Market Roundup
• With rate hike in the bag, focus turns to Fed's policy language .
• In stunning summit concession, Trump says he will halt Korea war games.
• Britain's May defeats rebellion in parliament over Brexit plans.
• US May CPI MM, SA, 0.2%, 0.2% forecast, 0.2% previous.
• US May CPI YY, NSA, 2.8%, 2.7% forecast, 2.5% previous.
• US May Core CPI YY, NSA, 2.2%, 2.2% forecast, 2.1% previous.
• US May Core CPI MM, SA, 0.2%, 0.2% forecast, 0.1% previous.
• US May CPI Index, NSA, 251.588, 251.557, 250.546 previous.
• US May Core CPI Index, SA, 256.89, 256.45 previous.
• US May Real Weekly Earnings MM, 0.1%, 0.0% forecast, -0.1% previous.
• US May Cleveland Fed CPI, 0.2% previous.
• US May Federal Budget, $, -147.00 bln, -144.00 bln, 214.00 bln previous.
• US May NFIB Business Optimism Index, 107.80, 104.80 previous.
• US w/e Redbook MM, -0.2%, 0.1% previous.
• US w/e Redbook YY, 4.3%, 4.0% previous.
Looking Ahead - Economic Data (GMT)
• 12 Jun 22:45 New Zealand May Food Price Index, 0.1% previous
• 13 Jun 00:30 Australia Jun Consumer Sentiment, -0.6% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of Iceland releases monetary policy statements in Reykjavik, Iceland
• 06:30 Riksbank Seminar: A changing mortgage market in Stockholm
• 07:00 Greece's Finance Minister Euclid Tsakalotos and Labour Minister Effie Achtsioglou speak at a conference in Brussels
• 08:00 New Bank of Ireland chief executive Francesca McDonagh to lay out strategic priorities for Ireland's biggest bank by assets, including details of a cost cutting drive to bring its costs in line with rivals in Dublin
• 08:30 Bank of England Deputy CEO of the Prudential Regulation Authority, Lyndon Nelson: Regulatory Keynote Address at OpRisk Europe in London
• 17:15 Member of the Bank of England Financial Policy Committee, Anil Kashyap: Speech at the OMFIF City lecture in London
• 18:00 U.S. Federal Reserve's Federal Open Market Committee announces decision on interest rate
• 18:30 Federal Reserve Chairman Jerome Powell holds news conference on interest rate policy in Washington D.C.
Currency Summaries
EUR/USD is likely to find support at 1.1700 levels and currently trading at 1.1747 levels. The pair has made session high at 1.1800 and hit lows at 1.1731 levels. The euro declined against US dollar on Tuesday as dollar was boosted after data showed U.S. consumer prices rose in May, matching analysts' forecasts and reinforcing the view the Federal Reserve would raise short-term interest rates gradually. U.S. consumer prices rose marginally in May amid a slowdown in the pace of increases in the cost of gasoline, pointing to moderate inflation pressures. Three of the world's top central banks the Federal Reserve, the European Central Bank and the Bank of Japan are each meeting this week. The market was relatively quiet on Tuesday as investors waited for guidance from the banks. The Federal Reserve holds a two-day meeting starting on June 12, and it is widely expected to raise interest rates for the second time this year. The focus is on whether the central bank will hint at raising rates a total of four times in 2018. The European Central Bank meets on June 14, when it could signal intentions to start unwinding its massive bond purchasing program. The Bank of Japan will meet from June 14 through June 15, but will not offer an immediate report following the meeting, instead publishing a summary of opinions on June 25. The dollar index rose 0.21 percent to 93.81, The euro was down 0.25 percent to $1.1747.
GBP/USD is supported in the range of 1.3300 levels and currently trading at 1.3372 levels. It reached session high at 1.3424 and dropped to session low at 1.3348 levels. Sterling whipsawed against the dollar on Tuesday after British Prime Minister Theresa May saw off a rebellion in parliament over amendments to a bill for the country's exit from the EU next year that had threatened to undermine her authority. May had faced a showdown with lawmakers who wanted the power to force her government to go back to the negotiating table if they reject a Brexit deal, testing her plans for leaving the European Union. But May won a key vote in parliament on Tuesday with a compromise on plans to give lawmakers a 'meaningful' vote later this year on the terms of Britain's exit from the EU. The pound strengthened 0.3 percent against the dollar to $1.3424 after parliament voted to back the government on several amendments to the EU withdrawal bill. It then retraced its moves and finally settled around $1.3372. On the data front, British factory output unexpectedly dropped in April at the fastest pace since 2012, due to weaker demand at home and abroad, raising concern that the economy's weakness in early 2018 is persisting. The official data published on Monday also showed the biggest trade deficit for goods since September 2016 after big falls in exports of aircraft, pharmaceuticals and machinery.
USD/CAD is supported at 1.2920 levels and is trading at 1.3015 levels. It has made session high at 1.3028 and lows at 1.2977 levels. The Canadian dollar edged lower against its U.S. counterpart on Tuesday, pressured by an uncertain outlook for the country's trade with the United States and lower oil prices. U.S. President Donald Trump insisted he had a good relationship with Justin Trudeau, just days after blowing up a G7 summit the Canadian prime minister had hosted. But Trump took another dig at Trudeau, saying the United States had a big trade deficit with Canada and that "a little balance" was needed. The U.S. president's comments come amid slow-moving talks between Canada, the United States and Mexico to modernize the North American Free Trade Agreement. Canada sends about 75 percent of its exports to the United States and its economy could be hurt if NAFTA were scrapped. The price of oil, one of Canada's major exports, dipped even as comments from the Iraqi oil minister cast doubt on whether the Organization of the Petroleum Exporting Countries would decide to boost output at its upcoming meeting. The Canadian dollar was trading 0.2 percent lower at C$1.3015 to the greenback. The currency traded in a range of C$1.2977 to C$1.3029.
USD/JPY is supported around 109.17levels and currently trading at 110.31 levels. It peaked to hit session high at 110.48 and made session lows at 110.07 levels. The U.S. dollar strengthened against the Japanese yen on Tuesday as the dollar strengthened following a positive U.S.-North Korea summit. U.S. President Donald Trump said North Korean leader Kim Jong Un pledged at a historic summit on Tuesday to move toward complete denuclearisation, while the United States promised its old foe security guarantees. The start of negotiations aimed at banishing what Trump described as North Korea's "very substantial" nuclear arsenal could have far-reaching ramifications for the region, and in one of the biggest surprises of the day, Trump said he would stop military exercises with old ally South Korea. Greenback also gained after data showed the Consumer Price Index increased 0.2 percent last month, as expected. In the 12 months through May, the CPI accelerated 2.8 percent. Fed officials are due to update their economic and rate projections on Wednesday and investors will be watching for any changes in their policy statement for clues on further rate moves. The dollar was trading higher against the Japanese yen, at 110.34 yen, after hitting 110.49 earlier in the day, its highest in nearly three weeks and above a 200-day moving average.
Equities Recap
European stocks fell on Tuesday, pulled down by commodities stocks, but retailers gained after Carrefour signed an online shopping partnership with Google.
UK's benchmark FTSE 100 closed down 0.4 percent, FTSEurofirst 300 ended the day down by 0.01 percent, Germany's Dax ended down by 0.02 percent and France’s CAC finished the day down by 0.4 percent.
U.S. stocks ended slightly higher on Tuesday, boosted by gains in utilities and technology shares, though investors were cautious ahead of the Federal Reserve's policy decision.
Dow Jones closed down by 0.01 percent, S&P 500 ended up 0.17 percent, Nasdaq finished the day up by 0.58 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday ahead of Wednesday's widely expected hike in interest rates by the Federal Reserve and after inflation data met economists expectations.
Benchmark 10-year notes fell 1/32 on the day in price to yield 2.961 percent, up from 2.957 percent on Monday.
Commodities Recap
Gold prices edged lower on Tuesday as the dollar strengthened following a positive U.S.-North Korea summit, with markets now waiting for a likely interest rate hike by the U.S. Federal Reserve.
Spot gold fell 0.4 percent at $1,294.96 per ounce by 1:35 p.m. EDT (1735 GMT), earlier hitting $1,292.60, a one-week low. U.S. gold futures for August delivery settled down $3.80, or 0.3 percent, at $1,299.40 per ounce.
Oil prices were mixed on Tuesday, with U.S. crude edging higher and Brent crude slipping, as investors prepared for a key meeting of the OPEC producer group next week.
Brent crude futures dipped 66 cents to trade at $75.80 a barrel by 2:13 p.m (1813 GMT), while U.S. West Texas Intermediate crude futures climbed 15 cents to $66.25
