Market Roundup
• Oil slumps 7 pct as equities slide fuels demand worries.
• With Carney warning of 1970s-style shock, UK firms ready for no-deal Brexit.
• US Oct Building Permits: Number, 1.263 mln, 1.267 mln forecast, 1.270 mln previous.
• US Oct Build Permits: Change MM, -0.6%, 1.7% previous.
• US Oct Housing Starts Number, 1.228 mln, 1.225 mln forecast, 1.201 mln prev, 1.210 mln revised.
• US Oct House Starts MM: Change, 1.5%, -5.3% previous, -5.5% revised.
• US 17 Nov, w/e Redbook YY, 6.2%, 6.1% previous.
• White House's Kudlow: Tax reform's next phase won't happen in 2018.
• Bitcoin crashes to lowest this year, losses top 25 percent in a week.
• Bank of Canada to review policy framework, hints at big changes.
• Oil markets heading into unprecedented uncertainty - IEA's Birol.
Looking Ahead - Economic Data (GMT)
• No major economic data scheduled
Looking Ahead - Events, Other Releases (GMT)
• 20 Nov 22:15 Bank of Canada Deputy Governor Timothy Lane participates in a panel in Toronto
• 21 Nov 08:00 Deutsche Bank Board Member Silvie Matherat speaks in Frankfurt
• 21 Nov 08:30 Swedish Central Bank publishes Financial Stability Report 2018 in Stockholm
• 21 Nov 14:30 Dutch Finance Minister Hoekstra meets euro group president Centeno in The Hague
• 21 Nov N/A Riksbank to hold a press conference on financial stability in Stockholm
• 21 Nov N/A Riksbank General Council Meeting in Stockholm
• 21 Nov N/A ECB governing council non-monetary policy meeting in Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1360 levels. The pair has made session high at 1.1439 and hit lows at 1.1357 levels. The euro declined against the dollar on Tuesday as slide in European equities and nervousness about Italian banks weakened single currency. Earlier, cautious comments overnight by Federal Reserve officials about the global economic outlook, weak U.S. data and a selloff on Wall Street had knocked the dollar lower and supported the single currency. But the euro gave up is gains as European stocks fell, Italian bank shares hit a two-year low and Italian bonds sold off again amid an ongoing confrontation with the European Union over Rome's budget plans. The euro fell 0.7 percent to $1.1360 after earlier reaching a two-week high of $1.1472. The dollar index, a measure of its value against a basket of six major currencies, rose 0.65 percent to 96.80, off its weakest level since Nov. 7.The index fell nearly half a percent last week, its biggest weekly drop since late September as investors worry about slowing U.S. economic growth.
GBP/USD is supported in the range of 1.2718 levels and currently trading at 1.2777 levels. It reached session high at 1.2883 and dropped to session low at 1.2774 levels. Britain's pound declined against the dollar on Tuesday as concerns about Brexit negotiations dragged British currency lower. Earlier, sterling had rebounded off lows after Bank of England Governor Mark Carney gave his backing to a Brexit deal struck by Prime Minister Theresa May last week. Speaking to lawmakers, Carney and other BoE officials repeated their warning to investors not to assume that the central bank would respond to a no-deal shock by cutting interest rates, as it did after the Brexit referendum in 2016.The Northern Irish Democratic Unionist Party, which props up British Prime Minister Theresa May's government, has said May ought to demand a better deal from the European Union on the terms of Britain's departure. Growing opposition to May's draft arrangement has hit sterling hard in recent days, pulling it down nearly 3 percent from a Nov. 7 high of $1.3176.Markets will focus on Bank of England Governor Mark Carney's testimony to the Parliament, where he might face questions on how the central bank responds to a no-deal Brexit.
USD/CAD is supported at 1.3203 levels and is trading at 1.3294 levels. It has made session high at 1.3298 and lows at 1.3169 levels. The Canadian dollar declined to hit 5-days low against its U.S. counterpart on Tuesday as stronger dollar and weaker oil prices weighed on Canadian dollar. Oil prices slid as much as 6 percent to mirror the stock sell-off as fears about slowing global demand and a surge in U.S. production outweighed expected supply cuts by the Organization of the Petroleum Exporting Countries .Oil extended its losses after U.S. President Donald Trump said the United States intends to remain a "steadfast partner" of Saudi Arabia even though "it could very well be" that Saudi Crown Prince Mohammed bin Salman had knowledge of the killing of journalist Jamal Khashoggi. Heightened tensions between the two countries had raised concerns about the possibility of supply disruptions. With Tuesday's losses, U.S. crude prices have fallen more than 30 percent from a near four-year peak in early October. Brent crude prices have dropped some 28 percent in the same period. The Canadian dollar was trading 1.03 percent lower at 1.3303 to the greenback. The currency touched its weakest level intraday since last Thursday at 1.3115.
AUD/USD is supported around 0.7163 levels and currently trading at 0.7221 levels. It hit session high at 0.7271 and made session lows at 0.7209 levels. The Australian dollar slipped lower against dollar on Tuesday as renewed Sino-U.S. trade tensions hurt demand for commodity-linked currencies like Australian dollar. Trade relations between the world two biggest economies seemed to have worsened over the weekend when U.S. Vice President Mike Pence said in a blunt speech there would be no end to U.S. tariffs on $250 billion of Chinese goods until China changed its ways. The Australian dollar was last trading at $0.7219 after climbing to a 2-1/2 month peak of $0.7338 on Friday. It slipped 0.5 percent overnight for its worst single-day performance since Nov. 12.The losses came alongside a sell-off in global equity markets with the main Wall Street indexes tumbling between 1.6 and 3.0 percent due to a cocktail of factors, including rattled investor confidence in the long high-flying tech sector. The Aussie is often traded as a liquid proxy for global growth as Australia's export-driven economy is largely dependent on world trade. The spectre of escalation in the Sino-U.S. tariff war has weighed on the Aussie for much of this year.
Equities Recap
European stocks fell on Tuesday, with banks weighing heavily on worries about slowing economic growth, fading earnings momentum, Italy's budget, and a lower likelihood of rate hikes in Europe next year.
UK's benchmark FTSE 100 closed down by 0.70 percent, the pan-European FTSEurofirst 300 ended the day down by 1.05 percent, Germany's Dax ended down by 1.59 percent, France’s CAC finished the day down by 1.21 percent.
U.S. stocks extended their recent selloff on Tuesday, with the S&P 500 hitting a three-week low, as energy shares dropped with oil prices and retailers including Target and Kohl's sank after weak earnings and forecasts.
Dow Jones closed down by 2.22 percent, S&P 500 ended down 1.82 percent, Nasdaq finished the day down by 1.67 percent.
Treasuries Recap
Benchmark U.S. Treasury yields fell to seven-week lows on Tuesday as global stock market declines boosted demand for safe haven debt, before giving up some price gains as investors closed positions before Thursday's Thanksgiving holiday.
Benchmark 10-year notes fell to 3.036 percent, the lowest since Sept. 28, before rising back to 3.052 percent.
Commodities Recap
Gold prices edged downward on Tuesday as investors flocked to the dollar and U.S. government bonds amid steep declines in global stock markets, denting appeal for non-interest bearing bullion.
Spot gold was down 0.3 percent at $1,220.01 per ounce at 1:35 p.m. EST (1835 GMT), putting it on course to snap a five-session winning streak.U.S. gold futures settled down $4.10, or 0.3 percent, at $1,221.20.
Oil prices tumbled more than 6 percent on Tuesday in heavy trading volume, with U.S. crude diving to its lowest level in more than a year, caught in a broader Wall Street selloff fed by mounting concerns about slowing global economic growth.
U.S. West Texas Intermediate (WTI) crude futures ended the session down $3.77, or 6.6 percent, at $53.43 per barrel. The contract fell as much as 7.7 percent during the session to touch $52.77 a barrel, the lowest since October 2017.
