Market Roundup
• Powell says Fed is wrestling with whether to cut rates, insulated from politics
• Fed's Bullard says he doesn't see need for half-point rate cut - Bloomberg interview
• Trump thinks dollar is too strong, blames Fed policy -official
• Goal of Trump-Xi meeting at G20 is to reopen trade talks -U.S. official
• US Jun Consumer Confidence, 121.5, 131.1 forecast, 134.1 previous
• US May New Home Sales-Units, 0.626 mln, 0.680 mln forecast, 0.673 mln previous
• US May New Home Sales Chg MM, -7.8%, 1.9% forecast, -6.9% previous
• Trump threatens 'obliteration,' Iran calls White House 'mentally retarded'
• European watchdogs demand detail on Facebook's cryptocurrency
Looking Ahead - Economic Data (GMT)
• No major economic data scheduled
Looking Ahead - Events, Other Releases (GMT)
• 02:00 Reserve Bank of New Zealand to announce Official Cash Rate (OCR) in Wellington
• 08:00 BoE Executive Director, Prudential Policy, Victoria Saporta, speaks at Risk.net Liquidity & Funding Risk Europe, London
• 09:00 Opening remarks by ECB board member Yves Mersch at the ECB Legal Colloquium "The new challenges raised by investment arbitration for the EU legal order" in Frankfurt, Germany
• 09:15 BoE's Mark Carney and other interest rate-setters Jon Cunliffe, Silvana Tenreyro and Michael Saunders explain the economic forecasts and interest rate decisions included in May's Inflation Report in London
• 15:30 San Francisco Fed's Mary Daly speaks to The Forecasters Club of New York on "The Dual Mandate in a Flat Phillips Curve Environment" in New York
Currency Summaries
EUR/USD: The euro edged higher against the U.S. dollar on Tuesday, as expectations of multiple decreases of U.S. interest rates by the Federal Reserve have spurred selling of the U.S. currency. Fed Chair Jerome Powell pushed back on pressure from President Donald Trump to cut rates, saying that policymakers were grappling with whether trade uncertainties and other issues supporting interest rate cuts. Interest rate futures implied traders fully priced in a quarter-point rate cut from the Fed next month and saw a high rising probability of at least two more cuts after July. The euro up 0.01 percent at $1.1336. An index that tracks the dollar versus a basket of six major currencies was up 0.18 at 96.18 . Immediate resistance can be seen at 1.1421 (Higher Bollinger Band), an upside break can trigger rise towards 1.1443 (March 20th high).On the downside, immediate support is seen at 1.1331 (5 DMA), a break below could take the pair towards 1.1286 (11 DMA).
GBP/USD: The British pound weakened against the dollar after hitting its highest in a month on Tuesday, as the risk of a no-deal Brexit stemming from the Conservative Party leadership contest weighed on the currency. The pound has been supported to some extent by last week's Bank of England meeting which sounded less dovish than other central banks; the dollar has lapsed to three-month lows against the euro and five-month lows versus the yen after the Federal Reserve encouraged expectations of a July interest rate cut. The pound was down 0.16% at $1.2720, coming off a one-month high of $1.2784 while against the euro, it was 0.04% lower at 89.48 pence. Immediate resistance can be seen at 1.2720 (38.2% retracement level), an upside break can trigger rise towards 1.2800 (Higher Bollinger Band).On the downside, immediate support is seen at 1.2668 (Daily low), a break below could take the pair towards 1.2632 (23.6 % retracement level).
USD/CAD: The Canadian dollar was little changed against its U.S. counterpart on Tuesday, giving up its earlier gains, as less dovish than anticipated comments from a U.S. Federal Reserve policymaker offset strong domestic wholesale trade data. Canadian wholesale trade increased by 1.7% in April from March on stronger sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada said. The U.S. dollar climbed against a basket of major currencies after St. Louis Federal Reserve President James Bullard said he does not see the need for a half-point interest rate cut at next month's Federal Open Market Committee meeting. The Canadian dollar was trading little changed at 1.3161 to the greenback. Immediate resistance can be seen at 1.3211 (50 % retracement level), an upside break can trigger rise towards 1.3267 (61.2 % retracement level).On the downside, immediate support is seen at 1.3145 (38.2 % retracement level), a break below could take the pair towards 1.3070 (23.6 % retracement level).
USD/JPY: The dollar weakened against the Japanese yen on Tuesday, as the prospect of monetary easing by the Federal Reserve knocked demand for the U.S. currency. Interest rate futures implied traders fully priced in a quarter-point rate cut from the Fed next month and saw a high rising probability of at least two more cuts after July. Dollar also fell as investor anxiety mounted over this week's U.S.-China trade talks at the G20 Summit. Dollar sales have accelerated since the Fed last week signalled it would cut interest rates before year-end on mounting worries about the fallout from U.S. President Donald Trump's trade disputes with China and others. The United States and China have waged an 11-month trade war marked by tit-for-tat tariffs on hundreds of billions of dollars of each other’s goods, roiling financial markets, disrupting supply chains and crimping global economic growth prospects. Strong resistance can be seen at 107.33 (50 % retracement level), an upside break can trigger rise towards 107.77 (21st June high).On the downside, immediate support is seen at 106.68 (Lower Bollinger Band), a break below could take the pair towards 106.00 (Psychological level).
Equities Recap
European shares extended losses to a third day on Tuesday amid rising U.S.-Iranian tensions and anxiety over Sino-U.S. trade, but strong gains by Capgemini and Altran on a multi-billion-euro takeover deal helped cap losses.
The UK's benchmark FTSE 100 closed up by 0.01 percent, FTSEurofirst 300 ended the day up by 0.06 percent, Germany's Dax ended down by 0.32 percent, and France’s CAC finished the up by 0.16 percent.
Wall Street stock indexes fell on Tuesday, led by a sharp selloff in technology shares, as simmering trade concerns and disappointing economic data sent buyers to the sidelines, while the Federal Reserve chairman pushed back on pressure from President Donald Trump to cut interest rates.
Dow Jones closed down by 0.66 percent, S&P 500 ended down 0.94 percent, Nasdaq finished the day down by 0.94 percent.
Treasuries Recap
U.S. benchmark Treasury yields fluctuated around the key 2% level on Tuesday as investors weighed the prospect of an ongoing U.S.-China trade war against the likelihood that the Federal Reserve may be less dovish than traders expect.
Benchmark 10-year yields are holding just above the 1.974% level reached on Thursday, which was the lowest since November 2016.
Commodities Recap
Gold prices retreated from a six-year high on Tuesday after comments from U.S. Federal Reserve officials trimmed expectations that the central bank will lower interest rates by half a percentage point next month.
Spot gold was up 0.3% at $1,423.26 per ounce as of 2:36 p.m. EDT (1836 GMT). Prices had touched a high of $1,438.63 in the session, a level last seen in May 2013, and were set for a sixth straight sessions of gains. U.S. gold futures were little changed on settlement at $1,418.7.
Oil prices were mixed on Tuesday ahead of data expected to show U.S. crude stocks declining, outweighing investors' concerns that U.S.-China trade tensions could dampen fuel demand.
Benchmark Brent crude futures settled up 19 cents, or 0.3%, at $65.05 a barrel. U.S. crude futures fell 7 cents, or about 0.1%, at $57.83 a barrel.
