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Brexit jitters continued to drag the pound down for the rest of the U.S. session and market participants seemed to be in no mood to take on more risk.

The safe-haven dollar managed to score some gains versus the commodity currencies and and European currencies but was no match to yen strength.

  • Canadian RMPI up 3.3% vs. 1.8% forecast, -0.9% previous
  • Canada’s IPPI up 0.3% vs. 0.5% consensus, -0.1% previous
  • U.S. preliminary GDP downgraded from 2.6% to 2.5% as expected
  • U.S. preliminary GDP price index down from 2.4% to 2.3%
  • Chicago PMI slumped from 65.7 to 61.9 vs. 64.2 estimate
  • U.S. pending home sales sank 4.7% vs. projected 0.4% uptick
  • U.S. EIA crude oil inventories up by 3M barrels vs. 2.4M forecast
  • Australia’s AIG manufacturing index fell from 58.7 to 57.5

Major Events/Reports:

Mostly downbeat U.S. data

Uncle Sam’s numbers were mostly in the red once more, casting more doubts that the Fed could actually carry on with its tightening pace as hinted at by Chairman Powell in his speech yesterday.

The preliminary GDP reading for Q4 2017 was downgraded from 2.6% to 2.5% as expected, “primarily reflecting a slight downward revision to private inventory investment” as the BEA news release indicated. The preliminary price index for the same period was lowered from 2.4% to 2.3% to reflect slower inflationary pressures.

The Chicago PMI was also a disappointment as the reading sank from 65.7 to 61.9, much lower than the estimated fall to 64.2. Firms reported a slower pace of new orders and output for February, bringing the index down to its lowest level in six months.

Lastly, pending home sales posted a surprise 4.7% tumble instead of the projected 0.4% uptick for January while the previous figure was downgraded from 0.5% to a flat reading. Analysts blamed low supply levels for the drop in sales, as well as the cold snap in the first two weeks of the month.

Continuation of risk-off flows

Risk aversion was already the name of the game during the London session as Brexit jitters came back in full force. This gloomy mood extended its stay in the New York hours, dragging equities lower.

  • Dow 30 index is down 380.83 points to 25,029.20 (-1.50%)
  • S&P 500 index is down 30.45 points to 2,713.83 (-1.11%)
  • Nasdaq is down 57.34 points to 7,273.01 (-0.78%)

Crude oil was also in the red as the Energy Information Administration reported a larger build of 3 million barrels in stockpiles versus the estimate of 2.4 million barrels.

  • WTI crude oil dipped to $61.56 per barrel
  • Brent crude oil is down to $64.72 per barrel
  • Gold is flat at $1,317.10 per troy ounce

Bond yields were also lower, as some pinned the blame on month-end profit-taking.

  • 30-year yield is down 0.047 basis points to 3.1283%
  • 10-year yield is down 0.038 basis points to 2.8697%
  • 2-year yield is down 0.004 basis points to 2.2620%

Major Market Mover(s):

 

JPY

The yen was the runaway winner as it took advantage of risk-off flows and outpaced its lower-yielding rival, the U.S. dollar.

USD/JPY resumed its fall to a low of 106.66, EUR/JPY tumbled from 130.88 to a low of 130.09, GBP/JPY continued to sell off to a low of 146.95, and AUD/JPY is down to 82.55.

CAD

The Loonie was the weakest of the comdoll bunch as a larger than expected build in EIA inventories dragged oil prices down.

USD/CAD kept climbing to a high of 1.2842, CAD/JPY slumped to 83.11, EUR/CAD popped up to a high of 1.5633, and NZD/CAD is up to the .9250 minor psychological mark.

Watch Out For:

  • 12:30 am GMT: Australian private capital expenditure q/q (another 1.0% gain expected)
  • 12:30 am GMT: Japanese final manufacturing PMI
  • 1:45 am GMT: Chinese Caixin manufacturing PMI (dip from 51.5 to 51.3 expected)
  • 3:45 am GMT: Japanese 10-year bond auction
  • 5:00 am GMT: Japan’s consumer confidence index (gain from 44.7 to 44.9 expected)
  • 5:30 am GMT: Australia’s commodity prices y/y (-0.6% drop previous)