Market Roundup
• Trump discusses China trade practices with Macron, Merkel.
• In call with Trump, Merkel urges EU-US dialogue on trade.
• U.S. Mar Consumer Confidence, 127.7, 131.0 forecast, 130.8 previous, 130.0 revised.
• U.S. Mar Rich Fed Comp Index, 15, 28 previous.
• U.S. Mar Rich Fed Services Index, 25, 27 previous.
• U.S. Mar Rich Fed Mfg Shipments, 15, 31 previous.
• U.S. Mar Texas Serv Sect Outlook, 13.5, 17.5 previous.
• U.S. Mar Dallas Fed Services Revenues, 19.3, 13.2 previous.
• U.S. w/e Redbook MM, 0.1%, -0.1% previous.
• U.S. w/e Redbook YY, 3.6%, 3.2% previous.
• U.S. Jan CaseShiller 20 MM SA, 0.8%, 0.7% forecast, 0.6% revised, 0.7% revised.
• U.S. Jan CaseShiller 20 MM NSA, 0.3%, 0.2% previous.
• U.S. Jan CaseShiller YY, 6.4%, 6.2% forecast, 6.3% previous.
• Bank of England considered bank capital buffer hike but waiting to watch risks.
• OPEC, Russia consider 10- to 20-year oil alliance -Saudi Crown Prince.
• Lending to euro zone companies slows in potential headache for ECB .
• Euro zone approves new loans for Greece, helps set up cash buffer.
• China vice premier Liu He says prevention of financial risks a top priority.
Looking Ahead - Economic Data (GMT)
• 00:00 New Zealand Mar NBNZ Business Outlook, -19% previous
• 00:00 New Zealand Mar NBNZ Own Activity, 20.4% previous
Looking Ahead - Events, Other Releases (GMT)
• 15:30 Fed’s Raphael Bostic participates in a chat before the Atlanta Society of Finance and Investment Professionals
• N/A Ontario Finance Minister Charles Sousa delivers 2018 budget
Currency Summaries
EUR/USD is likely to find support at 1.2369 levels and currently trading at 1.2400 levels. The pair has made session high at 1.2428 and hit lows at 1.2370 levels. Euro declined against the dollar on Tuesday as concerns about weak inflation and a slowdown in company borrowing raised questions about the momentum of the euro zone's economic expansion. After a big gain on Monday, the euro had added another 0.3 percent to hit $1.2473 in early European trading, leaving it less than cent off the three-year highs hit in mid-February. Receding worries about a trade war had supported euro bulls. But it went into reverse after data showing that lending to euro zone companies slowed last month and comments by European Central Bank Governing Council member Erkki Liikanen that underlying euro zone inflation may remain lower than expected even if growth is robust. With many traders betting on prolonged dollar weakness this year because of the United States' trade and budget deficits, and investors expecting to allocate more money to the euro zone as its economy strengthens, the single currency has performed well in 2018.The single currency declined 0.3 percent at $1.2400 .The dollar rallied 0.3 percent against a basket of currencies to 89.334 , off the five-week lows hit on Monday.
USD/CAD is supported at 1.2800 levels and is trading at 1.2890 levels. It has made session high at 1.2901 and lows at 1.2838 levels. The Canadian dollar edged lower against its U.S. counterpart on Tuesday, pulling back from an earlier two-week high, as broader gains for the greenback offset higher oil prices.The U.S. dollar rose against a basket of major currencies as worries about the momentum of the euro zone's economic expansion weighed on the euro. The price of oil, one of Canada's major exports, climbed on concern that tensions in the Middle East could lead to supply disruptions. U.S. crude oil futures settled 0.5 percent lower at $65.25 a barrel, while Wall Street was dragged down by technology shares as investors weighed discussions between the United States and China on trade. Reduced fears of a global trade war had helped boost Canada's commodity-linked currency on Monday. The loonie has also benefited in the last week from optimism about a deal to revamp the North American Free Trade Agreement and hotter-than-expected domestic inflation data. The Canadian dollar was trading 0.2 percent lower at C$1.2882 to the greenback. The currency's weakest level of the session was C$1.2903, while it touched its strongest since March 12 at C$1.2835.
GBP/USD is supported in the range of 1.4056 levels and currently trading at 1.4152 levels. It reached session high at 1.4174 and dropped to session low at 1.4064 levels. Sterling bounced off the day's lows but is on track to post its biggest daily loss in a month on Tuesday as expectations of selling pressure from a large corporate healthcare deal prompted investors to take profits after a recent rally. The British currency enjoyed a strong last week after Britain secured a Brexit transition deal with the European Union, official data showed British workers' wages growing at their fastest rate in nearly 2-1/2 years and the BoE confirmed its hawkish tilt. But news that GlaxoSmithKline will buy Novartis's percent stake in their consumer healthcare joint venture for $13 billion in cash triggered an unwinding of long sterling bets against its rivals built up after Britain clinched the transition deal last week. Global markets were shaken this month after U.S. President Donald Trump moved to impose tariffs on Chinese goods and Beijing threatened similar measures, though headlines over the last 24 hours suggested that tensions were receding. Derivative markets were signalling bullishness for sterling in the short term with three-month risk reversals for the British currency a ratio of calls to puts trading at their highest level in more than a month. Sterling plunged nearly a percent against the dollar, but is still up more than 4 percent so far this year as investors snapped up the pound citing its undervaluation relative to other currencies.
AUD/USD is supported around 0.7623 levels and currently trading at 0.7676 levels. It hit session high at 0.7755 and made session lows at 0.7673 levels. The Australian dollar declined against the US dollar on Tuesday as fears of a U.S.-China trade war tensions receded and the greenback found support from month-end flows as global asset and fund managers rebalanced their portfolios. China's Premier Li Keqiang pledged on Monday to maintain trade negotiations and ease access to American businesses. That followed a report in the Wall Street Journal that Treasury Secretary Mnuchin was considering a visit to Beijing to begin talks. In addition, a number of countries including South Korea won an exemption from Trump's tariffs on steel and aluminium. Investors took all this as a sign of rapprochement between China and the United States, sending dollar higher. Market participants are looking ahead to key data, after new U.S. Federal Reserve Chairman Jerome Powell last week said the U.S. economy does not appear to be running hot. Forecasts issued by the Fed after last week's meeting showed central bank policymakers expect to raise interest rates three times this year, not four as expected. Higher interest rates make gold a less attractive investment since it does not draw interest. The next employment report will give clues on the pace of future interest rate hikes.
Equities Recap
European shares surged on Tuesday on incipient signs of a detente in trade rhetoric between Washington and Beijing, while French supermarket Casino was boosted by a grocery delivery partnership with Amazon.
UK's benchmark FTSE 100 closed up by 1.54 percent, the pan-European FTSEurofirst 300 ended the day up by 1.19 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 0.93 percent.
Wall Street closed sharply lower Tuesday, with each of the major U.S. indexes suffering their fourth decline in five sessions, fueled by a selloff in the tech sector.
Dow Jones closed down by 1.43 percent, S&P 500 ended down by 1.73 percent, Nasdaq finished the day down by 2.93 percent.
Treasuries Recap
U.S. Treasury yields fell on Tuesday with 10-year yield hitting six-week lows as fund managers purchased bonds to rebalance their portfolios for quarter-end, offsetting sales to make room for the record high $294 billion in government debt this week.
Two-year yields were down 4.2 basis points to 2.274 percent, while the yield on 30-year Treasury bonds touched a near seven-week low and was last down 4.3 basis points to 3.028 percent.
Commodities Recap
Gold fell on Tuesday after hitting a near six-week high as the U.S. dollar rose and risk appetite revived in global financial markets, but the precious metal remained underpinned by an array of geopolitical tensions.
Spot gold dropped 0.7 percent at $1,343.84 per ounce by 1:40 p.m. EDT (1740 GMT), after touching $1,356.66, its highest since Feb. 16.U.S. gold April futures settled down $13, or 1 percent, at $1,342 per ounce.
Oil prices settled slightly lower on Tuesday, only to fall in post-settlement electronic trading as stocks slumped and industry group data showed a surprising increase in crude inventories.
Brent crude futures touched $71 a barrel before retreating, and settled down 1 cent at $70.11 a barrel in what traders characterized as profit-taking following several days of gains. West Texas Intermediate (WTI) futures fell 30 cents to settle at $65.25 a barrel.
