Market Roundup
• US JOLTS Job openings 5.743 mln, 5.682 mln –previous.
• US Wholesale inventories, R MM 0.2% v -0.1% forecast, -0.1% - previous.
• US Wholesale sales MM 0.0% v 0,2% forecast, 0.6% - previous.
• US NFIB Business Optimism 104.5, 104.70 – previous.
• Atlanta GDPNow Latest forecast: 3.6% down from 4.2% on May 4.
• Fed’s George: runoff of fed balance sheet should be set on 'autopilot'.
• Fed’s George: Fed should start reducing investments this year in longer-term Treasury’s and MBS.
• Fed's Kashkari: does not yet know the impact of technology on employment.
• Fed's Rosengren: US unemployment drop below 4% would overheat the economy, prompt higher rates.
• Fed’s Rosengren: doesn't expect balance sheet shrinkage to be disruptive –DJN.
• Fed's Rosengren: would like balance sheet exit to start soon –DJN.
• Goldman Sachs’s Lloyd Blankfein on CNBC: i think trump has raised expectations of stimulus change.
• Moody's: proposed tax cuts by Trump administration might boost econ growth in short-term, effect unlikely to last long.
• Germany's Schaeuble: expects interest rates to normalise soon, citing statements by ECB officials.
• US Senator Graham: wants to look into Trump's business dealings –CNN.
• S.Korea's liberal Moon Jae-In wins presidency.
Looking Ahead - Economic Data (GMT)
• 01:30 China PPI YY* 6.9% forecast, 7.6% -previous
• 01:30 China CPI YY* 1.1% forecast, 0.9% - previous
• 01:30 China CPI MM* 0.0% forecast, -0.3% - previous
• 05:00 Japan Coincident indicator MM* 0.4 - previous
• 05:00 Japan Leading indicator* -0.5 - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0850 levels and currently trading at 1.0868 levels. The pair has made session high at 1.0906 and hit lows at 1.0862 levels. Euro declined against the dollar on Tuesday as the dollar strengthened across the board following the French election and investors focused on monetary policy and potential upcoming Federal Reserve interest rate hikes. Traders focused their attention on incoming issues including U.S. monetary policy. Bets on a June rate increase by the Federal Reserve have mounted in recent weeks but the pace of tightening from then on remains a question mark due to mixed economic figures for the beginning of the year. Last week, the U.S. central bank left the door open for further rate hikes, downplaying anemic economic growth in the first quarter. The U.S. dollar gained 1 percent against a basket of currencies so far this week as it rose to its highest since April 21. The euro dipped back below $1.0874, down 0.3 percent, falling from six-month highs hit on Monday.
GBP/USD is supported in the range of 1.2841 levels and currently trading at 1.2928 levels. It reached session high at 1.2953 and dropped to session low at 1.2910 levels. Sterling declined against the U.S. dollar on Tuesday as sterling came under selling pressure ahead of Bank of England inflation report and policy meeting this week for new drivers for a currency that has climbed almost 5 percent in the past month. The BoE's "Super Thursday" will be closely watched for clues on how long UK interest rates will remain at record lows. Inflation has risen above the Bank's 2 percent target, outpacing wage growth and hitting consumers, who have shored up the economy since last year's Brexit vote. Investors will also be on the look-out for whether the Bank cuts its economic growth forecasts, having raised them in its last report in February. The pound is trading around 8 U.S. cents higher than its March lows, with investors buying back into the battered currency last month when Prime Minister Theresa May unexpectedly called an early election for June 8. Sterling is still down almost 14 percent against the dollar since last June's EU referendum. But it is also almost 13 percent higher than the 31-year lows it hit in October.
USD/CAD is supported at 1.3662 levels and is trading at 1.3722 levels. It has made session high at 1.3752 and lows at 1.3694 levels. The Canadian dollar lost ground against its U.S. counterpart on Friday as oil priced dipped and the greenback firmed against a basket of major currencies. The U.S. dollar posted broad gains as foreign exchange markets swung back to bets on improving growth and tighter monetary policy. The pickup in investor sentiment has been bolstered by historically low U.S. stock market volatility and last weekend's French presidential election result. The loonie hit a 14-year low on Friday at C$1.3793. It has been pressured recently by lower commodity prices, concerns about a possible North American Free Trade Agreement renegotiation. U.S. crude prices were down 1.2 percent at $48.73 a barrel, pressured by a rise in U.S. crude output that has shaken investors' faith in the ability of Organization of the Petroleum Exporting Countries to rebalance the market. The Canadian dollar was last trading at C$1.3721 to the greenback, or 72.86 U.S. cents, down 0.3 percent. The currency traded in a range of C$1.3690 to C$1.3752.
AUD/USD is supported around 0.7308 levels and currently trading at 0.7336 levels. It hit session high at 0.7365 and made session lows at 0.7326 levels. The Australian dollar declined hit four months low against US dollar on Tuesday as firmer greenback across the board and downbeat Australian retail sales data weighed on the Australian dollar. The Aussie was also pressured by retreating iron ore prices. The most-traded iron ore on the Dalian Commodity Exchange was down 2 percent on Tuesday, below 460 yuan a tonne and nearing January lows. Australian retail turnover for March, released by the Australian Bureau of Statistics showed retail sales dipped 0.1 percent in March, against forecasts of a gain of 0.3 percent. The weak data, however, barely changed expectations of a steady rate outlook with interbank futures showing almost no chance of a move this year. The Reserve Bank of Australia (RBA) kept rates at a record low 1.5 percent last week, following two easings last year. The Australian dollar hit session low at $0.7326, the lowest since mid-January, before retreating slightly to trade at $0.7338 in the late US session.
Equities Recap
A raft of well-received updates and a recovery in resources stocks helped European shares rebound on Tuesday from the previous session's slight losses, ending at fresh 21-month highs.
The UK's benchmark FTSE 100 closed up by 0.6 percent, FTSEurofirst 300 ended the day up by 0.02 percent, Germany's Dax ended up 0.5, and France’s CAC finished the day up by 0.4 percent.
The S&P 500 fell on Tuesday after edging up to an intra-day record high for the second straight session, while Apple became the first U.S. company to close with a market capitalization above $800 billion.
Dow Jones closed down by 0.17 percent, S&P 500 ended down 0.11 percent, Nasdaq finished the day up by 0.28 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday, with benchmark yields hitting a five-week peak as investors were making room in their portfolios for $62 billion in supply from the May refunding and a growing calendar of corporate bond issues.
The benchmark 10-year Treasury yield was up 3 basis points at 2.405 percent, below a five-week high of 2.416 percent set earlier on Tuesday.
The 30-year bond yield was up over 2 basis points at 3.039 percent after touching its highest level since March 31.
The three-year yield increased to a seven-week high at 1.560 percent following a weak $24 billion three-year note auction.
Commodities Recap
Oil prices fell on Tuesday, rattled by concern over slowing demand, a rising U.S. dollar and increasing U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.
Brent futures lost 61 cents, or 1.2 percent, to settle at $48.73 a barrel, while U.S. West Texas Intermediate crude fell 55 cents, or 1.2 percent, to $45.88.
Gold dropped to an eight-week low on Tuesday as safe-haven demand continued to fade in the wake of Emmanuel Macron's victory in the French election and as expectations for tighter U.S. monetary policy lifted bond yields.
The spot gold price was down 0.8 percent at $1,215.81 an ounce by 2:19 p.m. EDT (1819 GMT), after falling below its 100-day moving average to $1,214.39, the lowest since March 15. U.S. gold futures settled down 0.9 percent at $1,216.10.
