tusk to issue negotiating guidelines by Mar 31, EU vows no sweetheart deal to avoid spurring more exits.

• Fed’s Evans: Fed on track to raise US rates twice more this year, by June will know about financial conditions, economic data, fiscal updates.

• Fed’s Evans: Likely growth trend lower than historical experience, Fed increasingly has power to provide new stimulus if needed (DJ).

• Fed’s Harker: wouldn’t rule out more than 3 hikes in 2017, there will be a bit of inflation overshoot, wants to get well north of 1% before halting bond reinvestments (CNBC).

• Trade protectionism worry drags on stocks, dollar at 6-week low, Oil prices fall on concerns of growing U.S. output.

• Germany's economic advisers reject criticism of C/A surplus, Call on ECB to start winding down monetary stimulus.

• Euro zone's Dijsselbloem wants bailout fund (ESM) turned into a European IMF.

• Copper market in 17k tonnes surplus in Dec 2016 – ICSG.

Looking Ahead - Economic Data (GMT)

• 00:30 Australia Home Price Index Q4 1.5%-previous

Looking Ahead - Events, Other Releases (GMT)

• 00:30 Australia RBA March Rate Meeting Minutes

Currency Summaries

EUR/USD is likely to find support at 1.0681 levels and currently trading at 1.0739 levels. The pair has made session high at 1.0744 and hit lows at 1.0722 levels. Euro declined slightly against the dollar on Monday as traders took profits on euro's last week rally against the greenback, while investors looked for fresh catalysts after the Federal Reserve's interest rate hike last week. Group of 20 financial leaders at a meeting expressed renewed concern about the United States' global trade relations and by implication the Trump administration's concern over the strong dollar. The post-meeting communique retained language on avoiding currency manipulation, which has previously seemed aimed chiefly at Japan and China, but it omitted a call for free trade seen as opening the door to more overt efforts by Washington to shift the balance of its international relationships. The dollar index fell by as much as 0.3 percent in Asian and early European trading before reversing losses to trade up 0.1 percent on the day at 100.40.

GBP/USD is supported in the range of 1.2274 levels and currently trading at 1.2356 levels. It reached session high at 1.2398 and dropped to session low at 1.2331 levels. Sterling fell from a three-week high against the dollar on Monday, on the news Prime Minister Theresa May will trigger Britain's divorce proceedings with the European Union on March 29, launching two years of negotiations. May's government said her permanent envoy to the EU had informed European Council President Donald Tusk of the date when Britain intends to invoke Article 50 of the Lisbon Treaty - the mechanism for starting its departure from the bloc. The pound has also come under selling pressure amid calls for another Scottish independence referendum, as investors consider the increased uncertainty posed by a potential break-up of the United Kingdom. The pound, which had been up as much as a third of a percent against the dollar in London morning trade, reversed course, falling as low as $1.2335 before recovering to around $1.2356 by 20:30 GMT, still down 0.4 percent on the day.

USD/CAD is supported at 1.3300 levels and is trading at 1.3351 levels. It has made session high at 1.3373 and lows at 1.3336 levels. The Canadian dollar weakened against its U.S. counterpart on Monday as lower oil prices offset strong domestic wholesale trade data, while investors weighed the G20's decision to drop a pledge to resist trade protectionism. Financial leaders of the world's biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States. About 75 percent of Canadian exports go to the United States. Its economy could be hurt by renegotiation of the North American Free Trade Agreement (NAFTA) or the implementation of a proposed U.S. border adjustment tax. Prices of oil, one of Canada's major exports, fell on concerns that growing U.S. crude output could hamper an Organization of the Petroleum Exporting Countries-led production cut deal. The Canadian dollar was last trading at C$1.3351 to the greenback, or 74.91 U.S. cents, slightly weaker than Friday's close of C$1.3337, or 74.98 U.S. cents.

USD/JPY is supported around 112.00 levels and currently trading at 112.55 levels. It peaked to hit session high at 112.80 and made session lows at 112.48 levels. Japanese yen strengthened against the dollar on Monday as demand for safe-haven Japanese yen increased after investors worried that President Donald Trump's plan to cut taxes and boost the economy could take longer than previously expected. The U.S. Federal Reserve's conservative rate guidance is also keeping the market in check. A host of Fed officials are scheduled to speak this week, including Chair Janet Yellen on Thursday. The Fed is on track to raise interest rates twice more this year and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, Chicago Fed President Charles Evans said on Monday. Last week, the central bank raised interest rates for the first time this year but stuck to its outlook for two more hikes this year, instead of three expected by the market. The dollar was down 0.1 percent against the yen at 112.55 yen.

Equities Recap

European shares retreated slightly from 15-month highs on Monday with lower crude prices weighing on oil stocks and Deutsche Bank dragging banks lower one day before the start of its 8 billion-euro cash call.

UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.20 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.2 percent.

Wall Street drifted lower on Monday as investors worried that President Donald Trump's plan to cut taxes and boost the economy could take longer than previously expected.

Dow Jones closed up by 0.14 percent, S&P 500 ended down 0.20 percent, Nasdaq finished the day down by 0.04 percent.

Treasuries Recap

U.S. Treasury prices gained on Monday as Chicago Federal Reserve President Charles Evans reiterated the U.S. central bank's view that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

Benchmark 10-year notes were last up 7/32 in price to yield 2.48 percent, down from 2.50 percent on Friday.

Commodities Recap

Gold prices edged higher to a two-week peak on Monday as the dollar slid to a six-week low after a G20 weekend summit dominated by the U.S. administration's protectionist stance.

Spot gold rose 0.44 percent to $1,233.92 an ounce by 2:14 EDT (1814 GMT), after touching $1,235.50, its highest since March 6.U.S. gold futures gained 0.3 percent to settle at $1,234.00.

Oil prices slipped on Monday, despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing U.S. oil output and high inventories.

Brent crude futures settled at $51.62 a barrel, down 14 cents. U.S. West Texas Intermediate (WTI) crude futures settled down 56 cents, or 1.2 percent, to $48.22 a barrel.

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