Americas Roundup: Dollar Retreat Against Euro After Trump Tax Plan, Wall Steet Dips, Oil Prices Stable After Big Draw in

Market Roundup

•    US Building permits +4.2% v 3.6% previous.

•    White House readies order to quit NAFTA – administration official.

•    US NEC’s Cohn: Trump to repeal AMT, death tax; will protect mortgage tax deduction, simplify tax filing.

•    US Treasury Secretary Mnuchin: Administration believes 3% growth rate sustainable.

•    Canadian Retail sales m/m Feb -0.6% v -0.1% forecast, 2.3% previous.

•    US moves THAAD anti-missile to S. Korean site, sparking protests; Frontrunner in S. Korean presidential race denounces move.

•    US crude inventories fall, products build as refining jumps –EIA.

Looking Ahead – Economic Data (GMT)

•    23:50 Japan Foreign Bond Investment w/e -796.2b-previous

•    23:50 Japan Foreign Invest JP Stock w/e 315.2b- previous 

•    01:30 Australia Export Prices QQ* Q1 12.40%- previous

•    01:30 Australia Import Prices QQ* Q1 0.20%- previous

Looking Ahead – Events, Other Releases (GMT)

•    –:– Japan Bank of Japan end its two-day monetary policy meeting

•    –:– Japan Bank of Japan rate decision; no change expected (-0.1%)

Currency Summaries

EUR/USD is likely to find support at 1.0852 levels and currently trading at 1.0901 levels. The pair has made session high at 1.0911 and hit lows at 1.0854 levels. The euro recovered some ground against the U.S. dollar on Wednesday after President Donald Trump unveiled a tax reform plan that largely underwhelmed the market. Details of the tax overhaul package have come out all week, limiting any positive upside surprise from the announcement. On Wednesday, Trump proposed slashing tax rates for businesses and on overseas corporate profits returned to the country. He also called for raising standard deductions for individuals, repealing inheritance taxes on estates and simplifying tax returns. With the tax package largely in line with expectations, investors were focused on whether the reforms would push through following an earlier failure on healthcare legislation. The euro had fallen around a third of a percent against dollar weakening to $1.0886 from a high of $1.0951 hit in early European trade, it was last trading at 1.0905. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.4 percent at 99.171.

GBP/USD is supported in the range of 1.2762 levels and currently trading at 1.2854 levels. It reached session high at 1.2860 and dropped to session low at 1.2807 levels. Sterling struggled for direction against the dollar on Wednesday, as investors awaited for first quarter growth numbers due on Friday in a week so far dominated by political events in the Eurozone. The pound surged by as much as 4 U.S. cents on May's election announcement last week, but its failure to push on since points to the doubts that remain in the market about the outlook for the currency and the UK economy. Investors are eyeing gross domestic product numbers due on Friday for clues on the state of Britain's economy, and are also on the lookout for more news on Brexit. Sterling was half a percent higher against the euro by 1530 GMT at 84.69 pence, having hit a two-week low of 85.30 pence on Tuesday. Against the dollar, the pound was flat at $1.2840.

USD/CAD is supported at 1.3510 levels and is trading at 1.3589 levels. It has made session high at 1.3620 and lows at 1.3577 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as Canadian dollar was pressured on news that the administration of U.S. President Donald Trump was considering pulling out of the North American Free Trade Agreement (NAFTA). A senior Trump administration official said on Wednesday a draft executive order that would withdraw the United States from NAFTA, that also includes Mexico and Canada, was under consideration, confirming an earlier report from Politico. On the data front, Canadian retail sales fell more than expected in February, dragged down by lower vehicle purchases and cheaper prices for gasoline at the pump, but the decline did not alter expectations for strong economic growth in the first quarter. Sales were down 0.6 percent, Statistics Canada said on Wednesday, while economists had forecast a 0.1 percent dip. January, however, was revised slightly higher to a gain of 2.3 percent from the previously reported 2.2 percent. The Canadian dollar was last trading at C$1.3616 to the greenback, or 73.64 U.S. cents, weaker than Tuesday's close of C$1.3565, or 73.72 U.S. cents.

AUD/USD is supported around 0.7450 levels and currently trading at 0.7477 levels. It hit session high at 0.7481 and made session lows at 0.7452 levels. The Australian dollar declined against US dollar on Wednesday as Australian dollar was weighted down by a stronger dollar and downbeat Australian inflation data. Australian consumer price inflation tiptoed atop 2 percent last quarter for the first time since 2014 as petrol, health care and education got more expensive, a hopeful sign that the danger of deflation had likely passed for this cycle. Yet, key measures of core inflation stayed stubbornly short of the Reserve Bank of Australia's (RBA) 2 to 3 percent target band, implying there was scant pressure for a hike in interest rates anytime soon. The RBA's favoured measures of underlying inflation ticked up to an annual pace of 1.8 percent in the first quarter, from 1.5 percent and in line with market expectations. The Australian dollar sank about 1 percent against the greenback to a more than three-month low of $0.7453 following downbeat inflation numbers. Strong support was found at 7400 cents, with resistance at the 200-day moving average of $0.7612. The Aussie has lost a full U.S. cent since hitting a peak above 76 cents last week.

Equities Recap

French blue chips hit a fresh 9-year high on Wednesday, helped by a surge in the shares of luxury group Kering after it reported strong sales, while European regional indexes hovered near a 20-month peak.

UK's benchmark FTSE 100 closed up by 0.3 percent, FTSEurofirst 300 ended the day up by 0.44 percent, Germany's Dax ended up by 0.1 percent, and France’s CAC finished the day up by 0.2 percent.

U.S. stocks ticked lower on Wednesday following two sessions of strong gains as upbeat corporate earnings were offset by uncertainty over the feasibility of a proposed business tax cut.

Dow Jones closed down by 0.09 percent, S&P 500 ended down 0.04 percent, Nasdaq finished the day down by 0.30 percent.

Treasuries Recap 

U.S. Treasury prices rose on Wednesday, reversing steep losses sustained the last few sessions, as President Donald Trump unveiled a tax reform plan that largely underwhelmed the market.

In late trading, benchmark 10-year notes rose 4/32 in price to yield 2.312 percent, down from 2.329 percent late on Tuesday. Yields hit a fresh two-week high of 2.35 percent earlier.

U.S. 30-year bond prices were up 5/32 in price, yielding 2.971 percent, down from Tuesday's 2.979 percent.

Commodities Recap

Oil prices rebounded from early losses on Wednesday after U.S. government data showed a larger-than-expected falloff in crude inventories, which encouraged buying after several days of selling on worries that a global crude glut was persisting despite output cuts by producing countries.

U.S. crude prices stayed higher, while Brent edged back into negative territory but off session lows. U.S. West Texas Intermediate (WTI) settled up six cents at $49.62 per barrel, while Brent crude, the international benchmark, ended down 21 cents at $51.82 a barrel.

Gold recovered from a two-week low, buoyed by short-covering on Wednesday as U.S. Treasury yields turned lower and the dollar pared gains after President Donald Trump proposed slashing the U.S. tax rate on corporate profits.
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Spot gold was up 0.3 percent at $1,266.81 an ounce by 3:10 p.m. EDT (1910 GMT). Earlier in the session prices hit 1,259.90, their weakest since April 11.U.S. gold futures settled down 0.2 percent at $1,264.20.
 

The material has been provided by InstaForex Company – www.instaforex.com

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