Market Roundup
• U.S. core CPI misses forecast: +0.1% m/m vs +0.2% consensus.
• Annual rate +2.2% vs forecast of +2.3%.
• Headline rate as forecast: +0.3% m/m, +1.5% y/y.
• Canada manufacturing sales beat: +0.9% vs +0.3% forecast, +0.0% previous.
• Minutes: nine Fed banks call for discount rate increase, up from eight.
• Dairy prices rise, volumes drop at auction -NZ's Fonterra.
• US October NAHB housing index 63, same as forecast, vs 65 in Sept.
• Brazil retail sales drop for second month in August.
• OPEC sec-gen optimistic on reaching oil output deal in Nov.
• Turkey heads towards vote on stronger presidency, with nationalist nod.
Looking Ahead - Economic Data (GMT)
• 2:00 China Industrial Output YY Sep 6.40% forecast, 6.30% -previous
• 2:00 China Retail Sales YY Sep 10.60% forecast, 10.60% - previous
• 2:00 China GDP YY Q3 6.70% forecast, 6.70% - previous
• 2:00 China GDP QQ SA Q3 1.80% forecast, 1.80% - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0960 levels and currently trading at 1.0979 levels. The pair has made session high at 1.0994 and hit lows at 1.0968 levels. The euro declined against the dollar on Tuesday as investors increased bets the Federal Reserve would raise interest rates in December after data showed positive US inflation figures. U.S. consumer prices recorded their biggest gain in five months in September as the cost of gasoline and rents surged, pointing to a steady pickup of inflation that could keep the Federal Reserve on track to raise interest rates in December. The U.S. Labor Department said the Consumer Price Index, its broadest inflation gauge, rose 0.3 percent in September, matching the median forecast.However, the CPI core rate, which excludes volatile food and energy prices, edged up 0.1 percent in September, falling short of an expected 0.2 percent increase. The dollar index, which tracks the greenback against a basket of six major currencies, was last unchanged on the day at 97.890.
GBP/USD is supported in the range of 1.2222 and currently trading at 1.2290 levels. It reached session high at 1.2323 and hit low at 1.2257 levels. British pound inched higher against the dollar on Tuesday after a government lawyer said parliament would very likely have to ratify any deal to take Britain out of the European Union and following stronger-than-expected inflation numbers. Lawyer James Eadie, representing the government in a High Court challenge over who has the right to trigger divorce talks, helped send the pound above $1.23 for the first time in a week by saying parliament would very likely have to ratify any Brexit agreement. Sterling was up 1 percent on the day at $1.2307. It hit an 11-day high of 74.7 against the trade-weighted basket of currencies used by the BoE to measures the British currency's broader strength. It was 1.1 percent higher at 89.32 pence per euro.
USD/CAD is supported at 1.3071 levels and is trading at 1.3121 levels. It has made session high at 1.3140 and lows at 1.3101 levels. The Canadian dollar weakened slightly against its U.S. counterpart on Tuesday as the greenback firmed across the board after data showed U.S. consumer prices recorded their biggest gain in five months in September that could keep the Federal Reserve on track to raise interest rates in December. Oil prices steadied as the dollar gave up early gains and expectations of output curbs by the Organization of the Petroleum Exporting Countries lifted crude prices despite forecasts for a second straight weekly build in U.S. crude stockpiles. On the data front, Canadian Manufacturing sales rose by 0.9 percent from July to hit C$51.12 billion, stronger than the 0.2 percent gain forecast by market analysts. In volume terms, sales climbed by 1.2 percent. The Canadian dollar was last trading at C$1.3109 to the greenback, weaker than Monday's low of C$1.3051.
AUD/USD is supported around 0.7590 levels and currently trading at 0.7607 levels. It hit session high at 0.7635 and made session lows at 0.7604 levels. The Australian dollar edged slightly lower against US dollar on Tuesday as the pair was weighted down after U.S. consumer prices showed US inflation modestly increased in September reinforcing expectations that Federal Reserve will raise interest rates in December. Early on Tuesday, newly-released minutes of the RBA's October policy meeting said coming data on inflation and employment will be critical for decisions at its next meeting on Nov. 1, opening the door to possible policy easing. However, investors still assume easing is a distant possibility. The Aussie is among the best performing major currencies this year, up more than 5 percent against the U.S. dollar. Much of the gain is due to carry trades where investors borrow in currencies seen as safe havens such as the yen or the euro to invest in high-yielding assets. The Australian dollar initially hit session high of $0.7679, but slightly declined to trade at $0.7670 in the late US session.
Equities Recap
European shares bounced back on Tuesday, with mining stocks and banks leading the way, while Burberry slumped following its earnings update.
UK's benchmark FTSE 100 closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 1.37 percent, Germany's Dax ended up by 1.2 percent, France’s CAC finished the day up by 1.3 percent.
Wall Street advanced on Tuesday to give the S&P 500 its best day this month on the heels of solid earnings reports from names such as UnitedHealth and Netflix that put corporate profits on track to snap a four-quarter streak of declines.
Dow Jones closed up by 0.41 percent, S&P 500 ended up by 0.62 percent, Nasdaq finished the day up by 0.84 percent.
Treasuries Recap
U.S. Treasury yields fell on Tuesday in line with their U.K. counterparts on chances that parliament may have to ratify a British exit from the European Union, which reduced some bets that the U.K. would lose access to the single market.
Benchmark U.S. 10-year Treasury notes were last up 4/32 in price for a yield of 1.750 percent, down 1.6 basis points and not far below a four-month peak of 1.841 percent reached on Monday.
Commodities Recap
Gold prices rose on Tuesday, supported by weakness in the U.S. dollar index, though receding worries about the outcome of the U.S. election and expectations of a U.S. rate increase in December could mean lower levels.
Spot gold was up 0.6 percent at $1,262.84 an ounce at 2:49 p.m. EDT (1849 GMT), holding just below the 200-day moving average. U.S. gold futures settled up 0.50 percent at $1,262.90.
Oil settled higher on Tuesday as expectations of OPEC output curbs lifted prices despite forecasts that data would show a second straight weekly build in U.S. crude stockpiles.
Brent crude settled up 16, or 0.3 percent, at $51.68 a barrel.U.S. West Texas Intermediate (WTI) crude rose 35 cents, or 0.7 percent, to settle at $50.29.
