Market Roundup
• US Oct Consumer confidence, 125.9, 121.0 forecast, 119.8 previous.
• US Q3 Employment wages q/q, 0.7%, 0.5% previous.
• US Q3 Employment costs, 0.7%, 0.7% forecast, 0.5% previous.
• US Oct Chicago PMI, 66.2, 61.0 forecast, 65.2 previous.
• CA Aug GDP m/m, -0.1%, 0.1% forecast, 0.0% previous.
• CA Sept Producer prices m/m, -0.3%, 0.4% forecast, 0.3% previous.
• CA Sept Producer prices y/y, 1.5%, 1.9% previous 2.3% revised.
• Pence goes to Capitol Hill as lawmakers work on tax bill.
• Ousted Catalan leader agrees to election, summoned to Madrid court.
• Eurozone economy grows faster than expected in Q3, supports ECB QE decision.
• Rookies and robots brace for first UK rate rise since 2007.
• Britain accelerates Brexit plans, talks also to speed up.
• Brazil's central bank leaves door open for rate cuts in 2018.
Looking Ahead - Economic Data (GMT)
• 00:30 Japan Oct Nikkei Mfg PMI, 52.5 previous
• 01:45 China Oct Caixin Mfg PMI final, 51.0 forecast, 51.0 previous
Looking Ahead - Events, Other Releases (GMT)
• 05:00 Bank of Japan Deputy Governor Nakaso speaks in Tokyo
• 10:15 BOE Deputy Gov Jon Cunliffe and Sam Woods speak in London
• 17:15 Swiss National Bank's Zurbrugg speaks in Switzerland
• 18:00 Federal Reserve's FOMC announces its decision on interest rate
• 20:15 Bank of Canada Governor, Stephen Poloz appear before the Standing Senate Committee
Currency Summaries
EUR/USD is likely to find support at 1.1600 levels and currently trading at 1.1649 levels. The pair has made session high at 1.1661 and hit lows at 1.1629 levels. Euro edged higher slightly against the dollar on Tuesday as investors awaited a heavy calendar of events that market participants expected could prompt volatile prices moves for the rest of the week. The U.S. central bank is expected to leave interest rates unchanged when it concludes its two-day policy meeting on Wednesday, but investors will be watching for any new indications that a rate hike is likely in December. Republicans in the U.S. House of Representatives may also introduce a long-awaited tax bill on Wednesday, though lawmakers were still grappling with key provisions on Monday and some lobbyists expressed concern that legislation might not be ready as expected. President Donald Trump is expected to announce his choice for new Fed chair on Thursday, with news reports indicating that Federal Reserve Governor Jerome Powell is likely to get the nomination. Economic data is also in focus with manufacturing data on Wednesday and the jobs report for October on Friday. The dollar index, which measures the greenback against major currencies, was flat, while the euro last trading slightly up at $1.1649.
GBP/USD is supported in the range of 1.3191 levels and currently trading at 1.3280 levels. It reached session high at 1.3289 and dropped to session low at 1.3234 levels. Sterling rose against the dollar on Tuesday, after the European Union's chief Brexit negotiator said he was ready to speed up discussions with Britain, easing concerns about the lack of progress in negotiations. Talks intended to unravel more than 40 years of union with EU member states have become bogged down over what Britain should pay to leave the bloc, with some market analysts predicting a prolonged period of pain for the economy. Sterling rose 0.3 percent on the day against the dollar to a high at $1.3258 before it settled to trade at $1.3244.Against the euro, the pound hit a one-month high of 87.78 pence after Barnier's comments, before also edging down slightly to 87.86 pence. Sterling was set for a second consecutive month of declines. Before the news, the pound was trapped in a narrow 30 basis points range, among the quietest days in a 15-year trading history, with investors sidelined before a Bank of England rate decision on Thursday.
USD/CAD is supported at 1.2821 levels and is trading at 1.2910 levels. It has made session high at 1.2911 and lows at 1.2871 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday after data showed a surprise contraction of the domestic economy in August further dampened prospects of another Bank of Canada interest rate hike this year. Canada’s gross domestic product declined 0.1 percent in August following flat growth in July, in part due to maintenance shutdowns in major industries, Statistics Canada said. Analysts had forecast an increase of 0.1 percent. The data supported the view that Canadian growth will slow in the third quarter after the rapid expansion of the economy in the first half of the year. Perceived chances of another Bank of Canada rate increase by the end of the year slipped to 22 percent from 27 percent before the data, the overnight index swaps market indicated. They were 37 percent before last week's interest rate decision by the central bank, when the benchmark rate was left unchanged at 1 percent. The Bank of Canada had hiked in July and September for the first time in nearly seven years. The Canadian dollar was trading at C$1.2899 to the greenback, down 0.5 percent. The currency traded in a range of C$1.2825 to C$1.2915. On Friday, it touched a more than three-month low at C$1.2916.
AUD/USD is supported around 0.7624 levels and currently trading at 0.7655 levels. It hit session high at 0.7668 and made session lows at 0.7638 levels. The Australian dollar declined against US dollar on Tuesday as Australian dollar was dragged lower after data showed China's factories expanded at a slower pace in October. The Australian dollar, often traded as a liquid proxy for China plays, was the last trading down at $0.7653, edging closer to 4-month trough of $0.7622 touched last week. China’s official manufacturing Purchasing Managers' Index fell to 51.6 in October, from 52.4, while the services index eased to 54.3 from 55.4 in September. China is Australia's top trading partner, taking much of its iron ore output, while the services sector accounts for over half of China's economy and is important to Beijing as it rebalances growth away from investment and exports. The Aussie has underperformed in recent weeks largely on a resurgent greenback. It has fallen more than 4.5 percent since setting a near 2-1/2-year top of $0.8124 last month. The Aussie is poised for its third straight month of losses in October, but some analysts see its woes coming to an end, at least in the short-term.
Equities Recap
European stocks held at five-month highs on Tuesday, ending October with a 1.8 percent monthly gain, the second in a row, as third-quarter data fuelled confidence in the resilience of equity markets.
UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.31 percent, France’s CAC finished the day up by 0.3 percent.
A jump in shares of consumer companies Mondelez and Kellogg after their quarterly reports, along with further gains for tech stocks on Tuesday, helped Wall Street end October on a positive note.
Dow Jones closed up by 0.13 percent, S&P 500 ended up 0.09 percent, Nasdaq finished the day up by 0.43 percent.
Treasuries Recap
U.S. Treasury debt prices were steady on Tuesday as investors awaited a heavy calendar of events that market participants expected could prompt volatile prices moves for the rest of the week.
Benchmark 10-year notes were last down 1/32 in price to yield 2.37 percent, little changed on the day.
Commodities Recap
Gold prices fell on Tuesday as the U.S. dollar was firm for much of the session and precious metals investors turned cautious ahead of central bank meetings this week, U.S. payrolls data and the announcement of the next U.S. Federal Reserve chair.
Spot gold slipped 0.4 percent to $1,270.40 an ounce by 2:40 p.m. EDT (1840 GMT), headed for a second-straight monthly decline.
U.S. gold futures for December delivery settled down $7.20, or 0.6 percent, at $1,270.50 per ounce, a 1 percent monthly decline.
Oil prices settled higher again on Tuesday, notching a monthly gain of more than 5 percent, but analysts said bullish sentiment that has driven Brent crude to its highest in more than two years could encourage U.S. producers to export more oil.
Brent settled up 47 cents or 0.7 percent to $61.37, close to its July 2015 highs reached earlier this week, and up around 37 percent from its 2017 lows hit in June.
U.S. West Texas Intermediate crude (WTI) settled up 23 cents or 0.4 percent to $54.38, still near its highest since February and close to its highest in more than two years.
