Market Roundup
• U.S. Q1 non-farm productivity revised to -0.6 pct from -1%.
• US Redbook m/m -1% vs 2.2% previous, y/y +0.6 vs +0.9%.
• ECB’s Makuch: return to inflation target seen beyond policy horizon.
• ECB’s Villeroy: very important for ECB to reaffirm 2% inflation target.
• German 10-yr Bund yield falls to record low 0.049%.
• Brazil's Goldfajn says supports central bank autonomy.
• Brazil's Senate committee confirms Goldfajn as central bank chief, needs ratification from Upper House Floor.
• US Crude futures settles USD 50.36/bbl, +1.35%.
Looking Ahead - Economic Data (GMT)
• --:-- China Exports YY* May forecast -3.6%, -1.80%-previous
• --:-- China Imports YY* May forecast -6%, -10.90%- previous
• --:-- China Trade Balance USD* May forecast 58.00b, 45.56b- previous
• 23:50 Japan Bank Lending YY May 2.20%- previous
• 23:50 Japan Current Account NSA JPY Apr forecast 2318.9b, 2980.4b- previous
• 23:50 Japan GDP Rev QQ Annualized Q1 forecast 1.9%, 1.70%- previous
• 23:50 Japan GDP Revised QQ* Q1 forecast 0.5%, 0.40%- previous
• 1:30 Australia Housing Finance* Apr forecast 2.5%, -0.90%- previous
• 1:30 Australia Invest Housing Finance* Apr 1.50%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1324 levels and currently trading at 1.1355 levels. The pair has made session high at 1.1381 and hit lows at 1.1338 levels. Euro inched higher against US dollar as Euro continued its yesterday’s bullish momentum on Tuesday as the dollar fell across the board on doubts over whether the U.S. Federal Reserve will raise interest rates in the near future. European currencies strengthened on Tuesday after U.S. Federal Reserve Chair Janet Yellen refrained from setting a time frame for further interest rate hikes and did not repeat her assessment that rate increases would be appropriate in coming months. Nevertheless, she gave a largely upbeat assessment of the U.S. economy and indicated further hikes were coming. In spite of the upbeat mood, investors said volatility could increase in the near term as Britain prepares for what looks like a close vote on June 23 over whether to leave the European Union.
GBP/USD is supported in the range of 1.4492 levels and currently trading at 1.4534 levels. It reached session high at 1.4596 and hit low at 1.4524 levels. The Sterling inched higher against US dollar on Tuesday after a pair of polls gave a narrow lead to the "Remain" camp ahead of the June 23 referendum on Britain's European Union membership. Sterling recovered further from three-week lows versus the dollar after two newspaper polls on Tuesday showed Britons narrowly favor remaining in the European Union. The results stood in contrast to surveys released on Monday showing more voters favored leaving the EU.Sterling was last up 0.6 percent on the day at $1.4539, having fallen as far as $1.4352 on Monday. It remains way above long-term lows around $1.38 hit as the Brexit campaign proper got underway in February.
AUD/USD is supported around 0.7400 levels and currently trading at 0.7457 levels. It hit session high at 0.7463 and made session lows at 0.7430 levels. The Australian dollar strengthened against its American peer on Tuesday after the Reserve Bank of Australia kept interest rates on hold and hinted it was in no hurry to ease monetary policy further on signs of reasonably strong economic growth. Australia's central bank held its policy rate steady on Tuesday, refraining from delivering back-to-back easings and appeared to have lifted the bar for another rate cut in a move that saw the local dollar pop higher. The Aussie was the biggest gainer among major currencies, hitting $0.7458, its highest since May 6 . It was up 1.2 percent at $0.7455. It also rose 1 percent against the yen and the euro. Many traders were disappointed that the RBA statement offered no hints on further easing, which led them to exit earlier bets on an imminent rate cut, sending the Aussie higher.
USD/CAD is supported at 1.2687 levels and is trading at 1.2757 levels. It has made session high at 1.2815 and lows at 1.2753 levels. The Canadian dollar rallied against its U.S. counterpart on Tuesday, buoyed by steady oil prices and a weaker greenback. Oil prices climbed above $50 a barrel and after bets for U.S. interest rate hikes were lowered following disappointing U.S. jobs data last week. Oil prices reached their highest in eight months, buoyed by recent weakening in the U.S. dollar and by falling Nigerian oil output after a spate of attacks on infrastructure. Rebels in Nigeria's Niger Delta vowed to halt output in the country, Africa's biggest producer until last year. The Nigerian government said it was initiating talks with the rebels. Meanwhile, Canadian employment data for May will be released at the end of the week. The report comes after a wildfire last month cut production in Alberta's oil sands region.
Equities Recap
European shares touched a one-week high on Tuesday after Federal Reserve Chair Janet Yellen pushed back expectations for a rate increase without raising concerns over the strength of the world's largest economy.
UK's benchmark FTSE 100 closed up 0.01 percent, the pan-European FTSEurofirst 300 ended the day up by 1.14 percent, Germany's Dax ended up 1.65 percent, France’s CAC finished the day up by 1.27 percent.
The S&P 500 inched closer to its record high on Tuesday, helped by a big jump in energy shares and enthusiasm following Federal Reserve Chair Janet Yellen's speech this week.
Dow Jones closed up by 0.12 percent, S&P 500 ended up by 0.14 percent, Nasdaq finished the day down by 0.13 percent.
Treasuries Recap
U.S. Treasury prices rose on Tuesday, boosted by expectations that the Federal Reserve will not raise interest rates for several months, but briefly pared gains after the government had to pay more to sell new three-year notes.
Benchmark 10-year notes gained 3/32 in price to yield 1.713 percent, down from 1.723 percent late on Monday. The yields have risen from two-month lows of 1.697 percent on Friday, after the weak jobs report.
Commodities Recap
Oil prices hit 2016 highs on Tuesday, with U.S. crude settling above $50 a barrel the first time in almost a year, on expectations of domestic stockpile draw and worries about global supply shortfalls from attacks on Nigeria's oil industry.
U.S. crude's West Texas Intermediate (WTI) futures settled up 67 cents, or 1.4 percent, at $50.36 a barrel. It was WTI's first settlement above $50 since July 2015. The session high was $50.53, a peak from October.
Brent crude futures settled up 89 cents, or 1.8 percent, at $51.44. It hit $51.53, also the highest since October.
Gold inched lower on Tuesday, as investors turned cautious after the metal failed to sustain a recent rally, though it held near the previous day's two-week high after the Federal Reserve further dampened speculation about an imminent U.S. rate rise.
Spot gold was down 0.1 percent at $1,243.43 an ounce at 2:58 p.m. EDT (1858 GMT), while U.S. gold futures for August delivery settled down 40 cents at $1,247 an ounce. Spot gold hit its highest since May 24 on Monday at $1,248.40.
