Dollar gains broadly on upbeat U.S. data, sterling hits 3-month lows on Brexit impasse

Market Review - 17/05/2019 00:07GMT  

Dollar gains broadly on upbeat U.S. data, sterling hits 3-month lows on Brexit impasse

The greenback gained against majority of its peers on Thursday on rising U.S. Treasury yields together with release of upbeat U.S. economic data. The British pound fell to a 3-month low on continued Brexit and U.K. leadership concerns while the single currency remained on the back foot ahead of European parliamentary election next week.  
  
Reuters reported U.S. housing starts rose 5.7% to a seasonally adjusted annual rate of 1.235 million units last month, driven by gains in the construction of both single- and multi-family housing units, the Commerce Department said on Thursday. Groundbreaking was also likely boosted by drier weather in the Midwest.   Reuters reported the number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to sustained labor market strength that should underpin the economy as growth slows.     
Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 212,000 for the week ended May 11, the Labor Department said on Thursday. Data for the prior week was unrevised.    
Economists polled by Reuters had forecast claims would fall to 220,000 in the latest week. The Labor Department said no states were estimated last week.    
Data for March was revised up to show homebuilding rising to a pace of 1.168 million units, instead of falling to a rate of 1.139 million units as previously reported.   
  
Versus the Japanese yen, although dollar initially fell to 109.34 in Asian morning on weakness in the Nikkei 225, price rebounded to 109.53 and later rallied to session highs at 109.97 in New York on gains in U.S. equities as well as rising U.S. Treasury yields.  
  
The single currency went through a volatile session. Although euro traded with a firm bias in Asia and rose to +session highs at 1.1225 (Reuters)+ in Europe on continued optimism that U.S. will delay its auto-tariffs, price erased its gains and dropped to an 8-day low of 1.1167 in New York as investors remained cautious ahead of European parliamentary elections next week together with usd's broad-based strength.   
Although the British pound moved sideways in Asia, price met renewed selling at 1.2852 and fell to 1.2821 in European morning and then tumbled to a 3-month low at 1.2788 in New York morning on continued Brexit deadlock over UK government and opposition Labour Party before moving narrowly.  
  
Reuters reported Britain's Labour Party will vote against the Withdrawal Agreement Bill if there is no deal between the government and the opposition party, its Brexit spokesman Keir Starmer said on Thursday.   
In other news, Reuters reported British Prime Minister Theresa May will discuss a timetable for the election of a new Conservative Party leader no matter what the result of a vote on the second reading of her Withdrawal Agreement Bill, the chairman of the 1922 Committee said.  
Reuters reported Economy Minister Giovanni Tria said on Thursday Italian debt will not rise to 140% of GDP, after comments from the ruling coalition suggesting the government may flout European Union public finance rules roiled financial markets.   
Tria encouraged investors to buy Italian bonds, saying that after recent rises in yields they are now a "bargain", and he reiterated there was no risk of Italy quitting the euro zone.   
  
On the data front, Reuters reported Philadelphia Fed business conditions May 16.6 vs April 8.5.   
  
Data to be released on Friday :  
  
New Zealand manufacturing PMI, PPI inputs, PPI outputs, EU construction output, HICP, and U.S. leading indicator, University of Michigan sentiment.