Forex - US North American Summary and Highlights 17 May


 20:05 (GMT) 17 May

  [Forex Highlights]

Sample Premium Content

Overview

US North American Summary and Highlights 17 May (0101-LGFX-C04)

Equities opened weak on China trade worries but picked up as the US took a less aggressive line on auto, aluminum and steel tariffs, though a late hit was seen as CNBC reported US-China talks had stalled. USD/JPY pushed higher while CAD advanced on trade optimism and comments from BoC Governor Poloz. GBP continued to weaken as Brexit risks mounted.

News highlights

- US May preliminary Michigan CSI rose to 102.4 from 97.2 vs 97.2 exp.

- BoC's Poloz said natural tendency is for rates to move a bit higher

Currencies:

US North American Summary and Highlights 17 May (0101-LGFX-C01)

GBP weakened through the day with talks between the government and Labour were finally pronounced dead, with Labour leader Corbyn saying the talks had gone as far as they could and that he would oppose the government's Brexit deal. However, there were also reports that the government and Labour had agreed to put votes to parliament in the coming week in an attempt to rule out a second referendum and indicate support for Brexit by July 31. GBP/USD fell to its lowest level since mid-Jan.

EUR/USD also weakened through the morning. There was no clear driver, but Brexit uncertainty and political worries related to Salvini's recent comments and the upcoming EU elections continued to weigh. Eurozone CPI was essentially in line with expectations at 1.7% y/y, though the core rate at 1.3% y/y was slightly above expectations. The EUR did get some support from the US confirming auto tariffs would be delayed, but EUR/USD remained below 1.12. Trump later said the EU treated the US worse than China.

US North American Summary and Highlights 17 May (0101-LGFX-C02)

Equities recovered from early weakness on the auto tariffs story, a stronger Michigan CSI and expectations, eventually confirmed, that steel and aluminum tariffs on Canada and Mexico would be removed. USD/JPY pushed higher, clearing 110.00, though a CNBC report that US-China trade talks had stalled delivered a modest late hit.

CAD was supported not only by trade optimism, but also comments from BoC Governor Poloz seeing a natural tendency for higher rates. This took USD/CAD back below 1.3450 after having earlier traded above 1.35. USD/JPY cleared 110 around that time suggesting CAD/JPY buying may have been at play.

Bonds:

US North American Summary and Highlights 17 May (0101-LGFX-C03)

USTs enjoyed better dip buying in Asia again as the market focused on the Chinese media flagging little point in further trade talks for now. The gilt breakout ahead of the NY open then gave a fresh spillover lift, until confirmation of the 6-month auto tariff delay took yields off the day lows. Strong UoM confidence data then added to the impulse to fade the earlier gains. Headlines flagging and eventually confirming removal of metal tariffs on Canada and Mexico also a rare trade news positive. 2s +0.8bps @ 2.20%, 5s +0.7bps @ 2.18%, 10s -0.2bps @ 2.39%, 30s -1.0bps @ 2.82%.

Agency Spreads: Freddie/Fannie 5s 0.0/-0.2 bps, 10s +0.3/+0.2 bps.

Swap Spreads: 2s -0.18bps, 5s -0.20bps, 10s -0.05bps.

Equities:

Equities opened weaker concerned about negative comments in the Chinese press over prospects for the US-China trade talks. The mood was improved by confirmation auto tariffs would be delayed, a strong Michigan CSI and removal of steel and aluminum tariffs on Canada and Mexico. The indices turned positive, but ended lower after a late report CNBC report that US-China trade talks had stalled, and Trump criticized the EU's trade practices.

To Be Released -

Data

23:01 GMT - UK: Rightmove House Price Index (May) % m/m (Prev: 1.1)

23:01 GMT - UK: Rightmove House Price Index (May) % y/y (Prev: -0.1)

23:50 GMT - JP: Q1 GDP (P) (Q1 P) 4cast: -0.1% q/q ann (Mkt: -0.2 Prev: 1.9)

04:30 GMT - JP: Capacity Utilisation (Mar F) % m/m (Prev: 1)

04:30 GMT - JP: Industrial Production (Mar F) % m/m (Prev: -0.9)

04:30 GMT - JP: Industrial Production (Mar F) % y/y (Prev: -4.6)

06:00 GMT - DE: PPI (Apr) % m/m (Mkt: 0.4 Prev: -0.1)

08:00 GMT - EU: Current Account (sa) (Mar) EUR bn (Prev: 26.8)

14:00 GMT - BE: BNB Consumer Confidence (May) (Prev: -7)

Events & Auctions:

06:00 GMT - JP: Auction for Enhanced-Liquidity

08:00 GMT - NL: Bills Auction

09:00 GMT - SK: Bonds Auction

11:05 GMT - SE: Riksbank's Skingsley speaks in Frankfurt

13:30 GMT - US: Fed's Harker speaks in Boston

15:30 GMT - US: 3mth Bills Auction (USD36 Bln)

15:30 GMT - US: 6mth Bills Auction (USD36 Bln)

16:30 GMT - UK: BoE's Broadbent speaks in London

17:00 GMT - US: Fed's Williams and Clarida speak in New York


CurrenciesCountriesMarket Bulletins

Latest Currency Analysis

Available to subscribers only
Order Now