Market Roundup
•Canada Jun Wholesale Sales (MoM) 0.5%, 2.0% forecast, 1.6% previous
• US Redbook (YoY) 13.3%,14.6% previous
•US May S&P/CS HPI Composite - 20 n.s.a. (MoM) 1.5% ,2.3% previous
•US May S&P/CS HPI Composite - 20 s.a. (MoM) 1.3%, 1.5% forecast, 1.8% previous
• US House Price Index 398.1, 392.9 previous
• US Jun New Home Sales 590K, 660K forecast, 696K previous
•US May S&P/CS HPI Composite - 20 n.s.a. (YoY) 20.5% , 20.6% forecast, 21.2% previous
• US House May Price Index (YoY) 18.3%,18.8% previous
•US Jul Richmond Manufacturing Shipments 7,-15 previous
•US Jul Richmond Manufacturing Index 0, -17 forecast, -11 previous
•US Jul CB Consumer Confidence 95.7,97.2 forecast, 98.7 previous
•US Jul Texas Services Sector Outlook -10.9 ,-12.4 previous
•US Jul Dallas Fed Services Revenues 9.5, 9.4 previous
Looking Ahead - Economic Data (GMT)
•05:00 Japan Leading Index (MoM) -1.5% previous
•05:00 Japan Leading Index 101.4 previous
•05:00 Japan Coincident Indicator (MoM) -1.3% previous
Looking Ahead - Economic events and other releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro declined on Tuesday as prospect of another Russian gas supply cut knocked the euro lower. European Union countries were preparing to approve an emergency proposal to curb gas demand, the prospect of which sent the single currency and German bond yields lower and hit German shares. Russia said on Monday it would cut gas flows to Germany via the Nord Stream 1 pipeline to 33 million cubic metres per day (bpd) from Wednesday. That is half of current flow, which is already only 40% of normal capacity. The euro fell about 1% to hit low at $1.0108, the largest fall since July 11 and was last trading at $1.0142.Immediate resistance can be seen at 1.0141(11DMA), an upside break can trigger rise towards 1.0187( 38.2%fib).On the downside, immediate support is seen at 1.0082(38.2%fib), a break below could take the pair towards 1.0024(15th July low).
GBP/USD: Sterling consolidated at more than two-week highs on Tuesday but remained within recent trading ranges as analysts assessed the prospect of a 50 basis point rate hike by the Bank of England against the backdrop of a worsening economic outlook. The BoE will likely shy away from a bigger interest rate rise in August and stick with the more modest 25 basis point increases it has been delivering, but it is a close call, a poll of economists found. The BoE is grappling with four-decade-high inflation, driven in large part by global pressures related to supply-chain disruptions and high energy prices. That has become a cost of living crisis, now pushing up the chances of recession. Immediate resistance can be seen at 1.2070(38.2%fib), an upside break can trigger rise towards 1.2153(38.2%fib).On the downside, immediate support is seen at 1.1983(21DMA), a break below could take the pair towards 1.1961(38.2%fib).
USD/CAD: The Canadian dollar was little changed against its U.S. counterpart on Tuesday as prospect of another super-sized U.S. interest rate hike and a looming gas crisis all kept the mood cautious . Investors are expecting a 75 basis point Fed rate increase on Wednesday, with markets pricing about a 10% risk of a larger hike. After rising earlier in the session, oil prices settled in the red as investors worried about weaker consumer confidence and the expectation that another 20 million barrels of crude oil would be released from the U.S Strategic Petroleum Reserve.Immediate resistance can be seen at 1.2924 (38.2%fib), an upside break can trigger rise towards 1.29438 (21DMA).On the downside, immediate support is seen at 1.2816 (50%fib), a break below could take the pair towards 1.2789 (Lower BB).
USD/JPY: The dollar steadied against the Japanese yen on Tuesday as investors braced for a Federal Reserve interest rate hike. Investors widely expect the U.S. Federal Reserve to raise interest rates by another 75 basis points when it concludes a two-day policy meeting on Wednesday. The Fed is expected to opt for another 75-basis-point hike rather than a larger move to quell stubbornly-high inflation as the likelihood of a recession over the next year rises to 40%.Strong resistance can be seen at 138.25 (23.6%fib), an upside break can trigger rise towards 138.18(23.6%fib).On the downside, immediate support is seen at 136.77 (21DMA), a break below could take the pair towards 136.05 (38.2%fib).
Equities Recap
European stocks ended on a mixed note on Tuesday with investors largely making cautious moves ahead of the Federal Reserve's monetary policy announcement, due on Wednesday.
UK's benchmark FTSE 100 closed down by 0.00 percent, Germany's Dax ended up by 0.86 percent, France’s CAC finished the day down by 0.42 percent.
U.S. stocks ended sharply lower Tuesday as a profit warning by Walmart dragged down retail shares and exceptionally weak consumer confidence data also fueled fears about spending.
Dow Jones closed down by 0.71 %percent, S&P 500 closed down by 1.15% percent, Nasdaq settled down by 1.87 % percent.
Treasuries Recap
U.S. Treasury yields trended lower on Tuesday, driven by a flight to safety following the latest supply cuts in gas supply from Russia to Europe and growing concerns about a U.S. economic slowdown as seen in Walmart's profit warning.
The yield on the 30-year Treasury bond US30YT=RR was down 2.6 basis points to 3.024%.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.589%.
The 10-year TIPS breakeven rate was last at 2.359%, indicating the market sees inflation averaging about 2.4% a year for the next decade.
Commodities Recap
Gold prices were stuck in a narrow range on Tuesday, as lower Treasury yields amid lingering recession woes offset a firmer dollar, while investors turned their attention to the U.S. Federal Reserve’s two-day meeting.
Spot gold eased 0.1% to $1,716.91 per ounce by 1:50 p.m. EDT (1750 GMT). U.S. gold futures settled down 0.1% at $1,717.70.
Oil prices reversed early gains and settled lower on Tuesday, as investors worried about lower consumer confidence and braced for another 20 million barrels of crude oil to be released from the U.S Strategic Petroleum Reserve.
Brent crude futures fell 75 cents, or 0.7%, to settle at $104.40. U.S. West Texas Intermediate (WTI) crude fell $1.72 cents, or 1.8%, to $94.98.
