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Commodity currencies staged a decent recovery during the New York trading session while the euro carried on with its slump.

Data from the U.S. came in mostly weaker than expected, but positive updates on NAFTA and potential trade talks with China put traders in a better mood.

  • Canadian manufacturing sales up by 1.4% vs. 1.1% forecast in March
  • Canada’s Feb manufacturing sales upgraded from 1.9% to 2.7%
  • U.S. building permits dipped from 1.38M to 1.35M as expected
  • U.S. housing starts slipped from 1.34M to 1.29M vs. 1.32M forecast
  • U.S. capacity utilization rate at 78.0% vs. 78.4% forecast
  • U.S. industrial production posted another 0.7% gain vs. 0.6% consensus
  • U.S. EIA crude oil inventories fell by 1.4M barrels vs. projected 1.1M drop
  • New Zealand PPI input prices up 0.6% vs. 0.3% forecast, 0.9% previous
  • New Zealand PPI output prices up 0.2% as expected, 1.1% previous

Major Events/Reports:

Trade deals in the works?

Market watchers seem more optimistic about seeing trade agreements with U.S. partners as positive updates on NAFTA and from China popped up.

On NAFTA, Mexico’s economy minister Ildefonso Guajardo remarked that an agreement could be struck before the end of the month. In an interview on a Mexican radio station, he noted:

“I would not rule out at any point, if the participants show the willingness, that we can settle this negotiation at any moment from the close of May onwards or in June.”

U.S. House Speaker Paul Ryan insists that a deal should be hammered out by Thursday this week to give lawmakers time to approve it before a newly-elected Congress takes over in January.

Sources from the Canadian government acknowledged the need to reach an agreement soon but also reiterated that they will not be pressured into one they’re not happy with.

As for China, Vice Premier Liu He sounded positive that they can come up with a trade deal with the U.S. during his visit to Washington. After all, U.S. President Trump has shown some willingness to bargain with ZTE, although he also later on tweeted:

On a similar note, Trump’s scheduled sit-down with North Korean leader Kim Jong-Un is also on the rocks.

Risk rebound in commodities and equities

Wall Street was in a chipper mood for the day, allowing equity indices and commodities to recover from earlier losses.

  • Dow 30 index is up 62.52 points to 24,768.93 (+0.25%)
  • S&P 500 index is up 11.01 points to 2,722.46 (+0.41%)
  • Nasdaq is up 46.67 points to 7,398.30 (+0.63%)

Gold was mostly flat for the session while crude oil drew support from a larger than expected draw in stockpiles.

  • Gold ticked $0.60 higher to $1,291.01 per troy ounce (+0.04%)
  • WTI crude oil rose to $71.54 per barrel (+0.21%)

U.S. bond yields still managed to chalk up a few gains after starting on a shaky note, likely getting a boost from upside surprises in medium-tier data.

Major Market Mover(s):

Commodity currencies

The comdoll gang had a positive run thanks to improving risk sentiment as market participants focused on positive trade updates, the larger draw in crude oil inventories, stronger than expected Canadian manufacturing sales, and the Yanny-Laurel debate.

AUD/USD ticked up to .7519, AUD/JPY recovered to the 83.00 handle, GBP/AUD is down to a low of 1.7938, and AUD/CAD held on to the .9600 mark.

NZD/USD bounced off the .6860 support to .6890, NZD/JPY is up to 76.13, GBP/NZD is down to 1.9639, and NZD/CAD is testing .6900 again.

USD/CAD fell from 1.2861 to 1.2786, CAD/JPY is up to 86.30, GBP/CAD fell to 1.7320, and CAD/CHF bounced to .7828.

EUR

The euro slid to the bottom of the forex pile early on in the session but managed to pull up before the closing bell tolled.

Worries surrounding a leaked draft of the 5 Star/League agreement previously released brought pain to Italy’s stock markets and dampened demand for the shared currency as well. In his speech, Draghi also commented that the region is becoming politically fragmented.

EUR/USD tumbled from 1.1807 to a low of .1762 before pulling up, EUR/JPY slid to a low of 1.2966 then bounced to 130.34, EUR/AUD fell to the 1.5700 levels, and EUR/NZD is down to a low of 1.7058.

 

Watch Out For:

  • 11:50 pm GMT: Japanese core machinery orders (-2.9% expected, +2.1 previous)
  • 1:00 am GMT: Australia MI inflation expectations
  • 1:30 am GMT: Australian employment change (19.8K expected, 4.9K previous)
  • 1:30 am GMT: Australian unemployment rate (no change from 5.5% expected)
  • 2:00 am GMT: New Zealand annual budget release