Market Roundup
• Fed's Powell commits to 'act as appropriate' to defend U.S. economy
• Trump likely to slap tariffs on Mexico, decries migrant 'onslaught'
• Dollar ticks lower after Fed's Powell opens door to U.S. rate cut
• Effusive Trump promises Britain a "phenomenal" post-Brexit trade deal
• US Apr Factory Orders MM, -0.8%, -0.9% forecast, 1.9% previous
• US w/e Redbook YY, 5.8%, 5.7% previous
• US w/e Redbook MM, 1.4%, 1.3% previous
• US May ISM-New York Index, 882.1, 882.8 previous
• Clarida says Fed cannot be "handcuffed" to U.S. market prices
• Inflation's decline puts pressure back on ECB
• Oil bounces off 4-month low, ends up 1% as stock markets rally
Looking Ahead - Economic Data (GMT)
• 4 Jun 22:30 Australia May AIG Services Index, 46.5 previous
• 5 Jun 01:30 Australia Q1 Real GDP YY SA, 1.8% forecast, 2.3% previous
• 5 Jun 01:30 Australia Q1 Real GDP QQ SA, 0.5% forecast, 0.2% previous
• 5 Jun 01:45 China May Caixin Services PMI, 54.5 previous
• 5 Jun 00:30 Japan May Services PMI, 51.8 previous
Looking Ahead - Events, Other Releases (GMT)
• 08:00 Dave Ramden, Bank of England Deputy Governor, speaks in London
• 08:45 Bank of England hosts "Last orders for Libor" event in London
• 09:00 Lyndon Nelson, Bank of England Deputy CEO, speaks in London
• 09:45 Former ECB's chief economist Peter Praet speaks in Brussels
• 12:30 Federal Reserve Bank of Chicago President Charles Evans speaks in Chicago
• 13:45 Federal Reserve Bank of Atlanta President Raphael Bostic speaks in Atlanta
• 14:00 Senate Committee holds hearing on the renomination of Michelle Bowman to a full term on the Federal Reserve Board of Governors
• 15:15 Federal Reserve Bank of Boston President Eric Rosengren speaks in Chicago
• 18:00 Federal Reserve to issue Beige Book of economic condition
Currency Summaries
EUR/USD: The euro gained against the U.S. dollar on Tuesday, after Federal Reserve Chair Jerome Powell alluded to the possibility of an interest rate cut in the face of economic risks, including the global trade war. The U.S. central bank will respond "as appropriate" to trade - and other headwinds, Powell said in a brief statement included as part of a speech on broader monetary policy issues. Powell said the Fed was "closely monitoring the implications" of the trade dispute that has, since the Fed's last meeting, disrupted global bond and equity markets and posed risks to U.S. and world economic growth. The dollar index , which measures the greenback against a basket of six rival currencies, was last 0.09% lower on the day at 97.057.The euro was up 0.12 percent at $1.1254. Immediate resistance can be seen at 1.1276 (100 DMA), an upside break can trigger rise towards 1.1325 (17th April high).On the downside, immediate support is seen at 1.1206 (50 DMA), a break below could take the pair towards 1.1186 (21 DMA).
GBP/USD: Sterling recovered against dollar on Tuesday, but concerns about a disorderly departure from the EU meant gains were minimal, amid promises from U.S. President Donald Trump of a "phenomenal" post-Brexit trade deal.The pound has dropped for four straight weeks, hit by worries that Britain will crash out of the European Union on Oct. 31 without an agreement on terms, as well as weak UK data.Trump, who arrived in Britain on Monday, has praised Brexit hardliners Boris Johnson and Nigel Farage. Sterling climbed off five-month lows, trading up 0.2% on the day at $1.2681. Against the euro, it gained 0.2% to 88.57 pence but remained close to a four-and-a-half-month low. Immediate resistance can be seen at 1.2690 (10 DMA), an upside break can trigger rise towards 1.2759 (Dec 10th High).On the downside, immediate support is seen at 1.2644 (5 DMA), a break below could take the pair towards 1.2566 (May 31st low).
USD/CAD:The Canadian dollar strengthened to its highest level in nearly two weeks against its U.S. counterpart on Tuesday, as speculation that the Federal Reserve would soon cut interest rates weighed on the greenback. The Federal Reserve will respond "as appropriate" to the risks posed by a global trade war and other recent developments, Fed Chairman Jerome Powell said on Tuesday in remarks that seemed to open the door to the possibility of a rate cut. The price of oil, one of Canada's major exports, fell to its lowest since January on signs that an economic slowdown is starting to dent energy demand and as Russia's top oil producer said it opposed extending joint cuts with OPEC until the end of the year. The Canadian dollar was trading 0.1% higher at 1.3422 to the greenback, or 74.50 U.S. cents. The currency touched its strongest level since May 22 at 1.3415. Immediate resistance can be seen at 1.3459 (11 DMA), an upside break can trigger rise towards 1.3473 (5 DMA).On the downside, immediate support is seen at 1.3379 (Daily low), a break below could take the pair towards 1.3346 (100 DMA).
USD/JPY: The dollar was little changed against the Japanese yen on Tuesday, as worries over a global recession due to trade conflicts kept investors cautious. U.S. Secretary of State Mike Pompeo said on Monday that the United States is seeking to "level the playing field" with China after decades of unfair trade practices, but his Dutch counterpart said tariffs would hurt international trade. Meanwhile, U.S. President Donald Trump said the tariffs that his administration has imposed on Chinese imports were not pushing up U.S. inflation and were prompting manufacturers in the Asian powerhouse to move elsewhere. The dollar was 0.07 percent higher versus the Japanese yen at 108.34. Strong resistance can be seen at 108.72 (5 DMA), an upside break can trigger rise towards 109.31 (11 DMA).On the downside, immediate support is seen at 107.82 (38.2 % retracement level), a break below could take the pair towards 107.30 (23.6% retracement).
Equities Recap
European shares rose on Tuesday to distance themselves further from a 3-1/2 month low hit during the previous session, aided by auto stocks which gained on broker recommendations.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.63 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 0.6 percent.
Wall Street's three major indexes clocked their biggest one-day gains in five months on Tuesday after Federal Reserve Chair Jerome Powell left the door open for a possible rate cut.
Dow Jones closed up by 2.06 percent, S&P 500 ended up by 2.14 percent, Nasdaq finished the down up by 2.66 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday with longer-dated yields climbing from their lowest since September 2017, as Wall Street stock prices recovered from recent losses tied to growing trade conflicts between the United States and key trade partners.
In late U.S. trading, benchmark 10-year Treasury yields rose 4.50 basis points to 2.126% after hitting 2.061%, their lowest since September 2017 on Monday.
Commodities Recap
Gold steadied below a three-month peak on Tuesday on news China was open to negotiating its trade dispute with the United States, while rising expectations the U.S. Federal Reserve will cut interest rates provided underlying support.
Spot gold eased 0.1% to $1,324.01 per ounce as of 1:43 p.m. EDT (1743 GMT), after touching its highest since Feb. 27 at $1,328.98 earlier in the session. U.S. gold futures settled up 0.1% at $1,328.70 per ounce.
Oil prices ended as much as 1% higher on Tuesday after a global stock market rally pulled Brent crude from a four-month low touched earlier in the session.
Brent futures gained 69 cents, or 1.1%, to settle at $61.97 a barrel. The global benchmark fell as low as $60.21 earlier in the session, its lowest since Jan. 29.
U.S. West Texas Intermediate (WTI) crude rose 23 cents, or 0.4%, to $53.48, rising over a dollar from its session low.
