Market Roundup
•Canada Apr Core Retail Sales (MoM) 1.3%, 0.6% forecast, 2.4% previous
• Canada Retail Apr Sales (MoM) 0.9%,0.8% forecast, 0.2% previous
•Canada May Housing Price Index (MoM) 0.5%, 0.6% forecast, 0.3% previous
• US May Chicago Fed National Activity 0.01, 0.47
• US Existing Home Sales 5.41M, 5.39M forecast, 5.61M previous
• US May Existing Home Sales (MoM) -3.4% , -2.4% previous
•New Zealand GlobalDairy Trade Price Index-1.3%, 1.5% previous
• US 3-Month Bill Auction 1.670%,1.640% previous
•US 6-Month Bill Auction 2.390%, 1.490% previous
Looking Ahead Economic Data(GMT)
•00:30 AU MI Leading Index (MoM) -0.2% previous
•03:00 New Zealand Credit Card Spending (YoY) 1.1% previous
Looking Ahead - Events, Other Releases (GMT)
•23:40 Japan Monetary Policy Meeting Minutes
Currency Summaries
EUR/USD: The euro rose on Tuesday, drawing support from the European Central Bank's plans to raise interest rates to contain inflation. ECB President Christine Lagarde reaffirmed on Monday plans to raise the ECB's interest rates twice this summer while fighting widening spreads in the borrowing costs of different euro zone countries. The euro was firmer at $1.0532 after ECB Chief Economist Philip Lane said the ECB will raise interest rates by 25 basis points at its July meeting, but the size of its September hike is still to be decided, suggesting a larger 50 basis point hike could be on the cards. Focus will be on Federal Reserve Chairman Jerome Powell's testimony before the Senate and the House as well as European business activity and UK inflation data later this week. Immediate resistance can be seen at 1.0578(38.2%fib),an upside break can trigger rise towards 1.0661(23.6%fib).On the downside, immediate support is seen at 1.0519(61.8%fib), a break below could take the pair towards 1.0441(61.8%fib).
GBP/USD: The pound rose against the U.S. dollar on Tuesday as hawkish comments from Bank of England policymakers continued to support the currency, with an equity rally also helping risk-sensitive sterling. BoE chief economist Huw Pill said on Tuesday the central bank would need to raise interest rates further in the near future to tackle surging inflation. After a three-week losing streak versus the dollar, the British pound rose 0.5% to $1.2310, moving away from a March 2020 low of $1.1934 touched last week. Markets are pricing in 184.50 basis points of BoE interest rates hikes by December. The BoE raised its benchmark interest rate by a quarter point to 1.25% on June 16 and said it was ready to act “forcefully” if needed to stamp out dangers posed by inflation. Immediate resistance can be seen at 1.2232(38.2%fib),an upside break can trigger rise towards 1.2432 (23.6%fib).On the downside, immediate support is seen at 1.2247(50%fib), a break below could take the pair towards 1.2120(61.8%fib).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Tuesday, extending its recovery from a 19-month low, as oil prices rose and domestic retail sales data supported bets for aggressive interest rate hikes by the Bank of Canada. The price of oil, one of Canada's major exports, was boosted by high summer fuel demand. U.S. crude prices settled nearly 1% higher at $110.65 a barrel. Canadian retail sales rose 0.9% in April, beating forecasts of a 0.8% gain and including higher volumes. A preliminary estimate showed that sales were up 1.6% in May. The loonie was trading 0.5% higher at 1.2920 to the greenback, the biggest gain among G10 currencies. Immediate resistance can be seen at 1.2965 (38.2%fib), an upside break can trigger rise towards 1.3033 (June 20th high).On the downside, immediate support is seen at 1.2891 (50%fib), a break below could take the pair towards 1.2809 (61.8%fib).
USD/JPY: The dollar strengthened on Tuesday as yen continued to weaken after the Bank of Japan on Friday dashed any mild expectations of a change in policy and renewed its commitment to ultra-easy monetary settings. Japanese Prime Minister Fumio Kishida said on Tuesday the central bank should maintain its ultra-loose monetary policy, brushing aside opposition calls that the policy be tweaked to target Japan's rising cost of living.Kishida said the recent sharp falls in the yen were worrying but monetary policy and exchange rates must be dealt with separately, while fiscal policy should take the principle role in addressing the impact of rising prices. Strong resistance can be seen at 136.62 (23.6%fib), an upside break can trigger rise towards 137.76(Higher BB).On the downside, immediate support is seen at 134.73(38.2%fib), a break below could take the pair towards 134.35(11DMA).
Equities Recap
The major European stock markets finished modestly higher on Tuesday, extending gains from the previous session as they continue their recovery from last week's heavy selling.
The UK's benchmark FTSE 100 closed up by 0.42 percent, Germany's Dax ended up by 0.20 percent, and France’s CAC finished the up by 0.75 percent.
Wall Street's major indexes jumped over 2% on Tuesday as investors scooped up shares of megacap growth and energy companies after the stock market swooned last week on worries over a global economic downturn.
Dow Jones closed up by 2.15 percent, S&P 500 ended up 2.45 percent, Nasdaq finished the day up by 2.51 percent.
Treasuries Recap
U.S. Treasury yields were slightly higher on Tuesday as the risk-off mode which weighed on U.S. markets last week took a pause, lifting stocks as investors returned from a long holiday weekend.
Two-year Treasury yields , which are highly sensitive to interest rate moves, were at 3.2% on Tuesday, up from 3.166% on Friday.
Benchmark 10-year yields were at 3.297%, up from their 3.239% close at the end of last week.
Commodities Recap
Gold prices were hemmed into a range on Tuesday as rising U.S. Treasury yields and aggressive rate hike bets dimmed bullion’s appeal despite a pullback in the dollar.
Spot gold fell 0.2% to $1,834.19 per ounce by 1:56 p.m. ET (1756 GMT). U.S. gold futures settled down 0.1% at $1,838.8.
Oil prices edged up on Tuesday on high summer fuel demand while supplies remained tight because of sanctions on Russian oil after its invasion of Ukraine.
Brent crude futures settled 52 cents, or 0.5%, higher at $114.65 a barrel. The U.S. West Texas Intermediate (WTI) crude contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The more active August contract was up $1.53 at $109.52.
