Markket Roundup
• China ready for proportionate response to U.S. tariffs- envoy.
• New York Fed launches U.S. Libor contender, slow take up seen.
• NY Fed names Williams to top post amid political backlash.
• U.S. w/e Redbook MM, 0.4%, 0.1% previous.
• U.S. w/e Redbook YY, 4.4%, 3.6% previous.
• U.S. Mar ISM-New York Index, 772.1, 770.2 previous.
• U.S. Mar ISM NY Biz Conditions, 54.0, 54.5 previous.
• Euro zone factory boom stumbles again in March but growth solid -PMI.
• UK manufacturing growth cools to one-year low -PMI.
• BOJ's Kuroda says politics won't get in way of exiting easy policy.
• Russia says looking at joint organisation for cooperation with OPEC
Looking Ahead - Economic Data (GMT)
• 4 Apr 00:30 Japan Mar Services PMI, 51.7 previous
• 4 Apr 01:30 Australia Feb Building Approvals, -5.0% forecast, 17.1% previous
• 4 Apr 01:30 Australia Feb Private House Approvals, -1.1% previous
• 4 Apr 01:30 Australia Feb Retail Sales MM, 0.3% forecast, 0.1% previous
• 4 Apr 01:45 China Mar Caixin Services PMI, 54.2 previous
Looking Ahead - Events, Other Releases (GMT)
• 3 Apr 20:30 Federal Reserve Board Governor Lael Brainard speaks on "Financial Stability" before an event hosted by the New York University Stern Center for Global Economy and Business – New York
• 3 Apr N/A Bank of Spain/IMF conference on "Spain: From Recovery to Resilience" - Madrid
• 4 Apr 13:45 Fed’s James Bullard makes presentation at the Arkansas Bankers Association & Arkansas State
Bank Department's Day with the Commissioner - Arkansas
• 4 Apr 15:00 Fed’s Loretta Mester speaks on "Diversity in Economics" before the Central State University Leaders, Executives, Entrepreneurs and Directors (LEED) program - Ohio
Currency Summaries
EUR/USD is likely to find support at 1.2200 levels and currently trading at 1.2265 levels. The pair has made session high at 1.2365 and hit lows at 1.2265 levels. The euro declined against US dollar on Tuesday as risk appetite improved and Wall Street's main indexes advanced, helping the dollar stabilize after sharp declines the previous day. The outlook for the dollar, however, remains murky due to global trade tensions. The greenback has lost 2 percent in the year so far. The trade dispute between China and the United States is seen likely to be a market focus in the near term. Investors are also focused on U.S. data this week, led by the non-farm payrolls report for March due on Friday. The reports are expected to determine the path for future Federal Reserve interest rate increases. China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.The Trump administration is expected to announce this week U.S. tariffs on $50 billion to $60 billion in Chinese imports. On Tuesday China's ambassador to the United States said Beijing will take counter-measures of the "same proportion" and scale if Washington imposes further tariffs. The dollar index, tracking it against a group of major currencies, rose 0.19 percent, with the euro down 0.26 percent to $1.2268.
GBP/USD is supported in the range of 1.4006 levels and currently trading at 1.4055 levels. It reached session high at 1.4088 and dropped to session low at 1.4019 levels. Britain's pound edged lower against the dollar on Tuesday as dollar gained and investors shifted their focus from Brexit to the state of the UK economy ahead of an expected rate hike next month. Dollar gained across the board as the market was not too concerned for now about how the trade spat could undermine global economic growth. On the data front, the UK Manufacturing Purchasing Managers' Index (PMI) released on Tuesday inched up to 55.1 in March from a downwardly revised 55.0 in February, beating the 54.5 consensus in a preliminary poll of economists. Tuesday's PMI data also showed manufacturing growth had cooled to a one-year low in the first quarter of 2018 as the economy remains on a slow but steady course a year ahead of Brexit. This week’s major economic catalyst will be Friday's jobs report, which will be watched for signs of accelerating jobs gains and wage pressures. The U.S. economy added the biggest number of jobs in more than 1-1/2 years in February, at 313,000 jobs. Federal Reserve Chairman Jerome Powell is also due to speak about the economic outlook at an event in Chicago on Friday.
USD/CAD is supported at 1.2776 levels and is trading at 1.2812 levels. It has made session high at 1.2885 and lows at 1.2780 levels. The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Tuesday as oil and stock prices steadied after steep declines the day before, while investors weighed potential progress toward a NAFTA trade deal. The United States, Mexico and Canada have made significant advances on reworking the North American Free Trade Agreement and ministers will meet in the coming days to determine the scope to agree on the basics of a deal, Mexico's economy minister said on Monday. U.S. stocks were boosted by gains in beaten-down technology companies. Canada's commodity-linked currency tends to be sensitive to movement in stock prices which are influenced by the health of the global economy. The price of oil, one of Canada's major exports, rose after its biggest one-day fall in almost a year the previous day, although higher Russian output and Saudi Arabia possibly cutting its selling prices acted as a drag. The Canadian dollar was last trading 0.7 percent higher at C$1.2805 to the greenback.The currency's weakest level of the session was C$1.2924, while it touched its strongest since March 27 at C$1.2782.
AUD/USD is supported around 0.7640 levels and currently trading at 0.7682 levels. It hit session high at 0.7697 and made session lows at 0.7664 levels. The Australian dollar edged lower against dollar on Tuesday as nervousness around the outlook for global growth amid escalating U.S.-China trade tensions weighed on Australian dollar. The Australian dollar was last trading at $0.7680 to be within spitting distance of last week's $0.7643, a level not seen since mid-December. Investors were cautious as China imposed extra tariffs on 128 U.S. products, deepening a dispute between the world's two biggest economies and stoking concerns about the impact on global growth. At home, Australia had a string of secondary data which showed the economy was expanding at a reasonable pace, with strong hiring and signs of a pick-up in price pressures. The Reserve Bank of Australia (RBA) also sounded optimistic about faster economic growth in 2018 at its monthly policy meeting on Tuesday in which it held rates at 1.50 percent in a widely expected move.The RBA has left rates at record lows since August 2016, the longest stretch without a change since early 1990s, and is likely to extend the spell for some time yet as it awaits a pick-up in inflation.
Equities Recap
European stocks retreated on Tuesday as investors began the second quarter in a fragile mood amid international trade tensions and mounting pressure on big technology companies.
The UK's benchmark FTSE 100 closed down by 0.3 percent, FTSEurofirst 300 ended the day down by 0.33 percent, Germany's Dax ended down by 0.7 percent, and France’s CAC finished the down by 0.2 percent.
The three major U.S. stock indexes ended higher after a choppy session on Tuesday as investors looked forward to earnings season while the S&P 500 pushed above a key support level and Amazon.com shares jumped on hopes that criticism from President Donald Trump would not translate to policy changes.
Dow Jones closed up by 1.63 percent, S&P 500 ended up 1.27 percent, Nasdaq finished the day up by 1.03 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday as stock markets firmed and as investors looked ahead to Friday's closely watched employment report for March.
U.S. benchmark 10-year Treasury note prices fell 14/32 in price on the day to yield 2.781 percent, after falling as low as 2.717 percent on Monday, the lowest since Feb. 6.
Commodities Recap
Gold prices fell on Tuesday as U.S. stock markets stabilized, easing fears of a deeper selloff, and the dollar strengthened, making bullion more expensive for users of other currencies.
Spot gold dropped 0.6 percent to $1,333.09 per ounce by 1:35 p.m. EDT (1735 GMT), after rising 1.3 percent on Monday. U.S. gold futures for June delivery settled down $9.60, or 0.7 percent, at $1,337.30 per ounce.
Oil edged up on Tuesday, supported by a recovery in the equities market and on a technical bounce for crude after the biggest daily percentage drop in almost a year, but Brent futures stayed well below $70 a barrel.
Brent crude futures gained 48 cents, or 0.7 percent, to settle at $68.12 a barrel. This followed a nearly 4 percent drop in Brent prices on Monday, the largest since June.
West Texas Intermediate futures rose 50 cents, or 0.8 percent, to settle at $63.51 a barrel.
