Market Roundup
• US Factory Orders MM Jul, -3.3%, -3.3% forecast, 3.0% previous.
• US Factory Ex-Transp MM Jul, 0.55, -0.2% previous.
• US Employment Trends Aug, 134.6, 133.6 previous.
• US Durable Ex-Def, R MM Jul, -7.8%, -7.8% previous.
• US Durable Goods, R MM Jul, -6.8%, -6.8% previous.
• US Durables Ex-Transpt R MM Jul, 0.6%, 0.5% previous.
• US Nondef Cap Ex-Air R MM Jul, 1.0%, 0.4% previous.
• US ISM-New York Index Aug, 748.8, 745.5 previous.
• US ISM NY Biz Conditions Aug, 56.6, 62.8 previous.
• Fed should be cautious in face of weak inflation -Brainard.
• Fed's rate hikes may be doing real harm to US economy -Kashkari.
• Trump pulls plug on 'Dreamer' immigration program.
• Sanctions doubts grow as N.Korea warns of 'gift packages' for the US.
• Brexit-bound Britain's economy continues to lag Europe.
• NAFTA ministers seen announcing progress on non-controversial topics.
• 'Potentially catastrophic' Irma barrels toward Virgin Islands, Puerto Rico.
Looking Ahead - Economic Data (GMT)
• 00:00 Japan Overtime Pay Jul, -0.2% previous
• 01:30 Australia GDP QQ Q2, 0.9% forecast, 0.3% previous
• 01:30 Australia GDP YY Q2, 1.9% forecast, 1.7% previous
• 01:30 Australia GDP Final Consumption Q2, 0.6% previous
• 01:30 Australia GDP Capital Expenditure Q2, -0.6% previous
Looking Ahead - Events, Other Releases (GMT)
• 23:00 Fed’s Kaplan participates in a Q&A session before the Dallas Business Club
• 07:55 ECB’s Nouy holds keynote speech in Frankfurt, Germany
• N/A German Banking Conf. with ECB’s Nouy, Germany’s Schauble and Luxembourg Finmin Gramegna, organized by Handelsblatt newspaper.
• 14:00 Bank of Canada interest rate announcement
• 18:00 U.S. Federal Reserve issues its Beige Book on economic condition
Currency Summaries
EUR/USD is likely to find support at 1.1843 levels and currently trading at 1.1911 levels. The pair has made session high at 1.1938 and hit lows at 1.1865 levels. The euro drifted in a narrow range against the U.S. dollar on Tuesday as simmering geopolitical tensions put investors off adding big bets before a European Central Bank meeting this week when policymakers might voice some concerns about the single currency's strength. While ECB officials have been very careful about expressing their concerns over the currency's rise this year, as the euro still remains broadly below levels obtaining when policymakers launched their monetary stimulus plans, there are some markets fears that that may change. The euro edged 0.4 percent higher to $1.1927, rising for a second day with most currencies trading in tight overnight ranges as tensions over North Korea remained high. The single currency has gained more than 13 percent against the dollar this year and is up more than 5 percent on a trade-weighted index calculated by the ECB since April.
GBP/USD is supported in the range of 1.2950 levels and currently trading at 1.3036 levels. It reached session high at 1.3038 and dropped to session low at 1.2977 levels. Britain's steadied against the dollar on Tuesday as sterling gained ground against a weaker dollar ahead of a parliamentary debate over the Prime Minister Theresa May's European Union repeal bill. May warned lawmakers over the weekend that Britain could be faced with a Brexit "cliff edge" if they failed to back her bill, which will sever Britain's ties with the bloc and will see existing EU legislation copied across into domestic law. Finance minister Philip Hammond urged lawmakers on Monday not to seek to delay the legislation, following reports that the opposition Labour Party is planning to propose several changes to the bill. If May manages to get the bill through parliament, strategists say that could lift sterling, as it would ease a little of the uncertainty that has kept the currency under pressure. Data on Friday showed speculators added to their bets against the pound in the week up to last Tuesday, taking net short positions to their highest level in almost four months. Sterling rose as much as 0.8 percent to hit $1.3034, its strongest since Aug. 14.
USD/CAD is supported at 1.2300 levels and is trading at 1.2383 levels. It has made session high at 1.2399 and lows at 1.2337 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices held steady and the greenback slid against a basket of currencies. Prices of oil, one of Canada's major exports, climbed as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude. On Wednesday, the Bank of Canada is likely to announce it will leave rates unchanged, a Reuters poll released on Friday showed. The bank will probably wait until October to raise them, according to the survey. Still, the chances of a hike this week have climbed to more than 40 percent, the overnight index swaps market indicated, from around 20 percent before data on Thursday showing Canada's economy expanded in the second quarter at its fastest pace in nearly six years. The central bank raised rates in July for the first time in nearly seven years. Its policy rate stands at 0.75 percent. At 9:06 a.m. ET (1306 GMT), the Canadian dollar was trading at C$1.2379 to the greenback, or 80.81 U.S. cents, up 0.3 percent. The currency traded in a range of C$1.2368 to C$1.2416. It posted on Friday a two-year high at C$1.2340. Canada's bond and stock markets were closed on Monday for Labor Day.
USD/JPY is supported around 108.40 levels and currently trading at 108.77 levels. It peaked to hit session high at 109.26 and made session lows at 108.62 levels. The U.S. dollar weakened against the yen on Tuesday as Japanese yen benefited on concern about North Korea's largest nuclear test and a Federal Reserve official's comments about low U.S. inflation. The dollar touched 108.87 yen, its lowest since Aug. 29 after North Korea conducted its sixth and biggest nuclear test two days ago. South Korea's Asia Business Daily, citing an unidentified source, reported that North Korea had been observed moving a rocket that appeared to be an intercontinental ballistic missile (ICBM) toward its west coast. The dollar index, which measures the greenback against a basket of six major rivals, fell as much as 0.5 percent to a session low of 92.183 and was on course for its biggest daily percentage decline in eight days.on the data front, new orders for U.S.-made goods recorded their biggest drop in nearly three years in July, but demand for capital goods was stronger than previously reported, pointing to a faster pace of business spending early in the third quarter.
Equities Recap
European shares inched lower on Tuesday dragged down by losses in the heavyweight financial sector as worries over North Korea persisted and caution grew before a European Central Bank policy meeting later in the week.
UK's benchmark FTSE 100 closed down by 0.46 percent, FTSEurofirst 300 ended the day down by 0.11 percent, Germany's Dax ended up by 0.19 percent, and France’s CAC finished the day down by 0.28 percent.
Wall Street's three main indexes sank on Tuesday, with the S&P 500 on track for its biggest down day in about three weeks, as investors weighed fresh tensions involving North Korea.
Dow Jones closed down by 1.05 percent, S&P 500 ended down 0.75 percent, Nasdaq finished the day down by 0.92 percent.
Treasuries Recap
U.S. Treasury yields recorded their steepest one-day drop since May on Tuesday as investors worries about a powerful storm rolling toward the southern United States and tensions between North Korea and the United States and its allies stoked safe-haven demand for bonds.
The benchmark 10-year Treasury yield was down 9 basis points at 2.065 percent after hitting its lowest intraday yield in nearly 10 months.
Commodities Recap
Gold prices climbed to a one-year high on Tuesday as the U.S. dollar eased and safe-haven buying demand remained robust due to continued concerns over North Korea's nuclear tests.
Spot gold was up 0.6 percent at $1,341.86 an ounce by 3:19 p.m. EDT (1919 GMT), after peaking at $1,344.21, its highest since Sept. 8, 2016.U.S. gold futures ended the session up 1 percent at $1,344.50.
Crude oil prices rose and gasoline fell by about 3 percent on Tuesday as the gradual restart of refineries in the U.S. Gulf that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch.
U.S. crude futures settled up $1.37 at $48.66 per barrel after trading earlier in the day as high as $48.98, a three-week high. Brent crude ended $1.04, or 2 percent, higher at $53.38 per barrel.
