Market Roundup
• US Housing Starts Number Aug, 1.180M, 1.175M forecast, 1.155M previous.
• US Housing Starts MM: Change Aug, -0.8%, -4.8% previous.
• US Building Permits: Number Aug, 1.300M, 1.220M forecast, 1.230M previous.
• US Build Permits: Change MM Aug, 5.7%, -3.5% previous.
• US Import Prices MM Aug, 0.6%, 0.4% forecast, 0.1% previous.
• US Export Prices MM Aug, 0.6%, 0.2% forecast, 0.4% previous.
• US Current Account Q2 US$, -123.1B, -115.1B forecast, -116.8B previous.
• US Redbook w/e, 0.1% MM, 3.6% YY; 0.3%, 4.5% previous.
• CA Manufacturing Sales MM Jul, -2.6%, -1.6% forecast, -1.8% previous.
• Canada posts C$17.8 bln deficit in 2016-2017.
• Trump vows if threatened to 'totally destroy' North Korea.
• Brexit, slowdown: a bleak backdrop for UK shift towards higher rates.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Current Account Qtrly Q2, -0.875B forecast, 0.244B previous
• 22:45 New Zealand Current Account Annual Q2, -8.08B forecast, -8.13B previous
• 22:45 New Zealand Cact Balance to GDP Q2, -3.0% forecast, -3.1% previous
• 23:50 Japan Exports YY Aug, 14.7% forecast, 13.4% previous
• 23:50 Japan Imports YY Aug, 11.8% forecast, 16.3% previous
• 23:50 Japan Trade Balance Total Yen Aug, 93.9B forecast, 418.8B previous
Looking Ahead - Events, Other Releases (GMT)
• 18:00 FOMC announces its decision on interest rates followed by a statement
• 18:30 Janet Yellen holds a news conference
• N/A ECB Governing Council meeting. No interest rate announcements scheduled.
• N/A BOJ monetary policy meeting in Tokyo (to September 21)
Currency Summaries
EUR/USD is likely to find support at 1.1913 levels and currently trading at 1.1994 levels. The pair has made session high at 1.2003 and hit lows at 1.1957 levels. Euro inched higher against the dollar on Tuesday as greenback traded in a narrow range as investors stayed away from making major bets ahead of the Federal Reserve's policy meeting. The U.S. central bank, which begins its two-day meeting on Tuesday, is widely expected to announce on Wednesday that it will begin paring its bond holdings, with reductions likely to start in the coming months. Investors will also be watching for signals that the Fed will raise rates in December and for any clues on personnel changes as the end of Fed Chair Janet Yellen's term approaches and after the resignation of Vice Chair Stanley Fischer earlier this month. The Fed's possible move to further roll back stimulus has not stemmed the greenback's weakness this year as other major central banks are considering steps to either slow their bond purchases or raise interest rates. The dollar index, which measures the greenback against a basket of currencies, was down 0.1 percent at 91.924.
GBP/USD is supported in the range of 1.3400 levels and currently trading at 1.3522 levels. It reached session high at 1.3532 and dropped to session low at 1.3471 levels. Sterling inched higher against the dollar on Tuesday, with traders citing a report from the Telegraph newspaper that UK foreign minister Boris Johnson would resign before the weekend if his Brexit demands are not met. The report in The Telegraph newspaper which came two days before British Prime Minister Theresa May is due to make a key speech in Italy on Brexit said close friends of Johnson believed he would have no choice but to walk away if May advocates permanently paying for access to the European Union's single market. But when questioned about the Telegraph report, Johnson said he was not going to resign, that the government was "working together" and that it would "deliver a fantastic Brexit. That prompted a half-cent jump in the pound, to $1.3535 from around $1.3485. Key events for sterling traders this week apart from May's Brexit speech will be a reading of UK retail sales on Wednesday and ratings firm Moody's UK sovereign debt rating also due on Friday.
USD/CAD is supported at 1.2219 levels and is trading at 1.2277 levels. It has made session high at 1.2292 and lows at 1.2253 levels. The Canadian dollar edged higher against its U.S. counterpart on Tuesday as loonie shrugged off weaker-than-expected domestic manufacturing data as oil prices rose and the greenback broadly fell. Canadian manufacturing sales dropped by 2.6 percent in July, the most in more than a year, as annual auto plant shutdowns cut sales of cars and motor vehicle parts, Statistics Canada said. Prices of oil, one of Canada's major exports, traded close to five-month highs after key Middle Eastern producers showed they continued to comply with output cuts under an OPEC-led deal that Iraq's oil minister said could be extended or deepened. On Monday, the loonie touched its weakest in nearly two weeks at C$1.2338 after a Bank of Canada policymaker said the currency's strength will be a factor in future rate decisions. The Canadian dollar was last trading at C$1.2277 to the greenback, or 81.43 U.S. cents, up 0.1 percent. The currency traded in a range of C$1.2255 to C$1.2309.
USD/JPY is supported around 111.00 levels and currently trading at 111.51 levels. It peaked to hit session high at 111.88 and made session lows at 111.17 levels. The dollar hit an eight-week high against the yen on Tuesday as U.S. central bank policymakers meet to discuss further monetary tightening, with renewed calm over North Korea easing demand for perceived safe havens. The U.S. central bank is widely expected to announce that it will begin paring its bond holdings, with reductions likely to start in the coming months. Investors will also be watching for signals that the Fed will raise interest rates in December, in addition to any clarity on personnel changes as Fed Chair Janet Yellen’s term-end approaches and after the resignation of Vice Chair Stanley Fischer earlier this month. Expectations that the Fed may raise rates in December have increased since data last Thursday showed that U.S. consumer prices accelerated in August. Interest rate futures traders are pricing in a 58 percent chance of a rate hike in that month, according to the CME Group’s FedWatch Tool. The dollar climbed as high as 111.88 yen on Tuesday, its highest level since July 26, but by 1055 GMT had edged back to 111.50 yen.
Equities Recap
Dealmaking talk lifted European telecom stocks on Tuesday, helping the unloved sector stand out in an otherwise quiet session, where investors were waiting for the outcome of a Federal Reserve meeting.
UK's benchmark FTSE 100 closed up by 0.28 percent, the pan-European FTSEurofirst 300 ended the day up by 0.07 percent, Germany's Dax ended down by 0.04 percent, France’s CAC finished the day up by 0.13 percent.
U.S. stocks closed slightly higher on Tuesday, helped by gains in financial, technology and telecom stocks, but indexes traded in a narrow range as investors stayed away from making major bets ahead of the Federal Reserve's policy meeting.
Dow Jones closed up by 0.18 percent, S&P 500 ended up 0.11percent, Nasdaq finished the day up by 0.10 percent.
Treasuries Recap
U.S. Treasury yields rose slightly on Tuesday as investors waited on the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday for new indications on whether an additional interest rate hike is likely this year.
Benchmark 10-year notes fell 3/32 in price to yield 2.24 percent, up from 2.23 percent late on Monday.
Commodities Recap
Gold was flat on Tuesday, barely budged from the prior session's two-week low, with trading lackluster as Federal Reserve policy makers headed into a two-day meeting that financial markets will watch for clues on the outlook for U.S. monetary tightening.
Spot gold was up 0.21 percent at $1,309.32 per ounce by 2:14 p.m. EDT (1814 GMT), off the previous day's low of $1,304.10. The most active U.S. gold futures for December delivery settled down $0.2, or 0.02 percent, at $1,310.6 per ounce.
Oil prices edged lower on Tuesday, retreating from near-five-month highs in advance of data expected to show a build in U.S. crude inventories as imports resume and refineries were still restarting after recent storm activity.
Brent crude futures were down 30 cents at $55.20 a barrel by 2:30 p.m. EDT (1830 GMT), not far off a five-month high of $55.99. U.S. West Texas Intermediate (WTI) crude futures fell 35 cents to $49.56.
