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The Canadian and U.S. Dollars lost steam during the U.S. session after weak economic reports and a shift in risk aversion sentiment weakened their demand, while a strong dairy auction boosted the New Zealand dollar.

  • Canada’s foreign securities purchases rises from 6.35B CAD to 38.4B CAD in February
  • U.S. building permits pops up to 1.26M vs. 1.25M expected, 1.22M in February
  • U.S. housing starts drops from 1.30M to 1.22M in March
  • U.S. industrial production rises from 0.1% to 0.5% in March as expected
  • U.S. capacity utilization rate improves to 76.1% vs. 76.3% expected, 75.4% previous
  • Global dairy auction prices show largest increase in a year at 3.1%
  • AU CB leading index remains at 0.4% in February

Major Events:

Mixed U.S. reports – Data from the U.S. Commerce Department showed housing starts falling faster than analysts had expected in March. Housing starts fell by 6.8% to a seasonally adjusted 1.22M in March while February’s figures were revised higher from 1.29M to 1.30M.

Bad weather might have factored in the weakness. See, surprisingly warm temperatures boosted home building in February, which made the impact of a cooler March more pronounced in the report.

Single-family home building, which makes up a huge chunk of the residential housing market, fell by a whopping 6.2% after hitting a 9 ½- year high in February.

Fortunately, the building permits partially canceled out the bad vibes. The report showed a 3.6% increase in March to 1.26M when market players had only expected a 1.25M reading.

Meanwhile, a separate report showed industrial production bouncing by 0.5% – its fastest in three months – in March as higher consumer goods and utilities output offset declines in construction and manufacturing.

Details show that cooler weather boosted demand for home and office heating and pushed utilities production up by 8.6%, while the production of consumer goods also rose for the first time in two months.

Overall risk aversion – It was a very busy day as mixed U.S. economic reports, concerns over North Korea, jitters ahead of a snap elections in the U.K. and Presidential elections in France, and surprisingly weak earnings reports from Wall Street titans weighed on risk-taking during the U.S. session.

  • The DJIA capped the day -0.55% lower to 20,523.28
  • S&P 500 dropped -0.3% to 2,342.19
  • NASDAQ fell by -0.12% to 5,849.47

Lower oil prices – The Black Crack slid further across the board after a weekly American Petroleum Institute (API) report reflected less declines in crude oil stockpiles than analysts had estimated.

API clocked in a decrease of 840,000 barrels in U.S. crude supplies for the week ended April 14. This represents a third consecutive week of decline for crude supplies, but still missed analysts’ estimates of a 1.5M-barrel draw for the week.

Brent crude oil fell to a low of $54.61, its lowest since April 7, before settling at $54.89, while WTI futures settled down 24 cents to $52.41.

Major Market Movers:

USD – Mixed economic reports, a weak start to the earnings season, and geopolitical jitters all extended the dollar’s losses against most of its counterparts.

USD/JPY inched 38 pips (-0.35%) lower to 108.45 while USD/CHF plunged by 50 pips (-0.50%) to .9958 and EUR/USD shot up by 56 pips (+0.52%) to 1.0734 while Cable got bumped up by another 177 pips (+1.40%) to 1.2845.

CAD – The Loonie was triple-roundhouse-kicked by lower oil prices, weak equities performance, and a sharp drop in Canada’s bond yields.

USD/CAD shot up by 29 pips (+0.22%) to 1.3382, GBP/CAD rose by 271 pips (+1.60%) to 1.7187, and CAD/JPY dropped by 44 pips (-0.54%) to 81.05.

NZD – The New Zealand dollar saw a strong mid-session reversal after a global dairy auction yielded a 3.1% increase of prices. This represents the third consecutive increase and the largest bump this year. Dairy is New Zealand’s biggest commodity export.

NZD/USD is up by 6 pips (+0.09%) to .7042 after hitting a session low of .7014 while NZD/JPY inched 18 pips higher (+0.24%) to 76.36.

Watch Out For:

  • 12:30 am GMT: AU MI leading index to improve from 0.1%?
  • 1:30 am GMT: AU new motor vehicle sales last seen with 2.7% dip in February

See also:

London Session Recap
Asian Session Recap

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