Market Roundup
• US Q1 GDP revised up to +1.1%, but consumer spending weakens to 1.5% in Q1.
• US Case Shiller 20MM SA April dips to 0.5% below previous month, misses forecast of 0.6%.
• US June consumer confidence index 98.0 vs forecast 93.3, May 92.4-previous.
• S&P: expects BoE to help UK to dodge recession, UK rating not affected by whether UK triggers Article 50 now or at end of year.
• Fitch says direct Brexit impact on U.S. limited, impact to be felt through renewed strengthening in USD, which will have dampening effect on growth, could delay Fed's next rate hike.
• Draghi says Brexit vote could cut Euro GDP as much as 0.5%, concerned Brexit may lead to competitive valuations.
• Germany’s Merkel: Germany will do everything to prevent further EU breakup, important to see Britain as friend & partner.
• Scotland’s Sturgeon to meet EU leaders in drive to keep Scotland in bloc.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Retail Sales YY May forecast -1.6%, -0.8%-previous
• 01:00 Australia HIA New Home Sales m/m May -4.7%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1074 levels. The pair has made session high at 1.1089 and hit lows at 1.1034 levels. Euro clawed backs some of its losses against the dollar on Tuesday as financial markets stabilized and investors looked past the shock of Brexit. Financial markets recovered slightly after the result of Thursday's referendum, but trading was volatile and policymakers said they would take all necessary measures to protect their economies. European leaders told Britain on Tuesday to act quickly to resolve the political and economic chaos unleashed by its vote to leave the European Union, a move the IMF said could put pressure on global growth. The euro was last up 0.4 percent against the dollar at $1.1068 after hitting a 3-1/2 month low of $1.0909 on Friday. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.5 percent at 96.112, after posting its strongest two-day gain since Sept. 2008.Despite the temporary relief in currency markets, uncertainty remained over the fall-out from the Brexit vote.
GBP/USD is supported in the range of 1.3215 levels and currently trading at 1.3353 levels. It reached session high at 1.3420 and hit low at 1.3268 levels. Sterling edged higher against the U.S. dollar on Tuesday as the market took a breather and potential profit-taking took place after two days of a brutal selloff in sterling sparked by Britain's vote to leave the European Union. Traders took some profits on short bets against sterling in the wake of the British referendum. The rebound was slight compared to the two-day plunge following the vote, however, with sterling still down more than 10 percent from its closing price on June 23. Sterling was last up 1 percent against the greenback at $1.3329, regaining some ground after hitting a 31-year low of $1.3122 on Monday. The pound's two-day slide on Friday and Monday was the biggest in the post-1973 floating exchange rate era and came as UK bank shares lost a third of their value in two trading sessions.
USD/CAD is supported at 1.2965 levels and is trading at 1.3030 levels. It has made session high at 1.3106 and lows at 1.3028 levels. The Canadian dollar firmed slightly against U.S. dollar on Tuesday as stabilization in global financial markets after volatility triggered by Britain's vote to leave the European Union helped support Canada's risk-sensitive currency. Gains for the loonie came after it hit a three-week low on Monday at C$1.3120 as Brexit-related shockwaves filtered through global financial markets. Global stocks rose as bargain hunting trumped still widespread uncertainty over Brexit and oil prices rallied as investors took advantage of a two-day slide. U.S. crude prices were up 3.3 percent at $47.85 a barrel. Canada's gross domestic product data for April is awaited on Thursday. Economic growth is expected to have edged up 0.1 percent following two months of declines. Even so, the gain is unlikely to change expectations from analysts and policymakers that second-quarter growth will be flat at best due to the impact of massive wildfires in oil-producing Alberta.
AUD/USD is supported around 0.7300 levels and currently trading at 0.7387 levels. It hit session high at 0.7407 and made session lows at 0.7341 levels. The Australian dollar inched higher against US dollar on Tuesday as the market tried to find some equilibrium after last week's massive jolt when Britain voted to leave the European Union. Brexit wiped off $3.01 trillion from global stock markets over two days. On Tuesday, global equities recouped some losses, with financial shares leading the rebound. U.S. stock indexes rallied, while prices for government debt fell. The dollar fell against a basket of currencies. However, uncertainty over when and on what terms Britain will end its membership is expected to fuel volatility in the next few weeks. Meanwhile, investors do not expect the U.S. Federal Reserve to raise short-term interest rates anytime this year, but they will keep an eye on economic data that can steer the Fed's sentiment.The riskier, higher-yielding Australian dollar was last up 0.8 percent at $0.7383 on the greater calm in markets and risk appetite, while the dollar was last up 0.6 percent against the safe-haven yen at 102.63 yen.
Equities Recap
European shares rose for the first time in three days on Tuesday after a heavy sell-off following Britain's shock vote to leave the European Union, with battered financial stocks leading the bounce.
UK's benchmark FTSE 100 closed up by 2.45 percent, the pan-European FTSEurofirst 300 ended the day up by 2.28 percent, Germany's Dax ended up by 1.7 percent, France’s CAC finished the day up by 2.45 percent.
Wall Street bounced back on Tuesday, recouping some recent losses, as investors sought cheap assets after a two-day equities rout sparked by Britain's decision to leave the European Union.
Dow Jones closed up by 1.56 percent, S&P 500 ended up by 1.77 percent, Nasdaq finished the day up by 2.10 percent.
Treasuries Recap
U.S. Treasury prices held steady on Tuesday as worries about sluggish economic growth countered relief from a recovery in stock markets around the globe which were crushed following Britain's vote to leave the European Union.
Benchmark 10-year notes were little changed in price to yield 1.461 percent. The 10-year yield hit a near four-year low of 1.406 percent on Friday.
The 30-year bond was up 4/32 in price to yield 2.274 percent, down 0.6 basis point from late on Monday. The 30-year yield is roughly 5 basis points above its all-time low struck in January 2015.
Commodities Recap
Gold fell more than 1 percent on Tuesday as buyers cashed in gains from the biggest two-day rally in the metal since late 2008, made in the wake of Britain's shock vote to leave the European Union last week.
Spot gold was down 1 percent at $1,311.60 an ounce at 3:15 p.m. EDT (1915 GMT), off an earlier low of $1,305.23. U.S. gold futures for August delivery settled down 0.5 percent at $1,317.90.
Oil prices settled up 3 percent or more on Tuesday with investors buying back into the market after a two-day rout triggered by Britain's vote to leave the European Union.
Brent crude futures settled up 3 percent, or $1.42, at $48.58 per barrel.
U.S. crude rose 3.3 percent, or $1.52, to settle at $47.85.
