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Americas Roundup:Dollar reverses gains as Fed starts two-day meeting,Wall Street stumbles, Oil falls on evidence of increased U.S. output,Investors await Fed meeting for interest rate cues-January 31st 2018

Market Roundup

• US Jan Consumer Confidence, 125.4, 123.1 forecast, 122.1 prev, 123.1 revised.

• US Nov CaseShiller 20 YY, 6.4%, 6.4% forecast, 6.4% prev, 6.3% revised.

• US Jan Texas Serv Sect Outlook, 22.2, 18.1 previous.

• US Jan Dallas Fed Services Revenues, 12.8, 24.4 previous.

• US w/e Redbook MM, 0.0%, 0.0% previous.

• US w/e Redbook YY, 3.2%, 3.8% previous.

• Trump to tout strong economy in State of the Union after turbulent first year.

• Russia's elite dismiss U.S. list as "telephone book" of the wealthy.

• EPA chief in 2016 called Trump a threat to U.S. Constitution.

• Bank of England turning sights to tackling inflation -Carney.

• Britain worse off in three Brexit scenarios, leaked analysis says.

• ECB's Knot says short taper acceptable at end of QE.

• Euro zone growth at 10-year high in 2017, January sentiment dips.

• Weak German inflation backs up ECB's cautious approach.

• German parties at odds after agreeing migrant policy in coalition talks.

• Catalonia postpones vote for new president

Looking Ahead - Economic Data (GMT)

• 00:30 Australia Dec NAB Business Conditions, 13, 12 previous

• 00:30 Australia Dec NAB Business Confidence, 11, 6 previous

• 23:50 Japan Dec Industrial output prelim mm, 1.6% forecast, 0.5% previous

Looking Ahead - Events, Other Releases (GMT)

• 30 Jan 23:50 Bank of Japan to release a summary of opinions from board members at its Jan. 22-23 policy meeting – Tokyo

• 31 Jan 18:00 Spanish Economy Minister Luis de Guindos to speak at a book presentation - Madrid

• 31 Jan 09:50 ECB executive board member Benoit Coeure speaks at the European Financial Forum in Ireland - Dublin

• 31 Jan 09:00 Riksbank’s Stefan Ingves will attend the Norges Bank seminar "Monetary Policy Symposium 2018" and will speak on financial stability risks, monetary policy and the need for macroprudential policy – Oslo

• 31 Jan 01:30 - Bank of Japan Deputy Governor Kikuo Iwata speaks to business leaders - Oita

• 31 Jan 19:00 - U.S. Federal Reserve's Federal Open Market Committee (FOMC) announces its decision on interest rates, followed by statement – Washington

Currency Summaries

EUR/USD is likely to find support at 1.2330 levels and currently trading at 1.2401 levels. The pair has made session high at 1.2452 and hit lows at 1.2380 levels. Euro edged higher against the dollar in the US session on Tuesday as dollar reversed its gains from the day before, as traders awaited for U.S. President Donald Trump's annual State of the Union address and Federal Reserve meeting announcement on Wednesday. The speech and policy news will come amid positive consumer data and continuing fallout from a Republican memo alleging anti-Trump bias. Investors will be closely watching Trump's annual State of the Union speech for comments on the dollar.U.S. Treasury Secretary Steven Mnuchin gave dollar bears a boost last week with a tacit endorsement of a weak U.S. currency, though Trump later tried to row back from those comments. The Fed began its meeting on Tuesday. A spike in global bond yields, with 10-year U.S. bond yields pushing well above 2.70 percent, their highest since April 2014, prompted some investors to cut some short positions and pushed the dollar higher on Monday. However, the dollar was last down 0.17 percent against a basket of six major currencies at 89.154, having pulled up from a low of around 88.43 set last week, its weakest level since December 2014. The euro gained 0.20 percent to $1.2395, still a way from a three-year high of $1.2536 touched last week.

GBP/USD is supported in the range of 1.3981 levels and currently trading at 1.4145 levels. It reached session high at 1.4165 and dropped to session low at 1.4091 levels. Sterling rose against the dollar on Tuesday after Bank of England Governor Mark Carney said the central bank was turning its focus back to bringing down inflation, supporting investors betting that the central bank would rein in monetary policy faster than expected. Carney said in a speech that there was a "gradual firming" in the private sector and that a pick-up in wages over the next few years appeared to be on track, helping the bank move to the more conventional business of bringing down inflation. The BoE has indicated before that it is unlikely to raise interest rates further until wage pressures grow. Sterling is enjoying a strong start to 2018, helped by optimism that the UK can win itself more favourable terms when leaving the European Union, as well better-than-expected economic data. The pound rose 0.5 percent to $1.4143 and 0.3 percent against the euro to 87.715 pence per euro. Still, political uncertainty in Britain around Brexit remain decisive factors in the direction for sterling. The pound had earlier on Tuesday fallen to a one-week low against the dollar and below $1.40, a key level, after a leaked government analysis claimed Britain would be worse off after Brexit in every scenario.
USD/CAD is supported at 1.2292 levels and is trading at 1.2327 levels. It has made session high at 1.2348 and lows at 1.2310 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as the greenback broadly fell ahead of U.S. President Donald Trump's State of the Union address and an interest rate decision by the Federal Reserve. Attention on Trump's address later in the day was mostly on his views on an infrastructure overhaul and trade, with the future of the North American Free Trade Agreement hanging in the balance. Trump's trade chief rejected Canadian proposals for unblocking NAFTA modernization talks on Monday but pledged to seek "breakthroughs" by late February, easing concerns that Washington would soon withdraw from the trilateral pact. Fed Chair Janet Yellen was expected to keep the central bank on course for more interest rate rises at her final meeting in charge. The rate decision is due on Wednesday. The price of oil, one of Canada's major exports, also fell, as nerves about rising global borrowing costs cooled financial markets' euphoric start to the year. The Canadian dollar was trading 0.2-percent higher at C$1.2326 to the greenback. The currency traded in a range of C$1.2306 to C$1.2378. Last week, the loonie touched its strongest in more than four months at C$1.2283.

AUD/USD is supported around 0.8041 levels and currently trading at 0.8081 levels. It hit session high at 0.8112 and made session lows at 0.8071 levels. The Australian dollar held steady against dollar on Tuesday as upbeat news at home helped offset a widening yield advantage for their U.S. counterpart. Australian business conditions remained buoyant in December with both profits and sales healthy, while a pickup in confidence was positive for the investment outlook, a survey reported on Tuesday. National Australia Bank's index of business conditions held steady at a seasonally adjusted +13 in December, staying well above the long-run average of +5.The survey's measure of profitability ticked up a point to +15 in December, while its sales index rose a point to +18.The U.S. currency drew some support from a sharp rise in Treasury yields, which was not matched by Aussie bonds. While markets imply a greater risk of three rate hikes from the Federal Reserve this year, a first move by the Reserve Bank of Australia (RBA) is not fully priced in until November. That divergence has seen yields on two-year Australian paper trade 18 basis points under the comparable U.S. note, the widest such gap since mid-2000. The Aussie was slightly firmer at $0.8097 and within striking distance of last week's 2-1/2 year peak of $0.8135. 

Equities Recap

European shares fell back on Tuesday as global markets took a risk-averse turn, with cyclical sectors including mining and financials suffering the sharpest losses.

UK's benchmark FTSE 100 closed down by 0.95 percent, the pan-European FTSEurofirst 300 ended the day down by 0.73 percent, Germany's Dax ended down by 0.91 percent, France’s CAC finished the day down by 0.76 percent.

U.S. stocks were on track for a second straight day of losses on Tuesday as healthcare stocks and rising bond yields weighed on all three major U.S. indexes.

Dow Jones closed up by 1.38 percent, S&P 500 ended down 1.09 percent, Nasdaq finished the day down by 0.87 percent.

Treasuries Recap 

U.S. Treasury long-dated yields rose on Tuesday ahead of a slew of events this week such as a Federal Reserve monetary policy decision which could help shed more light on the outlook for interest rates this year.

In late trading, U.S. 10-year yields edged up to 2.727 percent, from Monday's 2.699 percent. Overnight, 10-year yields hit 2.733 percent, the highest since April 2014.

U.S. 30-year bond yields also rose to 2.973 percent, up from 2.943 percent late Monday. The yield on this maturity touched an 8-1/2-month peak of 2.989 percent earlier in the session.

Commodities Recap

Gold slipped back to a one-week low on Tuesday as markets braced for U.S. President Donald Trump's annual State of the Union address and news on U.S. monetary policy.

Spot gold was down 0.22 percent at $1,336.99 an ounce by 1:49 p.m. EST (1849 GMT), earlier touching a one-week low of $1,334.10.

U.S. gold futures for February delivery settled down $4.90, or 0.4 percent, at $1,335.40 per ounce.

Oil prices slid for a second day on Tuesday, driven by ongoing evidence of rising U.S. crude output, while wary investors sold off stocks, bonds and commodities.

Brent crude futures for March delivery settled down 44 cents, or 0.6 percent, at $69.02 a barrel after touching a session low of $68.40.U.S. West Texas Intermediate futures fell $1.06, or 1.6 percent, to close at $64.50 a barrel.


 

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February 20 21:00 UTC Released

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