Market Roundup
• China to penalise $60 bln of U.S. imports in tit-for-tat move .
• Trump says U.S. may make a trade deal with China at some point .
• U.S. Senate passes spending measure, step toward preventing shutdown.
• US 15 Sep w/e Redbook m/m, 0.3%, 0.8% previous.
• US 15 Sep w/e Redbook y/y, 5.4%, 6.3% previous.
• US Sep NAHB Housing Market Index, 67, 67 previous, 66 forecast.
• CA Jul Manufacturing Sales m/m, 0.9%, 1.1% previous, 1.3% revised, 0.6% forecast.
• EU’S Barnier hopes to make significant progress on Irish issue and geographical indication on goods by October EU leaders’ meeting.
Looking Ahead - Economic Data (GMT)
• 18 Sep 21:00 New Zealand Q3 Westpac Consumer Survey, 108.6 previous
• 18 Sep 22:45 New Zealand Q2 Current account Qtrly, 0.182B previous, -1.050B forecast
• 18 Sep 22:45 New Zealand Q2 Current Acount Annual, -7.91B previous, -8.09B forecast
• 18 Sep 22:45 New Zealand Q2 Current Account GDP, -2.8% previous, -2.8% forecast
• 18 Sep 23:50 Japan Aug Exports y/y, 3.9% previous, 5.6% forecast
• 18 Sep 23:50 Japan Aug Imports y/y, 14.6% previous, 14.9% forecast
• 18 Sep 23:50 Japan Aug Trade Balance Total Yen, -231.2B previous, -468.7B forecast
• 19 Sep N/A Japan 19 Sep BOJ Rate Decision, -0.10% previous, -0.10% forecast
Looking Ahead - Events, Other Releases (GMT)
• 08:00 BoE Chief Economist Andy Haldane, Lectures at the Bank of Estonia's 100th Anniversary conference, Estonia .
• 12:00 Riksbank Deputy Governor Henry Ohlsson participates in Business Arena Stockholm.
• 13:00 ECB President Mario Draghi gives speech at an event entitled "Making Europe's Economic Union work" in Berlin.
Currency Summaries
EUR/USD is likely to find support at 1.1620 levels and currently trading at 1.1669 levels. The pair has made session high at 1.1724 and hit lows at 1.1650 levels. The euro declined against dollar on Tuesday as dollar gained after Washington and Beijing traded barbs and announced fresh tariffs on a growing number of imports. Beijing retaliated on Tuesday against tariffs imposed less than 24 hours earlier by President Donald Trump on an additional $200 billion worth of Chinese imports, adding levies of it own on $60 billion worth of U.S. goods. The greenback has been a major beneficiary of growing trade-related tensions in recent months, as investors bet it would gain at the expense of riskier currencies. The dollar index, which measures the greenback against a basket of six other major currencies, was up about 5 percent since mid-April. Traders will be paying attention to next week's Federal Reserve meeting at which the central bank is expected to raise rates and reveal how many more increases it expects over the coming year.
GBP/USD is supported in the range of 1.3080 levels and currently trading at 1.3148 levels. It reached session high at 1.3168 and dropped to session low at 1.3125 levels. Britain's pound trimmed some earlier gains against the dollar on Tuesday as traders booked profits and investors struck a more cautious note about progress towards a Brexit deal ahead of a European Union summit this week. Sterling has rallied around 4 percent from 2018 lows hit in mid-August when fears that Britain would crash out of the EU without a trade deal spooked investors. Growing confidence that London and Brussels can secure an agreement has encouraged investors to cut short positions on the pound or to buy into the British currency, although a row within the ruling Conservative Party over the sort of deal Prime Minister Theresa May is proposing has capped gains. The pound dipped 0.1 percent to $1.3143 against the dollar after briefly touching $1.3173 in early trading, sterling's strongest since July 31.Against the euro the British currency weakened 0.2 percent to 89.08 pence and was headed for its biggest daily decline in over two weeks.
USD/CAD is supported at 1.2948 levels and is trading at 1.2980 levels. It has made session high at 1.3008 and lows at 1.2970 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as renewed concerns about the risk of a global trade war and higher oil prices supported Canadian dollar. The gain for the loonie came despite an escalation in the China-U.S. trade war. Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows. The country has its own trade feud with the United States and is also in talks to revamp the North American Free Trade Agreement. The price of oil, one of Canada's major exports, climbed on signs that the Organization of the Petroleum Exporting Countries would not be prepared to raise output to address shrinking supplies from Iran and as Saudi Arabia signaled it was in no rush to bring prices down. On the data front, Canadian factory sales grew by 0.9 percent in July from June on higher sales in the transportation equipment industry, Statistics Canada said. Analysts surveyed by Reuters had forecast an increase of 0.6 percent. The Canadian dollar was last trading 0.3 percent higher at 1.3002 to the greenback, or 76.91 U.S. cents. The currency traded in a range of 1.2995 to 1.3065.
USD/JPY is supported around 111.80 levels and currently trading at 112.34 levels. It peaked to hit session high at 112.38 and made session lows at 111.99 levels. The dollar gained against the Japanese yen on Tuesday as concerns about a possible escalation in the trade conflict between the United States and China boosted demand for the greenback. News of a tit-for-tat on trade tariffs between the United States and China supported dollar across the board. China said on Tuesday that it had no choice but to retaliate against new U.S. trade tariffs, raising the risk that U.S. President Donald Trump could soon impose duties on virtually all of the Chinese goods that America buys. The Chinese commerce ministry's statement came hours after Trump said he was imposing 10 percent tariffs on about $200 billion worth of imports from China, and threatened duties on about $267 billion more if China retaliated against the U.S. action.The brief statement gave no details on China's plans, but Foreign Ministry spokesman Geng Shuang told a news briefing later that the U.S. steps have brought "new uncertainty" to talks between the two countries. Investors are eyeing a meeting by the U.S. Federal Reserve next week at which interest rates are widely expected to be raised.
Equities Recap
European shares shuddered, then recovered, on Tuesday after Beijing retaliated with new tariffs on $60 billion worth of U.S. goods, less than 24 hours after U.S. President Donald Trump imposed 10 percent tariffs on an additional $200 billion worth of Chinese imports.
The UK's benchmark FTSE 100 closed down 0.1 percent, FTSEurofirst 300 ended the day up by 0.08 percent, Germany's Dax ended up by 0.4 percent, and France’s CAC finished the up by 0.2 percent.
Wall Street rebounded on Tuesday in a broad-based rally as investors brushed aside intensifying trade rhetoric between the United States and China.
Dow Jones closed up by 0.72 percent, S&P 500 ended up 0.55 percent, Nasdaq finished the day up by 0.78 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday, as investors continued to price in more interest rate increases by the Federal Reserve this year and next and amid a heavy corporate bond schedule this week.
The U.S. 10-year yields were last at 3.044 percent, from 3.001 percent late on Monday. U.S. 30-year yields were at 3.193 percent, from Monday's 3.137 percent. U.S. 2-year yields, meanwhile, last traded at 2.798 percent, up from 2.786 percent on Monday.
Commodities Recap
Oil futures rose more than 1 percent on Tuesday on signs that OPEC would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signaled an informal target near current levels.
Brent crude futures rose 98 cents to settle at $79.03 a barrel, a 1.26 percent gain.U.S. West Texas Intermediate (WTI) crude futures rose 94 cents to settle at $69.85 a barrel, a 1.36 percent gain.
Gold prices turned negative on Tuesday as the dollar strengthened following news that China would retaliate against a new round of U.S. tariffs on its goods. U.S. Treasuries also rose, helping boost the dollar but pressuring gold.
Spot gold dropped 0.23 percent at $1,197.75 per ounce by 1:33 p.m. EDT (1733 GMT) in choppy trade. U.S. gold futures for December delivery fell $3.30, or 0.3 percent, at $1,202.50.
