Market Roundup
• Traders widely expect Fed to cut U.S. rates on Wednesday
• Trump fires new warning at China
• U.S. consumer confidence rebounds to hit 8-month peak in July
• US June Core PCE Price Index (YoY) 1.6%,1.7% forecast, 1.5 % previous
• US June Core PCE Price Index (MoM) 0.2%,0.2% forecast, 0.3 % previous
• US Redbook YoY 4.5%, 4.9 % previous
• US Redbook MoM 1.0%, 1.1 % previous
• US CB Jul Consumer Confidence 135.7,125.0 forecast, 124.3 previous
• US Jul Pending Home Sales (MoM) 2.8%,0.5% forecast, 1.1 % previous
• US Jul Pending Home Sales Index 108.3, 105.4 previous
• US Jul Dallas Fed Services Revenues 20.9, 13.6 previous
• US Jul Texas Services Sector Outlook 4.7, 3.2 previous
Looking Ahead - Economic Data (GMT)
• 23:00 UK BRC Shop Price Index (YoY) -0.1 previous
• 23:01 UK Jul GfK Consumer Confidence -13 forecast, -13 previous
• 01:00 China Jul Chinese Composite PMI, 53.0 previous
• 01:00 China Jul Manufacturing PMI 49.6 forecast, 49.4 previous
• 01:00 China Jul Non-Manufacturing PMI 54.0 forecast, 54.2 previous
• 01:30 New Zealand Jul ANZ Business Confidence -38 previous
• 01:30 New Zealand Jul NBNZ Own Activity 8 % previous
• 01:30 Australia CPI (QoQ) (Q2) 0.5% forecast, 0.0% previous
• 01:30 Australia CPI (YoY) (Q2) 1.5% forecast, 1.3% previous
• 01:30 Australia Jun Private Sector Credit (MoM) 0.3% forecast, 0.2 % previous
• 01:30 Australia Trimmed Mean CPI (YoY) (Q2) 1.5% forecast, 1.6 % previous
•01:30 Australia Trimmed Mean CPI (QoQ) (Q2) 0.4% forecast, 0.3 % previous
• 01:30 Australia Weighted Mean CPI (QoQ) (Q2) 0.4% forecast, 0.1 % previous
• 01:30 Australia Weighted Mean CPI (YoY) (Q2) 1.2% forecast, 1.2 % previous
• 18:00 US Fed Interest Rate Decision 2.25 % forecast, 2.50 % previous
Looking Ahead - Events, Other Releases (GMT)
• 18:00 US FOMC Statement.A more dovish than expected statement could be taken as negative/bearish for the USD, while a more hawkish than expected statement could be taken as positive/bullish for the USD.
• 18:30 US FOMC Press Conference
Currency Summaries
EUR/USD: The euro gained against the U.S. dollar on Tuesday, as investors awaited U.S. Federal Reserve meeting at which policymakers are expected to cut interest rates for the first time since the financial crisis. Markets will be watching for guidance on whether the Federal Open Market Committee’s expected move is a one-time cut or the beginning of a rate-cutting cycle.At (1909 GMT),the euro was up 0.12 percent at $1.1157, erasing an earlier loss tied partly to weak regional growth data. An index that tracks the dollar versus a basket of six major currencies was little changed at 98.04. Immediate resistance can be seen at 1.1180 (11 DMA), an upside break can trigger rise towards 1.1241 (100 DMA).On the downside, immediate support is seen at 1.1132 (Daily Low), a break below could take the pair towards 1.1100 (Lower Bollinger Bands).
GBP/USD: Sterling tumbled below $1.2200 on Tuesday, as growing concerns about disorderly Brexit attracted sellers. The British currency has now shed around 2.4% of its value since Johnson took over last week and is headed for its worst monthly performance since October 2016, not long after the country voted to leave the EU. Sterling traded as high as $1.32 in May. Sterling selling has accelerated since Johnson, whose cabinet is packed with Brexit supporters, took over with the explicit agenda of taking Britain out of the EU by Oct. 31, whether transitional trading agreements are in place or not.The pound fell to a low of $1.2113 in Asian trading and was last down 0.44% on the day at $1.2164. Immediate resistance can be seen at 1.2237 (50% retracement level), an upside break can trigger rise towards 1.2330 (5 DMA).On the downside, immediate support is seen at 1.2119 (38.2% retracement level), a break below could take the pair towards 1.2000 (Psychological level).
USD/CAD: The Canadian dollar edged higher against its U.S. counterpart on Tuesday, ahead of the widely expected interest rate cut by the Federal Reserve this week. Money markets are convinced the Fed will cut the key benchmark rate by 25 basis points, but it remains to be seen whether this is going to be a one-off cut or whether more cuts will follow. Meanwhile, the price of oil, one of Canada's major exports, rose for a fourth day on Tuesday on optimism the Fed will cut interest rates for the first time in more than 10 years, supporting fuel consumption in the world's biggest oil user. At (1921 GMT),the Canadian dollar was trading 0.1% higher at 1.3148 to the greenback . Immediate resistance can be seen at 1.3232 (50 DMA), an upside break can trigger rise towards 1.3308 (100 DMA).On the downside, immediate support is seen at 1.3116 (11 DMA), a break below could take the pair towards 1.3090 (21 DMA).
USD/JPY: The dollar weakened against the Japanese yen on Tuesday, as investors were on sidelines ahead of Federal Reserve policy meeting. Traders awaited signals on whether the U.S. central bank will offer an insurance rate-cut to combat risks from ongoing trade tensions or is prepared to lower borrowing costs a number of times in anticipation of an economic downturn. U.S. interest rates futures suggested traders are fully positioned for a rate cut on Wednesday with an expected 77% chance of a quarter-point decrease and a 23% probability of a half-point reduction, according to CME Group's FedWatch program. At (1925 GMT),the dollar was trading 0.19 percent lower versus the Japanese yen at 108.56. Strong resistance can be seen at 108.97 (Daily high), an upside break can trigger rise towards 109.70 (100 DMA).On the downside, immediate support is seen at 108.33 (50 DMA), a break below could take the pair towards 108.17 (11 DMA).
Equities Recap
European shares slipped on Tuesday as grim forecasts from German giants Bayer and Lufthansa soured sentiment, while a battered pound helped London’s blue-chip index outperform for a second day.
UK's benchmark FTSE 100 closed down by 0.52 percent,Germany's Dax ended down by 2.81 percent, France’s CAC finished the day down by 1.61 percent.
U.S. stocks dipped on Tuesday, as U.S.-China trade worries pressured technology shares, while the scale of consensus at the Federal Reserve in favor of deeper cuts in interest rates ate into optimism that drove markets to record highs last week.
Dow Jones closed down by 0.09 percent, S&P 500 ended down by 0.24 percent, Nasdaq finished the down up by 0.24 percent.
Treasuries Recap
U.S. Treasury yields edged up on Tuesday on encouraging data as Federal Reserve policy-makers began meeting on whether to lower key lending rates for the first time in a decade to prolong the longest-ever U.S. economic expansion.
In late U.S. trading, the yield on benchmark 10-year government notes was up 1 basis point at 2.063%, bouncing within a 3.5 basis-point trading range. The benchmark 10-year yield has risen over 6 basis points this month after hitting 1.939% on July 3, which was its lowest level since November 2016.
Commodities Recap
Gold prices steadied on Tuesday, a day before the conclusion of the Federal Reserve's two-day policy meeting, as investors awaited more information on the outlook for interest rate cuts by the U.S. central bank.Spot gold was up 0.2% at $1,429.38 per ounce as of 1:45 p.m. EDT (1745 GMT)
Oil prices rose about 2% to a two-week high on Tuesday on optimism the U.S. Federal Reserve will cut interest rates this week for the first time in more than 10 years, boosting demand expectations in the world’s biggest oil user.
Brent futures for September delivery gained $1.01, or 1.6%, to settle at $64.72 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.18, or 2.1%, to settle at $58.05.
