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Americas Roundup: Dollar gains on expectations for December Fed rate hike, oil rises on short-covering, surge in gasoline futures-September 16th, 2016

Market Roundup

•    Weak US retail sales, factory data dampen rate hike prospects.

•    Retail sales -0.3% in Aug v forecast +0.1%; core -0.1% forecast +0.2%.

•    US jobless claims rise in latest week 260k vs 259k previous, 4-wk avg 260.75k from 261.25k.

•    US PPI y/y 0.0% v 0.1% forecast, retail control -0.1% v 0.3% forecast -0.1% previous, Core PPI +0.3% in Aug.

•    US Q2 current account gap narrows to USD119.9bn from revised 131.8bn.

•    US business inventories unchanged as stocks at retailers drop.

•    US Philly Fed Sep 12.8 v 1.0 fore wheel, 2.0 previous.

•    ECB’s Weidmann: ECB should stick to country size in government debt buys.

•    Atlanta Fed lowers U.S. Q3 GDP view to 3.0% from 3.3% on Sep 9.

•    BoE holds rate at 0.25%, confirms bond-buying plans; Most MPC members likely to back further rate cut this year.

•    BoE: immediate Brexit impact on growth less severe than thought, notes signs of fall in business investment.

•    USD gains on expectations for Dec. Fed rate hike, Yen slips on anticipation of potential BOJ easing.

•    SNB keeps policy loose to curb strong franc, Reiterates readiness to intervene on FX markets.

Looking Ahead - Economic Data (GMT)

•    02:00 Japan TR IPSOS PCSI Sep 40.00-previous

•    02:00 Australia TR IPSOS PCSI Sep 48.70- previous

•    02:00 China TR IPSOS PCSI Sep 63.80- previous

•    03:00 New Zealand RBNZ Offshore Holdings Aug 63.90%- previous

Looking Ahead - Events, Other Releases (GMT)

•    No Significant Events

Currency Summaries
EUR/USD is likely to find support at 1.1213 levels and currently trading at 1.1243 levels. The pair has made session high at 1.1283 and hit lows at 1.1222 levels. The U.S. dollar gained slightly against euro on Thursday after traders looked ahead to a potential rate increase from the Federal Reserve in December. August U.S. retail sales fell more than expected, pointing to cooling domestic demand that further diminishes expectations for a Federal Reserve interest rate increase next week. The dollar briefly hit a six-day low against the euro of $1.1283 after data showing weaker-than-expected U.S. retail sales for August, which analysts said solidified expectations that the Fed would stand pat on rates at its meeting next week, however dollar recovered on the view that there was still a desire on the part of the U.S. central bank to hike before year-end. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.10 percent at 95.421 .The euro was last down 0.11 percent against the dollar at $1.1245.

GBP/USD is supported in the range of 1.3134 and currently trading at 1.3240 levels. It reached session high at 1.3243 and hit low at 1.3173 levels. Sterling initially declined against the dollar on Thursday, after the Bank of England left interest rates at their record lows and indicated that it would cut them further later this year but reversed course after weak U.S. retail sales data boosted Sterling. Bank of England said the initial hit from Britain's vote to leave the European Union was proving less severe than it had anticipated just last month, a majority of policymakers said they expected to support another rate cut in future meetings. Sterling initially fell to as low as $1.3174 but recovered most of the lost ground after mixed US economic data. Earlier in the day, data showed retail sales retail sales fell at a much slower pace than expected in August, which had sent sterling to $1.3243 before the publication of the BoE's latest minutes.

USD/CAD is supported at 1.3120 levels and is trading at 1.3156 levels. It has made session high at 1.3215 and lows at 1.3129 levels. The Canadian rose against U.S. dollar on Thursday as slightly higher oil prices and mixed  U.S. economic data ahead of next week's U.S. Federal Reserve policy meeting supported the risk-sensitive commodity-linked currency. The U.S. dollar seesawed against a basket of major currencies after retail sales and industrial production data disappointed. Canada's currency lost more than 1 percent of its value in the first three days of the week, as oil prices fell sharply on warnings from producer and consumer groups that a glut will take longer to clear. Oil prices rose about 1 percent after shedding 6 percent in the past two days. The Canadian dollar was last trading at C$1.3154 to the greenback, or 75.99 U.S. cents, stronger than Wednesday's close of C$1.3197, or 75.77 U.S. cents.

AUD/USD is supported around 0.7440 levels and currently trading at 0.7512 levels. It hit session high at 0.7522 and made session lows at 0.7460 levels. The Australian inched higher against US dollar on Thursday after weak U.S. economic figures reduced expectations of an imminent rate hike. Market volatility spiked in the US session as mixed economic data and conflicting remarks by U.S. Federal Reserve policymakers recently kept investors guessing over the timing of the central bank's next moves. The Australian dollar inched to $0.7514, slightly higher than $0.7443 touched on Monday. A break under that would take it to the lowest since late July. Australia's jobless rate hit a three-year low in August. The Australian Bureau of Statistics showed 3,900 net new jobs were lost in August, a sharp contrast to forecasts of a 15,000 gain. Even so, the jobless rate fell to 5.6 percent as fewer people looked for work.

Equities Recap

European shares rose on Thursday at the end of a choppy session that saw a key index hit a six-week low, with UK supermarket Morrisons leading gainers following a strong earnings update.

UK's benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.57 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day up by 0.2 percent.

Wall Street rallied 1 percent on Thursday, buoyed by Apple's best four-day run since 2014, higher oil prices and ho-hum economic data that further dimmed expectations for an interest rate hike next week.

Dow Jones closed down by 1.00 percent, S&P 500 ended down by 1.02 percent, Nasdaq finished the day up by 1.48 percent.

Treasuries Recap

The U.S. Treasury yield curve surged to its steepest levels in 2-1/2 months on Thursday after U.S. retail sales fell more than expected in August, further reducing the odds that the Federal Reserve will raise interest rates when it meets next week.

U.S. benchmark 10-year Treasury notes fell 4/32 in price to yield 1.70 percent, up from 1.69 percent on Wednesday.

The gap between five-year note yields and 30-year bonds yields widened to 130 basis points, the steepest curve since June 27.

Commodities Recap

Oil prices rose about 1 percent or more on Thursday after tracking a rally in gasoline futures sparked by a delayed restart of the main gasoline line at Colonial Pipeline, the No. 1 carrier for the motor fuel in the United States.

Brent crude futures settled up 74 cents, or 1.6 percent, at $46.59 a barrel, after a session high at $47.

U.S. West Texas Intermediate (WTI) crude futures rose 33 cents, or 0.8 percent, to close at $43.91.

Gold slid on Thursday to a two-week low after a mixed bag of U.S. economic data prompted selling ahead of next week's U.S. Federal Reserve policy meeting.

Spot gold  fell as much as 1 percent to $1,309.25 an ounce and was down 0.6 percent at $1,314.47 by 5:05 p.m. EDT (2105 GMT).

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