Market Roundup
• G20 ministers call for 'further dialogue and actions' on trade.
• WTO members say U.S. actions threaten trade body's credibility.
• U.S. Congress leaders seek to finalize $1.3 trillion spending bill.
• U.S. Redbook MM w/e, -0.1%, -0.3% previous.
• U.S. Redbook YY w/e, 3.2%, 2.9% previous.
• Trump congratulates Putin on election, leaders look to meet soon.
• UK inflation slows in February as Brexit hit to pound fades.
• EU demands "unilateral" power over UK banks' access after Brexit.
• German investor morale plunges on U.S. tariffs threat.
• CA Jan Wholesale Trade MM, 0.1%, 0.0% forecast, -0.5% previous.
• China's premier hopes trade war can be averted, pledges more open economy.
• BOJ deputy govs pledge to meet inflation target, show policy flexibility.
Looking Ahead - Economic Data (GMT)
• 18:00 New Zealand Cen Bank Interest Rate N/A, 1.75% forecast, 1.75% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A BOJ's two new deputy governors Masazumi Wakatabe and Masayoshi Amamiya give inaugural news conference - Tokyo
• N/A ECB Governing Council meeting. No interest rate announcements scheduled - Frankfurt
• 08:00 Austrian Finance Minister Hartwig Loeger gives budget speech - Vienna
• 16:30 Riksbank's Martin Floden tells about the central bank's history and on the development of money – Karlstad, Sweden
• 18:00 Fed's Federal Open Market Committee (FOMC) announces decision on interest rate, followed by a statement – Washington, D.C.
• 18:30 Fed's Jerome Powell holds news conference on FOMC interest rate decision - Washington
• 20:00 Reserve Bank of New Zealand's issues Official Cash Rate (OCR) announcement - Wellington
Currency Summaries
EUR/USD is likely to find support at 1.2200 levels and currently trading at 1.2248 levels. The pair has made session high at 1.2289 and hit lows at 1.2243 levels. Euro declined against dollar on Tuesday as dollar as investors awaited clues from the Federal Reserve on its outlook for the U.S. economy and how many interest rate increases it may embark on in 2018. Investors are expecting the Fed to raise rates three times this year but will be looking for any indications that four increases may be likely as inflation rises and on expectations of stronger economic growth. A key focus is if Jerome Powell adopts a more hawkish tone in his first meeting as Fed chairman than predecessor Janet Yellen and whether Fed officials change their projections for future rate increases, which is known as the “dot plot.” A jump in consumer prices in January increased expectations for four rate hikes this year, though February’s consumer price index last week showed prices cooled in that month. An index tracking the greenback versus a basket of six currencies rose 0.613 points or 0.68 percent, to 90.378. Earlier in the session it hit a high of 90.397, its highest since March 1. The euro was last down 0.60 percent at $1.2246.
GBP/USD is supported in the range of 1.3949 levels and currently trading at 1.4009 levels. It reached session high at 1.4034 and dropped to session low at 1.3979 levels. The British pound edged lower against the greenback on Tuesday after UK inflation slowed more than forecast in February, the first of several sets of data in a week when the Bank of England is expected to signal interest rates will rise as early as May.A Brexit transition deal agreed between Britain and the European Union, which sent sterling soaring on Monday, appeared to clear the way for a hike, with markets factoring in a 70 percent chance of one despite the subdued inflation number, which also undercut analyst forecasts. Against the dollar, sterling had traded up 0.2 percent at $1.4054 before the data was released and then fell below $1.40. It traded down 0.1 percent at $1.3996. The pound hit a one-month high of $1.4088 on Monday after the deal on a 21-month transition following Britain's departure from the EU next year .The two sides are now clear to negotiate what their future trading relationship will look like. Sterling has been one of the best performing major currencies in the last year, boosted by growing confidence that a disorderly Brexit will be averted.
USD/CAD is supported at 1.3000 levels and is trading at 1.3084 levels. It has made session high at 1.3109 and lows at 1.3049 levels. The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Tuesday as oil prices rose and domestic data showed an increase in wholesale trade, while investors braced for a potential Federal Reserve interest rate hike on Wednesday. Canadian wholesale trade edged up 0.1 percent in January as higher sales in the food and machinery and equipment sectors offset declines in the building material and vehicle industries, data from Statistics Canada showed. Analysts had forecast no change in wholesale trade. The price of oil, one of Canada's major exports, rose on tension in the Middle East and the possibility of further falls in Venezuelan output. The U.S. dollar climbed against a basket of major currencies, boosted by expectations of a more confident sounding Fed. Meanwhile, a sharp drop in a confidence survey among German investors weighed on the euro. The Canadian dollar was little changed at C$1.3082 to the greenback, or 76.48 U.S. cents. The currency traded in a range of C$1.3053 to C$1.3087. On Monday, it touched its weakest intraday since June 28 at C$1.3124.
AUD/USD is supported around 0.7645 levels and currently trading at 0.7682 levels. It hit session high at 0.7722 and made session lows at 0.7675 levels. The Australian dollar slipped lower against dollar on Tuesday as Australian dollar was undermined by acute risk aversion ahead of a much-anticipated U.S. Federal Reserve policy meeting. The Australian dollar was also hit by weaker prices for iron ore the country's top export earner, as fears of a global trade war swirled through commodity markets. The Aussie was last down 0.1 percent at $0.7678, which was the lowest since late December. The sell-off in the antipodean currencies accelerated last Thursday on concerns U.S. tariffs on imported steel and aluminium would jeopardise world growth, which had seen its first synchronised upturn in years. That hurt demand for iron ore, the key ingredient in making steel, sending the most-traded iron ore contract for May delivery on China's Dalian Commodity Exchange to its weakest since early November. U.S. President Donald Trump is expected to unveil up to $60 billion in new tariffs on Chinese products by Friday, targeting technology, telecommunications and intellectual property, two officials briefed on the matter said on Monday. Investors will now turn their attention to the March 20-21 Fed meeting, where it is all but certain to raise rates.
Equities Recap
European stocks recovered on Tuesday, led by banking stocks while tech stayed under pressure after concerns over increased regulation and taxation of large companies in the sector prompted selling overnight on Wall Street.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.63 percent, Germany's Dax ended up by 0.8 percent, France’s CAC finished the day up by 0.5 percent.
U.S. stocks advanced modestly on Tuesday as higher oil prices lifted the energy sector, but another slump in Facebook Inc shares curbed gains.
Dow Jones closed up by 0.48 percent, S&P 500 ended up by 0.15 percent, Nasdaq finished the day up by 0.27 percent.
Treasuries Recap
Two-year Treasury note yields hit more than nine-year highs on Tuesday as investors awaited the conclusion of the Federal Reserve’s two-day meeting on Wednesday, when the U.S. central bank is widely expected to raise interest rates for the first time this year.
Two-year note yields, which are highly sensitive to interest rate policy, jumped to 2.328 percent, the highest since September 2008. Benchmark 10-year note yields increased to 2.876 percent, after earlier rising to 2.888 percent, the highest since March 12.
Commodities Recap
Gold prices fell on Tuesday as the U.S. dollar strengthened ahead of a Federal Reserve meeting at which the U.S. central bank is expected to raise interest rates for the first time this year.
Spot gold was trading 0.3 percent lower at $1,312.16 per ounce at 1:35 p.m. EST (1735 GMT), while the dollar strengthened against a basket of currencies. U.S. gold futures for April delivery settled down $5.90, or 0.5 percent, at $1,311.9 per ounce.
Oil prices climbed to their highest level in three weeks on Tuesday as tension in the Middle East and the possibility of further falls in Venezuelan output helped offset the impact of growing U.S. crude production.
Brent crude futures for May delivery rose $1.37 to $67.42 a barrel, a 2.07 percent gain. Brent rose to $67.88 during the session, its highest level since late February. U.S. West Texas Intermediate (WTI) crude futures for April delivery rose $1.34 to settle at $63.40 a barrel, a 2.2 percent gain. WTI traded between $62.08 and $63.81.
