U.S. Dollar Gains Against Peers

Trading 01 mar 2019 Commentaire »

The U.S. dollar had a fairly good session on Friday, scoring gains against most major currencies, despite starting off on a sluggish note.

Economic data out of the U.S. was not any significantly encouraging, but then, economic reports from China and Eurozone were somewhat downbeat as well, and this tilted the scale in favour of the greenback.

Also, comments from White House economic adviser Larry Kudlow that the U.S. and China are making "fantastic" progress in their trade negotiations, supported the greenback.

The dollar index rose to 96.55 before easing slightly to 96.50, still up by about 0.25% from previous close.

Against the Japanese Yen, the dollar gained over 0.5%, with a unit fetching 111.98 yen. Earlier, the yen had weakened to 112.07 after opening at 111.38 a dollar.

Disappointing Canadian fourth quarter GDP data resulted in the Loonie falling by over 0.9% against the dollar.

The Euro was trading a $1.1367, while the British Pound Sterling was down at $1.1320, declining from $1.3261.

In economic news from Europe, British manufacturing growth slowed to its weakest level in four months in February and Euro zone manufacturing activity went into reverse for the first time in over five years last month.

A report from the Federal Labor Agency showed Germany's unemployment declined in February, surpassing economists' consensus by a wide margin.

German retail sales grew at a stronger-than-expected pace in January, entirely reversing a steep decline in the previous month.

Meanwhile, Eurozone inflation accelerated in February, while unemployment rate held steady in January, separate reports showed.

In the U.S., consumer sentiment rebounded by much less than initially estimated in the month of February, revised data from the University of Michigan revealed on Friday.

The report said the consumer sentiment index for February was downwardly revised to 93.8 from a preliminary reading of 95.5.

The index is still well above the final January reading of 91.2, but the revised reading came in well below analyst estimates of 95.7.

A report from the Institute for Supply Management said growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February, with the ISM Purchasing Managers Index dropping to 54.2 in the month. In January, the index had climbed to 56.6. Economists had expected the index to edge down to 55.5.


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Treasuries Extend Recent Move To The Downside

Trading 01 mar 2019 Commentaire »

Treasuries moved significantly lower over the course of the trading day on Friday, extending the downward move seen over the two previous sessions.

After coming under pressure early in the session, bond prices saw some further downside late in the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 2.755 percent.

With the continued increase on the day, the ten-year yield ended the session at its highest closing level in over a month.

Optimism about U.S.-China trade talks continued to reduce the appeal of safe havens such as bonds following upbeat comments from White House economic adviser Larry Kudlow.

Kudlow said the U.S. and China are making "fantastic" progress in their trade negotiations, suggesting the world's two largest economies are on the cusp of an "historic" agreement.

Meanwhile, traders largely shrugged off some disappointing economic data including a report from the Institute for Supply Management showing growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February.

The ISM said its purchasing managers index dropped to 54.2 in February after climbing to 56.6 in January. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to edge down to 55.5.

"Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

A separate report from the Commerce Department showed personal income edged slightly lower in the month of January after jumping much more than expected in December.

The report said personal income dipped by 0.1 percent in January after surging up by 1.0 percent in December and rising by an upwardly revised 0.3 percent in November.

Economists had expected income to climb by 0.4 percent in December compared to the 0.2 percent uptick originally reported for the previous month.

The Commerce Department noted the report combines estimates on income in January and December due to the recent partial government shutdown.

However, the report only included readings on personal spending in December as a result of a delay in the release of data on retail sales.

The report said personal spending fell by 0.5 percent in December after climbing by an upwardly revised 0.6 percent in November.

Economists had expected personal spending to drop by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Economic data may move into the spotlight next week, with traders likely to keep a close eye on the Labor Department's monthly jobs report due next Friday.

Reports on construction spending, new home sales, service sector activity, and housing starts are also likely to attract attention along with the Federal Reserve's Beige Book.


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Crude Oil Futures Settle Sharply Lower

Trading 01 mar 2019 Commentaire »

Crude oil prices drifted lower on Friday as worries about demand growth resurfaced after data showed a drop in manufacturing activity in the U.S. and a decline in consumer sentiment.

Recent disappointing report on manufacturing activity in China too pushed down oil prices.

Oil prices had climbed higher over the past couple of sessions after data showed a significant drop in U.S. crude inventories last week. The U.S. sanctions on Iran and Venezuela contributed as well to oil's rise in recent sessions.

West Texas Intermediate Crude oil futures for April ended down $1.42, or 2.5%, at $55.80 a barrel.

Oil futures for April ended up $0.28, or 0.5%, at $57.22 a barrel on Thursday, after having surged up 2.6% a session earlier.

On Wednesday, crude oil futures ended up $1.44, or 2.6%, at $56.94 a barrel.

Oil futures shed about 2.6% in the week.

According to a report released on Thursday by the National Bureau of Statistics, activity in China's vast manufacturing sector continued to contract in February, and at a faster rate, underscoring concerns that the world's second-largest economy is losing momentum.

A report from IHS Markit showed today that China's manufacturing activity decline eased in February with both output and new orders expanding slightly, despite weaker demand for exports.

The Caixin China Manufacturing Purchasing Managers' Index rose to a three-month high of 49.9 in February from 48.3 in January. The reading was just below the 50-neutral mark.

Meanwhile, consumer sentiment in the U.S. rebounded by much less than initially estimated in the month of February, revised data from the University of Michigan revealed on Friday.

The report said the consumer sentiment index for February was downwardly revised to 93.8 from a preliminary reading of 95.5.

The index is still well above the final January reading of 91.2, but the revised reading came in well below analyst estimates of 95.7.

A report from the Institute for Supply Management said growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February, with the ISM Purchasing Managers Index dropping to 54.2 in the month. In January, the index had climbed to 56.6. Economists had expected the index to edge down to 55.5.


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Gold Futures Tumble Again, Settle At 5-week Low

Trading 01 mar 2019 Commentaire »

Gold prices declined sharply on Friday, extending losses to a fifth straight session, as traders chose riskier assets such as equities. A stronger dollar, thanks to better than expected fourth quarter U.S. GDP data, contributed as well to the yellow metal's slide.

Global stocks moved higher as optimism about trade talks rose again after White House economic adviser Larry Kudlow said U.S.-China trade negotiations are making "fantastic" progress

The dollar index gained about 0.28%, rising to 96.49, rallying from an early low of 96.07.

Gold futures for April ended down $16.90, or 1.3%, at $1,299.20 an ounce, the lowest settlement since January 25.

On Thursday, gold futures ended down $5.10, or 0.4%, at 1,316.10 an ounce. For the week, gold shed about 2.5%, the biggest percentage loss in a week, since mid August 2018.

Silver futures for May settled at $15.256 an ounce, down $0.378 from previous close.

Copper futures for May ended down $0.0160, at $2.9320 per pound.

Data released by the U.S. Commerce Department on Thursday said real gross domestic product climbed by 2.6% in the fourth quarter compared to the 3.4% jump in the third quarter. Economists had expected GDP to increase by 2.3%.

In today's economy releases, a report from the Institute for Supply Management showed growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February.

The ISM said its purchasing managers index dropped to 54.2 in February after climbing to 56.6 in January. Economists had expected the index to edge down to 55.5.

A report from the Commerce Department showed personal income edged slightly lower in the month of January after jumping much more than expected in December.

The report said personal income dipped by 0.1% in January after surging up by 1% in December and rising by an upwardly revised 0.3% in November.

Economists had expected income to climb by 0.4% in December compared to the 0.2% uptick originally reported for the previous month.

The report said personal spending fell by 0.5% in December after climbing by an upwardly revised 0.6% in November. Economists had expected personal spending to drop by 0.3%.


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U.S. Consumer Sentiment Rebounds Less Than Initially Estimated In February

Trading 01 mar 2019 Commentaire »

Consumer sentiment in the U.S. rebounded by much less than initially estimated in the month of February, revised data from the University of Michigan revealed on Friday.

The report said the consumer sentiment index for February was downwardly revised to 93.8 from a preliminary reading of 95.5.

The index is still well above the final January reading of 91.2, but the revised reading came in well below analyst estimates of 95.7.

"Although sentiment was still above last month's low, the bounce-back from the end of the Federal shutdown faded in late February," said Surveys of Consumers chief economist, Richard Curtin.

"While the overall level of confidence remains diminished, it is still quite positive," he added. "Nonetheless, aside from last month, it was only lower in one month since Trump's election, but barely, at 93.4 in July 2017."

The report said the current economic conditions index edged down to 108.5 in February from 108.8 in January, while the index of consumer expectations jumped to 84.4 from 79.9.

On the inflation front, one-year inflation expectations dipped to 2.6 percent in February from 2.7 percent in January and five-year inflation expectations slid to 2.3 percent from 2.6 percent.

"Long-term inflation expectations remained near the lowest level recorded in the past half century," Curtin said. "Among households with incomes in the top third, the reduction in inflation expectations was even greater, falling to an all-time low of just 1.9%."


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U.S. Manufacturing Index Indicates Slower Growth In February

Trading 01 mar 2019 Commentaire »

Growth in the U.S. manufacturing sector slowed by much more than anticipated in the month of February, according to a report released by the Institute for Supply Management on Friday.

The ISM said its purchasing managers index dropped to 54.2 in February after climbing to 56.6 in January. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to edge down to 55.5.

"Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

The report said the new orders index fell to 55.5 in February from 58.2 in January, while the production index slumped to 54.8 from 60.5.

The employment index also slid to 52.3 in February from 55.5 in January, suggesting a slowdown in the pace of job growth in the manufacturing sector.

On the inflation front, the prices index edged down to 49.4 in February from 49.6 in January, indicating lower raw materials prices for the second straight month after nearly three years of increases.

"The manufacturing sector continues to expand, but inputs and prices indicate easing of supply chain constraints," said Fiore.

Next Tuesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of February.


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*U.S. Consumer Sentiment Index Downwardly Revised To 93.8 In February

Trading 01 mar 2019 Commentaire »

U.S. Consumer Sentiment Index Downwardly Revised To 93.8 In February


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*ISM U.S. Manufacturing Index Drops To 54.2 In February

Trading 01 mar 2019 Commentaire »

ISM U.S. Manufacturing Index Drops To 54.2 In February


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Canadian Dollar Falls On Disappointing GDP Data

Trading 01 mar 2019 Commentaire »

The Canadian dollar dropped against its major counterparts in the European session on Friday, as the Canadian economy grew at a much slower pace than forecast in the fourth quarter of 2018.

Data from Statistics Canada showed that the economy grew at an annualised pace of 0.4 percent in the fourth quarter, after rising 2.0 percent in the previous quarter. Economists had forecast a 1.2 percent growth.

On a month-on-month basis, the GDP dropped 0.1 percent, the same rate as in November. Economists had expected the growth to be stagnant.

The currency was further weighed by falling oil prices, led by surging U.S. supply and worries over a global economic slowdown.

Crude for April delivery fell $0.15 to $57.07 per barrel.

China manufacturing sector contracted for the third straight month in February, survey data from IHS Markit showed.

The Caixin China Manufacturing Purchasing Managers' Index came in at 49.9 in February versus 48.3 in January.

The loonie has been trading higher against its major counterparts in the Asian session.

The loonie fell to a weekly low of 1.3241 against the greenback and a 3-week low of 1.5069 against the euro, from its early 2-day high of 1.3130 and a 4-day high of 1.4920, respectively. The next possible support for the loonie is seen around 1.35 against the greenback and 1.50 against the euro.

The loonie dropped to 0.9405 against the aussie and 84.47 against the yen, off its early high of 0.9316 and near a 3-month high of 85.24, respectively. If the loonie falls further, 0.95 and 82.5 are likely seen as its next support levels against the aussie and the yen, respectively.

Looking ahead, U.S. ISM manufacturing index for February and University of Michigan's final consumer sentiment index for February are due shortly.


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Eurozone Inflationary Pressures Remain Subdued

Trading 01 mar 2019 Commentaire »

Eurozone inflation accelerated in February, while core price growth eased, suggesting that price growth pressures remain muted in the 19-nation economy, causing concern for the European Central Bank that is set to hold its policy session next week.

Separate data showed that the euro area unemployment rate held steady in January, and the Eurozone manufacturing sector contracted in February for the first time in nearly six years.

The flash harmonized inflation for February was 1.5 percent, which was higher than January's 1.4 percent, data from Eurostat showed on Friday. The latest rate was in line with economists' expectations.

Meanwhile, the core inflation rate that excludes energy, food, alcohol and tobacco, slowed to 1 percent in February from 1.1 percent in January. Economists had expected the rate to remain unchanged.

Energy price inflation accelerated to 3.5 percent in February, from 2.7 percent in January, marking the highest annual rate among the main components.

Prices in the food, alcohol and tobacco group rose 2.4 percent year-on-year after a 1.8 percent climb in January. Services costs grew 1.3 percent following 1.6 percent rise in January.

Eurostat is set to release the full data for February inflation on March 15.

The ECB is set to hold its policy session on March 7, when the bank President Mario Draghi will unveil the latest set of macroeconomic projections prepared by the ECB Staff.

Economists widely expect further downgrade to the growth and inflation forecasts.

"The new staff projections are sure to see weaker growth projections to be released, but core inflation also looks high for 2019," ING economist Bert Colijn said.

"Add to that the significant downside risks that hang over the Eurozone economy, and you'll find an ECB gearing up towards measures to counter unwarranted tightening next week, not normalization."

Separately, Eurostat reported that the euro area unemployment data was steady at 7.8 percent in January after December's figure was revised down from 7.9 percent.

Economists had expected the rate to remain unchanged at December's original 7.9 percent.

The latest jobless rate was the lowest rate recorded in the euro area since October 2008, Eurostat said.

Elsewhere on Friday, survey data from IHS Markit showed that Eurozone factory output declined for the first time since June 2013.

The final manufacturing Purchasing Managers' Index dropped to 49.3 from 50.5 in the previous month. The flash reading for February was 49.2.

A PMI reading below 50 suggests contraction in the sector.

Both output and new orders fell, while price pressures continued to ease. Export orders decreased for a fifth successive month and at the fastest pace in over six years.

The latest slowdown was largely due to the weakness in the intermediate and investment goods.

Among the main euro area countries, manufacturing growth slowed in the Netherlands and Austria, and the sector contracted in Spain, Italy and Germany.

In contrast, factory growth increased in Greece, Ireland and France.

Despite the latest slowdown, manufacturers continued to raise their staff levels at a solid pace, extending the rising trend seen since September 2014.

On the price front, input costs rose at the slowest pace since October 2016 and output charges grew at the weakest rate since the end of 2016.

"Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring," IHS Markit Chief Business Economist Chris Williamson said.

"Spare capacity is consequently developing, which means companies are likely to take a more cautious approach to hiring and investment, and instead focus on cost control," he added.


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