Market Roundup
• US NFIB Business Optimism Jun 103.6,104.50 previous.
• US Redbook YY w/e 2.4%, 2.7% previous.
• US JOLTS Job Openings May 5.666m, 5.950m forecast, 5.967m previous.
• US Wholesale Invt (y), R MM May 0.4%, 0.3% forecast, 0.3% previous.
• US Wholesale Sales MM May -0.5%, 0.2% forecast, -0.3% previous.
• US economy is seen growing 2.6% in Q2 vs 2.7% July 6 estimate - Atlanta Fed.
• Nine Fed banks wanted to increase discount rate in June -minutes.
• Fed Governor Lael Brainard: Fed should start reducing balance sheet 'soon'.
• Brainard: Want to move cautiously on further rate hikes to help boost inflation back to 2% target.
• Fed's Williams: Own view is to start adjustment of balance sheet in next few months.
• Fed's Kashkari: Wages will rise when labor is truly scarce.
• Trump Jr. email chain cites Russian support for his father.
• ECB to begin tentative rate hikes next year, market pricing shows.
• Coeure: Weaker euro not the objective of ECB policy.
• Coeure: QE effect on exchange rates is not fundamentally different from conventional policy.
• Moody's: European stability mechanism's key credit strengths are its very "strong" capital position and low leverage.
• BoE's Dy Governor Broadbent silent on rates, sends pound sliding.
• Moody’s: UK-credibility of BoE should ensure financial stability, exchange rate flexibility provides support for exports, UK's external stability.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Corp Goods Price YY Jun 2.1% forecast, 2.1% previous
• 00:30 Australia Consumer Sentiment MM Jul, -1.8% previous
Looking Ahead - Events, Other Releases (GMT)
• 13:45 Simon Potter, Executive VP, NY Fed, will speak at 14th Annual FX Week USA Conference in New York
• 14:00 Fed Chair Janet Yellen delivers semi-annual monetary policy testimony before the House Financial Services Committee, Washington
• 18:00 US Fed issues its Beige Book on economic condition, Washington
Currency Summaries
EUR/USD is likely to find support at 1.0368 levels and currently trading at 1.1445 levels. The pair has made session high at 1.1448 and hit lows at 1.0392 levels. Euro rose against the dollar on Tuesday as the dollar eased after emails disclosed by President Donald Trump's eldest son cited Russian support for his father's election campaign. Greenback reversed early gains to edge lower after President Donald Trump's eldest son released an e-mail chain related to a meeting with a Russian lawyer linked to the Kremlin during last year election campaign. The disclosures in the email chain could provide ammunition for U.S. investigators probing whether there was collusion between the Kremlin and Trump’s Republican presidential campaign following a U.S. intelligence conclusion that Moscow sought to hurt Clinton and help Trump in the 2016 U.S. presidential election. Financial markets were jolted by the revelation as investors assessed its impact on Trump administration's proposed policies. The dollar index, which tracks the greenback against six major rivals, turned negative on the day to fall to a more than one-week low of 95.673. The index was down 0.31 percent.
GBP/USD is supported in the range of 1.2800 levels and currently trading at 1.2853 levels. It reached session high at 1.2877 and dropped to session low at 1.2829 levels. Sterling declined against the dollar on Tuesday as sterling was weighted down after a speech by Bank of England Deputy Governor Ben Broadbent left the outlook for interest rates unanswered. In a speech that focused on the benefits of globalisation, Broadbent warned that less trade with the EU would damage Britain's comparative advantage in exports of financial and business services. Broadbent's speech had been keenly watched by currency traders as a chance to hear the views of a rate-setter who has not commented publicly since the Monetary Policy Committee unexpectedly came close to raising interest rates for the first time in a decade last month. The pound fell after the speech was published, losing half a percent against the euro to trade at 88.98 pence per euro, its weakest since early November. Sterling also slipped against the dollar, falling to as low as $1.2832, its weakest in a fortnight. It later edged up back to $1.2854 as the dollar fell broadly after U.S. President Donald Trump's son released an email chain which refers to a top Russian government prosecutor as offering the Trump campaign damaging information about Democratic rival Hillary Clinton.
USD/CAD is supported at 1.2856 levels and is trading at 1.2920 levels. It has made session high at 1.2943 and lows at 1.2900 levels. The Canadian dollar lost ground against its U.S. counterpart on Tuesday as investors were cautious ahead of interest rate decision by the Bank of Canada on Wednesday. Crude oil was higher. Benchmark Brent crude rose 31 cents to $47.19 a barrel. U.S. light, sweet crude rose 30 cents lower to $44.70.The Bank of Canada, which is widely expected to raise interest rates after strong signals from its main policymakers over the past month, meets on Wednesday. Chances of a hike on Wednesday sit at 88 percent, data from the overnight index swaps market shows. A nearly 80-percent chance of a second hike has been implied by December. After years of being warned that borrowing costs would have to rise eventually, debt-happy Canadians may be about to face a reckoning if the Bank of Canada hikes. The Canadian dollar was trading at C$1.2915 to the greenback, or 77.43 U.S. cents, down 0.2 percent. The currency traded in a range of C$1.2886 to C$1.2940.
AUD/USD is supported around 0.7586 levels and currently trading at 0.7630 levels. It hit session high at 0.7630 and made session lows at 0.7604 levels. The Australian dollar inched higher against the dollar on Tuesday as the dollar turned lower after President Donald Trump's eldest son released an email chain, which referred to a top Russian government prosecutor as offering the Trump campaign damaging information about Democratic rival Hillary Clinton. The Australian dollar was last trading at $0.7638, well off the recent lows of $0.7585. Trading volumes were below June's average daily turnover as traders awaited comments from Federal Reserve Chair Janet Yellen for fresh cues on policy direction. The Fed chair will deliver her semi-annual monetary policy testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. Investors will also be looking to Yellen for clues on when the Fed will start unwinding its massive balance sheet.
Equities Recap
European shares ended Tuesday on the backfoot as losses among defensive consumer staples and real estate stocks outweighed strength in autos and miners.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.71 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.5 percent.
U.S. stocks ended near flat on Tuesday in a day driven by political news, including concern over emails disclosed by President Donald Trump's eldest son citing Russian support for his father's election campaign.
Dow Jones closed up by 0.02 percent, S&P 500 ended down 0.07 percent, Nasdaq finished the day up by 0.29 percent.
Treasuries Recap
U.S. Treasury yields slipped in choppy trading on Tuesday after Federal Reserve officials, on the eve of Fed Chair Janet Yellen's congressional testimony on monetary policy, expressed doubts about further interest rate hikes due to low inflation.
In late trading, the benchmark 10-year Treasury note yielded 2.364 percent, down slightly from 2.371 percent late on Monday.
Yields on U.S. Treasuries with maturities from 2 to 10 years were also modestly lower.
U.S.30-year yields were at 2.924 percent, compared with Monday's 2.923 percent.
Commodities Recap
Oil prices climbed more than 1 percent on Tuesday along with rising heating oil futures on reports showing forecast cuts in U.S. oil production and a decline in European product stockpiles.
Benchmark Brent futures rose 64 cents, or 1.4 percent, to settle at $47.52 a barrel. U.S. West Texas Intermediate crude also rose 64 cents, or 1.4 percent, to settle at $45.04 per barrel.
Spot gold rose on Tuesday, of the previous day's near four-month lows, as a drop in equities drove safe-haven buying and the U.S. dollar retreated.
Spot gold was up 0.23 percent at $1,216.79 per ounce by 3:08 p.m. EDT (1908 GMT), near Monday's $1,204.45, its lowest since March 15.
U.S. gold futures for August delivery settled up $1.5, or 0.12 percent, at $1,214.70 per ounce.
