Market Roundup
• US Jul JOLTS Job Openings, 6.939M, 6.662M previous, 6.822M.
• US Aug NFIB Business Optimism, 108.980, 107.90 previous.
• US 8 Sep w/e Redbook m/m, 0.8%, 0.8% previous.
• US 8 Sep w/e Redbook y/y, 6.3%, 6.5% previous.
• US Jul Wholesale Inventories,R m/m, 0.65, 0.7% previous, 0.7% forecast.
• US Jul Wholesale Sales m/m, 0.0%, -0.1% previous, 0.3% forecast, -0.2% revised.
• CA Aug Housing Starts, Annualized, 201.0K, 206.3k previous, 210.3K forecast, 205.8K revised.
• China seeks WTO backing for $7 bln sanctions on U.S. over dumping duties.
• Bank of England's Carney to stay until January 2020 to smooth Brexit.
• Canada's Freeland returns to Washington for NAFTA talks.
• Brazil's Workers Party to swap Lula for running mate Haddad.
• Wall Street regulators take multiple actions against cryptocurrency firms.
Looking Ahead - Economic Data (GMT)
• 11 Sep 23:50 Japan Q3 Business Survey Index, -3.2% previous
• 12 Sep 00:30 Australia Sep Consumer Sentiment, -2.3% previous
Looking Ahead - Events, Other Releases (GMT)
• 09:30 Riksbank Governor Stefan Ingves will participate in a half-day conference on Financial Regulations Post Brexit in London.
• 13:15 Jill May External member of the PRC at BoE, and LSE Professor Julia Black: Treasury Select Committee external PRC pre-appointment hearing in London
• 13:30 Fed's Reserve Bank of St. Louis President Bullard speaks on the U.S. economy and monetary policy before the CFA Society, Chicago.
• 16:45 Fed's Reserve Board Governor Lael Brainard speaks on the economic and monetary policy outlook before a Detroit Economic Club luncheon, US.
• 18:00 Federal Reserve issues the Beige Book of economic condition, Washington D.C.
Currency Summaries
EUR/USD is likely to find support at 1.1508 levels and currently trading at 1.1602 levels. The pair has made session high at 1.1603 and hit lows at 1.1564 levels. The euro declined against dollar on Tuesday as concerns about trade friction between China and the United States boosted greenback. China will ask the World Trade Organization (WTO) next week for permission to impose sanctions on the United States, for Washington's non-compliance with a ruling in a dispute over U.S. dumping duties. Anxiety over the trade dispute between the world's two biggest economies outweighed traders' optimism about a possible agreement on the terms of Britain's exit from the European Union and reversed some of euro and sterling's gains on Monday. On the data front, U.S. job openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth. The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday also suggested a further tightening in labor market conditions, with employers appearing to increasingly have trouble finding suitable workers. The market will be watching the release of consumer price index data on Thursday to see if it confirms the increased inflation expectations suggested by the JOLTS numbers and wage gains reported on Friday.
GBP/USD is supported in the range of 1.2941 levels and currently trading at 1.3026 levels. It reached session high at 1.3041 and dropped to session low at 1.2962 levels. The British pound erased its earlier gains greenback and fell into the red on Tuesday as a recent rise in optimism over prospects for a Brexit trade deal with the European Union faded. The pound remained close to five-week highs, however, after EU chief negotiator Michel Barnier's comments on Monday that a Brexit deal was possible within weeks and given that British economic data has been broadly supportive of the currency. The latest figures, published on Tuesday, showed British workers' underlying pay growth picking up faster than expected, although market attention is squarely focused on Brexit headlines. The British currency hit its highest level since early August in early trading at $1.3087, but gave up its gains after the pay data to stand 0.2 percent down at $1.3015. Against the euro, the pound was flat at 89.06 pence. News that Bank of England Governor Mark Carney would extend his term until the end of January 2020 did little to boost the pound before a policy meeting this week. With less than seven months to go before the United Kingdom is due to leave the European Union, recent comments from policymakers have been perceived by markets as conciliatory.
USD/CAD is supported at 1.3000 levels and is trading at 1.3058 levels. It has made session high at 1.3173 and lows at 1.3039 levels. The Canadian dollar edged higher against its U.S. counterpart on Tuesday as oil prices jumped and investors grew more optimistic of a deal to renew the NAFTA trade pact. Canadian Foreign Minister Chrystia Freeland returned to Washington for talks aimed at rescuing the North American Free Trade Agreement. She said discussions between U.S. and Canadian negotiating teams over the weekend were "constructive and productive. Canada sends about 75 percent of its exports to the United States, including autos and oil, so its economy could be hurt if a deal is not reached. On the data front, housing starts declined to a seasonally adjusted annualized rate of 200,986 units from a revised 205,751 units in July, data from the Canada Mortgage and Housing Corporation showed. Economists expected starts to rise to 210,300 homes. The Canadian dollar was last trading 0.7 percent higher at C$1.3058 to the greenback. The currency, which had touched on Thursday its weakest in nearly seven weeks at C$1.3226, traded in a range of C$1.3039 to C$1.3175.
AUD/USD is supported around 0.7021 levels and currently trading at 0.7118 levels. It hit session high at 0.7125 and made session lows at 0.7097 levels. The Australian dollar hovered around 2-1/2 year lows against the greenback on Tuesday as investors feared an escalation in the Sino-US trade war. President Donald Trump warned last week he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days. The moves would escalate Trump's trade war with Beijing over his demands for major changes in economic, trade and technology policy. China told the World Trade Organization on Tuesday it wanted to impose $7 billion a year in sanctions on the United States in retaliation for Washington's non-compliance with a ruling in a dispute over U.S. dumping duties. Trump told reporters on Tuesday that the United States was taking a tough stance with China, but he described trade talks with Canada as going well. The Australian dollar held at $0.7121 after going as low as $0.7092 earlier in the day, a level not seen since early 2016.The Aussie, a proxy for Chinese assets, is now down almost 9 percent this year, putting it among the world's worst performing major currencies.
Equities Recap
A recovery in European shares stalled on Tuesday as a trade dispute between Washington and Beijing weighed on the market and investors seized on China's demand for sanctions from the World Trade Organisation as a reason to take the market lower.
The UK's benchmark FTSE 100 closed down by 0.2 percent, FTSEurofirst 300 ended the day down by 0.11 percent, Germany's Dax ended down by 0.2 percent, and France’s CAC finished the up by 0.2 percent.
U.S. stocks rose on Tuesday as Apple led a jump in technology shares and a gain of more than 2 percent in oil prices drove up energy shares.
Dow Jones closed up by 0.45 percent, S&P 500 ended up 0.38 percent, Nasdaq finished the day up by 0.62 percent.
Treasuries Recap
U.S. Treasury bond yields rose on Tuesday following a report of a record number of job openings in July as $144 billion in new supply on offer this week weighed on prices.
The two-year yield, which reflects market expectations of Fed interest rate hikes, hit a decade peak on Tuesday for the third day in a row at a yield of 2.752 percent, the highest since July 2008.
The 10-year yield was 2.981 percent, up from a high on Monday of 2.950 percent. The 30-year yield was also up, last at 3.127 percent.
Commodities Recap
Gold turned positive on Tuesday as investors bought when it approached $1,200 per ounce. But bullion remained under pressure after hitting a two-week low and the dollar resumed its ascent amid broad risk-off sentiment, looming U.S. interest rate rises and prospects for escalating U.S.-China trade tensions.
Spot gold gained 0.2 percent at $1,197.28 per ounce by 1:49 p.m. EDT (1749 GMT). U.S. gold futures for December delivery settled up $2.40, or 0.2 percent, at $1,202.20 per ounce.
Oil prices rose more than 2 percent on Tuesday as U.S. sanctions squeezed Iranian crude exports and after U.S. crude oil production in 2019 were forecast to grow at a slower rate than previously expected, prompting supply concerns.
Brent crude futures rose $1.69, or 2.2 percent, to settle at $79.06 a barrel. U.S. West Texas Intermediate (WTI) crude settled $1.71, or 2.5 percent, higher at $69.25 a barrel.
