Market Roundup
• US Building Permits MM 1.229 mln (5-mth low) vs 1.270 mln forecast, 1.260 mln previous.
• US Housing Starts MM 1.172 mln vs 1.260 mln forecast, 1.203 mln.
• US Industrial Production MM 1.0% vs 0.4% forecast, 0.4% previous.
• US Manufacturing output MM 1.0% vs 0.3% forecast, -0.4% previous.
• US Capacity Utilization MM 76.7% vs 76.3% forecast, 76.1% previous.
• Atlanta Fed raises US Q2 GDP growth view to 4.1% annualized pace.
• ECB’s Coeure: the recent rise in Euro Zone bond yields will not affect the ECB’s policy stance.
• Trump defends his "absolute right" to share information with Russians.
• Mexico expects NAFTA talks by late August -economy minister.
• McMaster declines to say whether or not Trump shared classified info with Russians.
• Iraq in favour of extending any OPEC-led oil output cut-PM Abadi
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Producer Prices – Inputs Q1 1.0% previous
• 22:45 New Zealand PPI Output Q1 1.5% previous
• 23:50 Japan Machinery Orders MM 2.1% forecast, 1.5% previous
• 23:50 Japan Machinery Orders YY 0.6% forecast, 5.6% previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Second APEC Senior Officials' Meeting (to May 18)
Currency Summaries
EUR/USD is likely to find support at 1.1013 levels and currently trading at 1.1091 levels. The pair has made session high at 1.1097 and hit lows at 1.1062 levels. Euro rose against dollar on Tuesday as the dollar slumped after the release of weaker-than-expected data on U.S. housing starts, adding to the economic reports that have missed predictions. Housing starts dropped 2.6 percent to a seasonally adjusted annual rate of 1.17 million units, the Commerce Department said on Tuesday. That was the lowest since November and followed a downwardly revised rate of 1.20 million units in March. The weak housing data came after the New York Federal Reserve said on Monday that state manufacturing turned negative for the first time since October, and followed weaker-than-expected U.S. consumer inflation data for April on Friday. Emmanuel Macron's victory in France's presidential election and growing expectations of further European integration, as he seeks deeper ties with Germany, also boosted the euro. The dollar index fell 0.65 percent, while the euro up 1.06 percent against the dollar at $1.1088.
GBP/USD is supported in the range of 1.2860 levels and currently trading at 1.2928 levels. It reached session high at 1.2929 and dropped to session low at 1.2864 levels. Sterling strengthened against the dollar on Tuesday as the dollar declined and sterling was boosted by upbeat economic data. British inflation hit its highest level since September 2013 last month, extending its sharp rise since the vote to leave the European Union and tightening the squeeze on living costs as a national election approaches. Consumer prices rose by an annual 2.7 percent, data showed, and they look set to rise further due to the fall in the value of the pound and the recent rise in global oil prices. Britain's economy was barely ruffled last year by the shock vote to leave the EU. But the steady rise in inflation since then, combined with weak wage growth, has slowed its momentum this year. Last week, Bank of England (BoE) Governor Mark Carney warned 2017 will be challenging for consumers, with inflation now almost certain to overtake wage growth. Sterling was last trading against the dollar at $1.2918, up 0.13 percent on the day.
USD/CAD is supported at 1.3530 levels and is trading at 1.3579 levels. It has made session high at 1.3624 and lows at 1.3572 levels. The Canadian dollar strengthened to three-week high against its U.S. counterpart on Tuesday as the greenback weakened further against a basket of major currencies. The U.S. dollar came under selling pressure after reports appeared that U.S. President Donald Trump disclosed classified information to Russia's foreign minister about a planned Islamic State operation. Oil prices were little changed as traders awaited weekly U.S. inventory data and after Kuwait joined top producers Saudi Arabia and Russia in support of prolonging supply cuts through March 2018 to reduce a global crude glut. The Canadian dollar's historically close link to oil has become stronger in recent weeks. The three-month rolling correlation between the loonie and oil reached its highest since September at 0.75, indicating that the currency and the commodity move mostly in the same direction. The Canadian dollar was last trading at C$1.3593 to the greenback, or 73.53 U.S. cents, up 0.2 percent. The currency's weakest level of the session was C$1.3659, while it touched its strongest since April 27 at $1.3596.
AUD/USD is supported around 0.7389 levels and currently trading at 0.7434 levels. It hit session high at 0.7438 and made session lows at 0.7418 levels. The Australian dollar strengthened against the dollar on Tuesday as the dollar was hurt by weaker-than-expected U.S. housing data and concerns after political turmoil once again hit Washington. The dollar weakened across the board after a report surfaced that Trump had disclosed highly classified information to Russia's foreign minister about a planned Islamic State operation in a meeting last week. That raised fears that Trump might not last his first term and that, even if he did, there were too many distractions for him to be able to successfully push through his economic stimulus programme. Earlier in the Asian session, minutes of the Reserve Bank of Australia's (RBA) May meeting showed jobs and housing were at the forefront of policy makers' minds. The central bank left interest rates at a record low 1.50 percent for a ninth straight month in May after last easing in August 2016. The Aussie stood at $0.7425, off a more than one-week high of $0.7446 touched on Monday. Technical analysts see stiff chart resistance at $0.7450, a move above will likely see selling pressure.
Equities Recap
European shares ended little changed on Tuesday as disappointing earnings updates weighed on banks and pharma stocks, but a well-received outlook from Vodafone helped Britain's FTSE 100 FTSE touch a record high.
UK's benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.08 percent, Germany's Dax ended flat, France’s CAC finished the day down by 0.2 percent.
The S&P 500 and Dow Jones was down slightly on Tuesday after a slew of mixed economic data and earnings while the Nasdaq hit another record as it was boosted by gains in technology stocks.
Dow Jones closed down by 0.02 percent, S&P 500 ended down by 0.07 percent, Nasdaq finished the day up by 0.33 percent.
Treasuries Recap
U.S. Treasury yields fell on Tuesday after data showing U.S. homebuilding unexpectedly fell in April, adding to recent economic weakness that has raised new doubts about how many times the Federal Reserve will raise interest rates this year.
Benchmark 10-year notes gained 3/32 in price to yield 2.33 percent, down from 2.36 percent before the data's release.
Commodities Recap
Oil prices were little changed on Tuesday as the market awaited weekly U.S. inventory figures and as Kuwait and other OPEC members joined top producers Saudi Arabia and Russia in support of prolonging supply cuts through March 2018 to reduce a global crude glut.
Brent futures fell 2 cents to $51.80 a barrel as of 1:54 p.m. EDT (1754 GMT). U.S. crude lost 8 cents to $48.77 a barrel.
Gold prices extended gains for a fourth day on Tuesday as political troubles and weaker-than-expected housing data in the United States dented the dollar while a more upbeat scenario in Europe lifted the euro.
Spot gold was up 0.6 percent at $1,237.85 an ounce by 3:30 p.m. EDT (1930 GMT), after rising to $1,239.10, the highest since May 4.U.S. gold futures settled up 0.5 percent at $1,236.40.
