Market Roundup
• US Consumer Confidence Jul 121.1, 116.5 forecast, 117.3 previous.
• US Monthly Home Price MM May 0.4%, 0.6% previous.
• US Monthly Home Price Index May 249.2, 248.3 previous.
• US Caseshiller 20 MM SA May 0.1%, 0.3% forecast, -0.2% previous.
• US Rich Fed Comp. Index Jul 14, 7 previous.
• US Redbook YY w/e, 2.1%, 2.0% previous.
• US Senate votes to open debate on healthcare repeal.
• Senate was deadlocked 50-50 on the healthcare debate, VP Pence casts tie-breaking vote.
• US Senate panel compels former Trump aide to attend Russia hearing.
• Sessions' allies say Trump using Twitter attacks to force resignation.
• IMF: ECB should maintain stimulus, calls for end are "premature".
• ECB's Nowotny: Wise to gently ease back on stimulus – paper.
• Greece prepares for end of bailout era with comeback bond.
• 'Euphoric' exporters lift German business morale to new high.
• UK factory output rises at fastest pace since 1995 –CBI.
• BOJ newcomers back 2% price goal, say too early to debate stimulus exit.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Trade Balance Jun, 103.0m previous
• 22:45 New Zealand Trade Balance YY Jun, -3.75b previous
• 01:30 Australia CPI QQ Q2, 0.4% forecast, 0.5% previous
• 01:30 Australia CPI YY Q2, 2.2 forecast, 2.1% previous
• 01:30 Australia CPI Index Number Q2, 110.5 previous
Looking Ahead - Events, Other Releases (GMT)
• 01:30 Bank of Japan Dy Gov Nakaso speaks to business leaders in Hiroshima – Tokyo
• 18:00 US Fed’s Federal Open Market Committee announces its decision on interest rate – Washington
• Reserve Bank of New Zealand Asst Gov McDermott will give a speech on economic trends. – Wellington
Currency Summaries
EUR/USD is likely to find support at 1.1615 levels and currently trading at 1.1644 levels. The pair has made session high at 1.1711 and hit lows at 1.1641 levels. The euro slipped from 2-1/2-year peak against the U.S. dollar on Tuesday as investors awaited Wednesday's Federal Reserve statement for new indications about when the U.S. central bank will begin paring its bond holdings and next raise interest rates. Many analysts and investors expect the Fed to announce that it will begin reducing its bond portfolio at its September meeting, but will be watching for any hints on the timing at this week’s meeting. Further interest rate hikes are not seen as likely until at least December. Futures traders are pricing in a 53 percent chance that the Fed will raise rates at its December meeting, according to the CME Group’s FedWatch Tool. The dollar index, which measures the greenback against a basket of currencies, earlier hit its lowest level since June 2016 at 93.638.It has fallen nearly 4 percent over the last month and more than 8 percent this year, and was last down 0.2 percent on the day at 93.811. The euro rose to its highest since August 2015 and was just below a 2-1/2-year peak, boosted by a stronger-than-expected German business survey.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3034 levels. It reached session high at 1.3054 and dropped to session low at 1.3011 levels. Britain's steadied against the dollar on Tuesday as sterling was supported by a broadly weaker dollar and worries over Brexit and the pace of UK economic growth eased. The pound inched up 0.2 percent in the late US session to trade at $1.3026, around a cent off 10-month highs hit a week ago as the greenback weakened globally. On the data front, British factories increased output at the fastest rate since the mid-1990s over the past three months, according to a survey published on Tuesday that suggested manufacturing might help to support the economy as it slows during 2017. The Confederation of British Industry's quarterly balance for manufacturing rose to +31 in the three months to July, the highest reading since January 1995 and up from +22 in the three months to April. The Bank of England is focusing closely on gauges of exports and investment by businesses ahead of next week's interest rate decision. BoE policymakers are hopeful that companies will help offset the cautious mood among consumers, who have been hurt by a sharp rise in inflation stemming largely from the fall in sterling.
USD/CAD is supported at 1.2480 levels and is trading at 1.2504 levels. It has made session high at 1.2523 and lows at 1.2481 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. The U.S. dollar fell to a more than one-year low against its rivals ahead of a two-day Federal Reserve meeting that starts later on Tuesday. Markets are giving a less than 50 percent probability of a interest rate increase before the end of the year. The combination of a weaker U.S. dollar, higher oil prices and robust economic data helped push the Canadian dollar to its strongest level in 14 months, breaching the C$1.25, or 80 U.S. cents, level. Prices of crude oil, a key Canadian export, strengthened further after Saudi Arabia promised to curb exports and the Organization of the Petroleum Exporting Countries and non-OPEC producers discussed extending their deal to cut output beyond March 2018 if necessary. The Canadian dollar was trading at C$1.2505 to the greenback. The currency's strongest level of the session was C$1.2477, while its weakest level was C$1.2530.
AUD/USD is supported around 0.7870 levels and currently trading at 0.7933 levels. It hit session high at 0.7968 and made session lows at 0.7929 levels. The Australian dollar hovered near two-year highs against its US counterpart as dollar turned lower on Tuesday as markets awaited clues about monetary policy from the U.S. Federal Reserve, which began its two-day meeting. The market is not expecting an interest rate increase following the Fed's two-day meeting, but it is looking for hints on the timing and extent of future moves. The antipodean currency was helped by higher oil prices. Oil prices extended their recovery on a pledge by leading OPEC producer Saudi Arabia to cut exports in August to help reduce the global crude glut. The Australian dollar was at $0.7941 compared with a high of $0.7992 touched last week. Key chart support lies at $0.7875 with resistance at $0.8000. A big potential catalyst for the Aussie's next move will be second quarter inflation data due on Wednesday, followed by a speech by Reserve Bank of Australia Governor Philip Lowe. Core inflation, closely watched by policymakers is likely to stay below target for a sixth straight quarter.
Equities Recap
Strength among commodity firms and banking stocks as well as a string of solid updates boosted European shares on Tuesday.
UK's benchmark FTSE 100 closed up by 0.84 percent, FTSEurofirst 300 ended the day up by 0.61 percent, Germany's Dax ended up by 0.49 percent, and France’s CAC finished the day up by 0.75 percent.
The S&P 500 extended its record-setting run on Tuesday, led by well-received corporate reports from McDonald's and Caterpillar and gains for bank shares, while the Nasdaq managed a record high despite losses for Google parent Alphabet.
Dow Jones closed up by 0.47 percent, S&P 500 ended up 0.30 percent, Nasdaq finished the day up by 0.05 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday as stocks hit record highs, reducing demand for safe-haven bonds, a day before the Federal Reserve was due to release its July meeting minutes.
Benchmark 10-year notes dropped 20/32 in price to yield 2.33 percent, up from 2.25 percent on Monday.
Commodities Recap
Oil rose 3.3 percent on Tuesday, the highest close in more than a month, a day after U.S. oil producer Anadarko said it would cut capital spending plans and Saudi Arabia vowed to reduce crude exports to help curb global oversupply.
Brent crude futures rose $1.60 or 3.3 percent to settle at $50.20 a barrel, the first time the benchmark closed above $50 since June 6. U.S. West Texas Intermediate futures rose $1.55 or 3.3 percent to settle at $47.89 a barrel, the benchmark's highest close since early June.
Gold prices retreated from a one-month high on Tuesday as equities gained and the markets awaited clues about monetary policy from the U.S. Federal Reserve, which began its two-day meeting.
Spot gold was down 0.2 percent at $1,251.90 an ounce by 1:50 p.m. EDT (1750 GMT), not far from the previous session's peak of $1,258.79, its highest since June 23. U.S. gold futures settled down 0.2 percent at $1,252.10.
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