Market Roundup
• US import prices post largest gain in four years in May ( +1.4% vs 0.7% forecast)
• US data point to strong domestic demand, stirring inflation; core retail sales +0.4%, April revised up.
• US business inventories rise modestly as sales surge, Mar revised lower.
• Atlanta Fed’s GDPNow: US econ on track to grow 2.8% v 2.5%.
• Barclays trims US Q2 GDP forecast to 2.6 from 2.7%, GS Q2 tracker unchanged at 3.2% after US retail sales.
• Stocks fall, Bund yields go negative on Brexit fears, crude oil futures extend losses.
• Betting odds indicate around 62 pct chance of "In" for UK's EU vote –Betfair.
• TNS says campaign for UK to leave EU has significant lead.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Current Account - Quarterly* Q1 forecast 1.050b, -2.614b-previous
• 22:45 New Zealand Current Account- Annual Q1 forecast -7.48b, -7.71b-previous
• 22:45 New Zealand Current Account Balance To GDP Q1 forecast -3%, -3.10%- previous
• 00:30 Australia Consumer Sentiment Jun 8.50%- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan- Bank of Japan monetary policy meeting (to June 16).
Currency Summaries
EUR/USD is likely to find support at 1.1135 levels and currently trading at 1.1205 levels. The pair has made session high at 1.1241 and hit lows at 1.1187 levels. The euro declined against dollar on Tuesday, as better than expected U.S. retail sales data added to support for the greenback, suggesting economic growth was gaining steam. Although U.S. retail sales rose strongly in May, the data did little to increase the odds of an interest rate hike by the Federal Reserve in the summer. The Commerce Department said retail sales increased 0.5 percent last month after surging by an unrevised 1.3 percent in April. The second straight month of gains boosted sales 2.5 percent from a year ago. In a separate report, the Labor Department said import prices increased 1.4 percent last month, the largest rise since March 2012, after advancing 0.7 percent in April. In the 12 months through May, import prices fell 5.0 percent, the smallest decline since November 2014.
GBP/USD is supported in the range of 1.4051 levels and currently trading at 1.4110 levels. It reached session high at 1.4185 and hit low at 1.4087 levels. The British pound declined against the dollar on Tuesday to hit its lowest level in two months, hurt by a poll showing support for those who want Britain to leave the European Union. The latest survey, from market research company TNS, gave British support for leaving the EU a seven-point lead, adding to a string of polls that put the Brexit campaign ahead. The British pound slipped to as low as $1.4097, after the TNS poll, down 1.1 percent on the day and its weakest since mid-April. Against the euro, though, which was weaker against most other currencies, the pound inched down only 0.2 percent to 79.43 pence. British inflation held steady in May against expectations for a small increase, data showed on Tuesday. Consumer prices rose 0.3 percent compared with a year ago, the Office for National Statistics said, and slightly below economists' expectation for a 0.4 percent annual rise.
USD/CAD is supported at 1.2747 levels and is trading at 1.2866 levels. It has made session high at 1.2871 and lows at 1.2821 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as fall in oil prices and market jitters about a potential British exit from the European Union weighed on the risk-sensitive commodity-linked currency. Oil prices fell 1 percent on Tuesday, as Brexit fears overshadowed signs of a return to health for crude after a two-year glut. Chances the U.S. Federal Reserve will raise rates at a meeting ending on Wednesday are considered to be virtually nil, with U.S. job growth having slowed considerably in May and policymakers concerned about the British EU vote. The Bank of England, Swiss National Bank and the Bank of Japan will meet this week, and are expected to hold monetary policies steady given caution about the global economic outlook.
USD/JPY is supported around 105.50 levels and currently trading at 105.96 levels. It peaked to hit session high at 106.36 and made session lows at 105.62 levels. The dollar declined to hit a six-week low against the yen on Tuesday as chances of Britain voting next week to leave the European Union grew, increasing the demand for safe havens assets like the Japanese yen. The dollar trimmed its losses against the yen after a strong U.S. retail sales report for May, though the data came better than expected, the odds of an interest rate hike by the Federal Reserve in the month of June-July is highly unlikely. The U.S. data's impact was muted, with the market generally preoccupied by Britain's future in the EU. The Fed concludes its policy meeting on Wednesday, with investors expecting interest rates to hold steady.
Equities Recap
European shares fell for a fifth straight session on Tuesday on angst over next week's referendum on Britain's membership of the European Union and uncertainty over the outcome of a two-day U.S. Federal Reserve meeting that starts later in the day.
UK's benchmark FTSE 100 closed down 2.01 percent, the pan-European FTSEurofirst 300 ended the day down 1.86 percent, Germany's Dax ended down 1.5 percent, France’s CAC finished the day down by 2.32 percent.
Wall Street fell on Tuesday as central bank policymakers weighed interest rates and the health of the U.S. economy and investors worried about an upcoming vote in Britain on whether to leave the European Union.
Dow Jones closed down by 0.32 percent, S&P 500 ended down by 0.19 percent, Nasdaq finished the day down by 0.10 percent.
Treasuries Recap
U.S. Treasury yields were little changed on Tuesday, hovering near four-month lows touched in early trading as positive economic data on the U.S. economy was offset by growing fears about Britain leaving the European Union.
Benchmark 10-year U.S. Treasury notes rose 1/32 in price to yield 1.613 percent. Yields had earlier fallen to 1.567 percent.
Commodities Recap
Gold hit its highest in almost six weeks on Tuesday, rising on worries about a potential British exit from the European Union and expectations the U.S. Federal Reserve will not raise interest rates at its June meeting.
Spot gold rose as high as $1,289.80 an ounce earlier and was up 0.1 percent at $1,285.06 an ounce by 2:51 p.m. EDT (1851 GMT).U.S. gold futures settled up 0.1 percent at $1,288.10 an ounce
Oil prices fell for a fourth straight day on Tuesday, dropping 1 percent as nervousness over Britain's vote next week on whether to leave the European Union overshadowed signs of a return to health for crude after a two-year glut.
Brent crude oil futures closed 52 cents lower at $49.83 a barrel, while U.S. crude ended the session 39 cents down at $48.49.
