Market Roundup
• US Sep Consumer Confidence, 138.4, 133.4 previous, 134.7 revised.
• US Jul Monthly Home Price y/y, 6.4%, 6.5% previous.
• US Jul CaseShiller 20 y/y, 5.9%, 6.3% previous, 6.4% revised.
• US 22 Sep w/e Redbook y/y, 5.8%, 5.4% previous.
• Argentina central banker's resignation amid IMF talks hits peso.
• Oil pares gains as Trump repeats calls on OPEC to pump more.
• At U.N., Trump rejects globalism and blasts Iran.
• UK's Labour set to vote against Brexit deal, open to second referendum.
• PM May: No-deal Brexit better than current EU offer.
• U.S. trade chief says China policy change 'not going to be easy'.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Aug Annual Trade Balance, -4.44B previous
• 22:45 New Zealand Aug Exports, 5.35B previous
• 22:45 New Zealand Aug Imports, 5.49B previous
Looking Ahead - Events, Other Releases (GMT)
• 7:00 ECB Board Member Yves Mersch and rate setting Governing Council member Jan Smets speak at conference on digital finance in Brussels
• 09:35 Norway Central Bank Deputy Governor Egil Matsen will give speech at a conference hosted by the Federation of Norwegian Industries
• 12:00 The Federal Republic of Germany President, Frank-Walter Steinmeier, will visit the European Central Bank in Frankfurt
• 18:00 US Federal Reserve's Federal Open Market Committee (FOMC) announces decision on interest rate in Washington D.C.
• 18:30 U.S. Federal Reserve Chairman Jerome Powell holds a news conference regarding the interest rate
Currency Summaries
EUR/USD is likely to find support at 1.1720 levels and currently trading at 1.1766 levels. The pair has made session high at 1.1795 and hit lows at 1.1756 levels. The euro strengthened against dollar on Tuesday as dollar weakened ahead of a Federal Reserve meeting that is widely expected to end with an interest rate hike, as investors already have priced in two more rate increases this year and some in 2019, leaving little room for further currency gains. The Fed kicked off its two-day meeting, with market participants focused on the U.S. central bank's view on the economy as well as its guidance on future tightening. The Fed already has raised rates twice in 2018. Rates futures implied traders priced in an 80 percent chance the Fed would raise rates again in December, CME Group's FedWatch program showed. Fed officials have signaled in recent days that the U.S. economic expansion remains intact with inflation heading toward their 2 percent goal, which would allow for more rate hikes in coming months. The dollar has benefited from a hawkish rate outlook all year, but has lost steam the last few weeks, as other economies such as the euro zone improved, keeping them closer to a shift to tighter monetary policy. In late trading, the dollar index was down 0.1 percent, at 94.051. The euro was last up 0.4 percent at $1.1766. It had touched a 3-1/2 month high on Monday.
GBP/USD is supported in the range of 1.3090 levels and currently trading at 1.3184 levels. It reached session high at 1.3181 and dropped to session low at 1.3140 levels. Britain's pound gained against the dollar on Tuesday as weaker dollar and growing expectations of a Brexit deal fuelled demand for the British currency. The dollar fell a fifth of a percent to 94.06 against a basket of its rivals as investors raised bets the U.S. central bank is nearing the end of its rate hiking cycle. The Federal Reserve is set to raise interest rates on Wednesday. With just over six months until Britain leaves the European Union, UK Prime Minister Theresa May has yet to reach a deal with Brussels on the terms of its departure. Her plan for future trade ties was rebuffed by the EU last week. British Brexit Secretary Dominic Raab said on Monday that he was confident that Britain would make progress and eventually clinch a Brexit deal. Investors have been hedging against more weakness in sterling should the negotiations with the EU collapse, although some say large short bets on the pound make it vulnerable to any positive headlines. Still investors were wary of pushing sterling above last week's high of $1.3295 as concerns about the British political situation dogged sentiment.
USD/CAD is supported at 1.2883 levels and is trading at 1.2950 levels. It has made session high at 1.2958 and lows at 1.2934 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose, but slow progress on talks on NAFTA trade deal limited big gains. Canadian Prime Minister Justin Trudeau took a cautious line over talks to update the North American Free Trade Agreement, saying he saw a possibility that Canada could build on a bilateral deal that the United States and Mexico have already struck. As the month-end deadline for North American trade talks nears, Canadian executives who hedge foreign exchange risk have been changing their strategies so their companies can profit from any possible swings in the Canadian dollar. The price of oil, one of Canada's major exports, was boosted by imminent U.S. sanctions on Iranian crude exports and the apparent reluctance of OPEC and Russia to raise output to offset the potential hit to global supply. The Canadian dollar was trading 0.1 percent higher at 1.2948 to the greenback. The currency, which touched on Thursday its strongest in more than three months at 1.2885, traded in a narrow range of 1.2946 to 1.2973.
USD/JPY is supported around 112.40 levels and currently trading at 112.93 levels. It peaked to hit session high at 112.97 and made session lows at 112.72 levels. The dollar gained against the Japanese yen on Tuesday as investors looked past the Sino-U.S. trade dispute to ponder what surprises the Federal Reserve might spring at its coming policy meeting. A rate hike from the U.S. Fed on Wednesday is considered a done deal, with another likely for December as well, leaving the focus on what it outlines for next year and beyond. On the data front, U.S. consumer confidence surged to an 18-year high in September as households grew more upbeat about the labor market, pointing to sustained strength in the economy despite an increasingly bitter trade dispute between the United States and China. Economists polled had forecast the consumer index slipping to a reading of 132.0 this month from the previously reported 133.4 in August. While other data on Tuesday showed a moderation in house price increases in July, the gains probably remain sufficient to boost household wealth and continue to support consumer spending, as well as making home purchasing a bit more affordable for first-time buyers. The dollar index fell 0.05 percent, with the Japanese yen down 0.16 percent at 112.85.
Equities Recap
European shares closed higher on Tuesday boosted by gains among oil stocks and optimism over the Italian budget while British clothing retailer Next rallied after raising its profit guidance.
UK's benchmark FTSE 100 closed up 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.52 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day flat.
U.S. stocks were mixed on Tuesday as a boost from the energy sector and strong consumer confidence data helped offset losses in chipmakers and utilities ahead of an expected Federal Reserve interest rate hike.
Dow Jones closed down by 0.25 percent, S&P 500 ended down by 0.13 percent, Nasdaq finished the day up by 0.18percent.
Treasuries Recap
U.S. Treasury yields climbed on Tuesday, with the 10-year yield scaling to a four-month peak, on bets about Federal Reserve interest rate increases in the coming months and poor demand so far for this week's supply of government debt.
The benchmark 10-year Treasury yield was 3.102 percent, up over 2 basis points from late on Monday. Its session high of 3.113 percent was its highest since May.
The 30-year yield reached 3.249 percent, its highest in four months. Five-year yields touched 2.990 percent, which was last seen in June 2009.
Commodities Recap
Gold edged higher on Tuesday as the dollar drifted ahead of a U.S. Federal Reserve monetary policy meeting, but bullion's upside remained capped by strong U.S. economic data that continues to underpin the greenback.
Spot gold gained 0.2 percent at $1,200.60 per ounce by 1:39 p.m. EDT (1739 GMT). U.S. gold futures for December delivery settled up 70 cents, or 0.1 percent, at $1,205.10 per ounce.
Oil prices rose Tuesday on global supply concerns following U.S. sanctions on Iran's oil exports, with benchmark Brent surging to a four-year high, then retraced gains to settle just slightly higher after U.S. President Donald Trump called again on OPEC to boost crude output.
Brent crude futures settled up 67 cents at $81.87 a barrel. U.S. crude futures rose 20 cents to $72.28 a barrel, close to the highest since mid-July.
