Market Roundup
• U.S. Aug housing starts -5.8%; single-family permits 3.7%, Building permits -0.4% on multi-family units.
• Stocks, dollar edge higher; focus turns to Fed, BOJ.
• Fonterra’s GDT price +1.7% w/an average selling price NZD 2,975, volume falls 4.5%.
• Fed again poised to cut longer-run interest rate forecast.
• BoC’s Poloz: Canada's interest rates to stay low given headwinds.
• Long-dated euro zone yields fall with Japanese influx expected.
• Yen up as traders doubt BOJ's firepower; next step seen as cutting rates & steepening yield curve.
• Sterling slides to 5-week low as Brexit chatter weighs, BoE may need to cut rates further.
• Oil at six-week low as oversupply outweighs output freeze talks; Saudi Arabian oil exports rose in July.
• OPEC chief Mohammed Barkindo : oil market stabilization deal may last one year –RIA.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Exports YY* Aug forecast -4.8%, -14.00%-previous
• 23:50 Japan Imports YY* Aug forecast -17.8%, -24.70%--previous
• 23:50 Japan Trade Balance Total Yen Aug forecast 202.3b, 513.5b--previous
Looking Ahead - Events, Other Releases (GMT)
• 00:00 Japan-Bank of Japan interest rate decision (rate expected steady at -0.1%)
Currency Summaries
EUR/USD is likely to find support at 1.1100 levels and currently trading at 1.1150 levels. The pair has made session high at 1.1185 and hit lows at 1.1150 levels. Euro slipped lower against the greenback on Tuesday as investors awaited the outcomes of Federal Reserve and Bank of Japan policy meetings that will conclude on Wednesday. Investors awaited the Fed's post-meeting statement scheduled for release at 2 p.m. EDT Wednesday with Fed Chair Janet Yellen's news conference to follow, when investors will watch for any hint that the central bank could raise rates before the end of the year. The dollar index rose 0.15 percent to 95.995, hovering just below the 96.108 mark touched on Friday that was the highest since Sept. 1. This week's big focus is the Bank of Japan and U.S. Federal Reserve meetings both ending on Wednesday, with higher expectations for action by the former as it battles a strong yen and long-running low inflation.
GBP/USD is supported in the range of 1.2945 and currently trading at 1.2982 levels. It reached session high at 1.2989 and hit low at 1.2945 levels. British pound declined sharply against the dollar on Tuesday as the pound was weighted down on worries about the political and economic risks from Britain's pending exit from the European Union drove sterling to a five-week low ahead of U.S. and Japanese central bank meetings. While the economy appears to have so far ridden out the aftermath of June's vote to leave the EU better than financial markets had expected, the past week has brought the first serious discussions of the terms on which Britain will leave. After a solid start in the early european session, sterling slid over half a percent to $1.2953, its weakest level since Aug. 16. It also lost 0.6 percent to hit a four-week trough of 86.22 pence per euro.
USD/CAD is supported at 1.3135 levels and is trading at 1.3188 levels. It has made session high at 1.3242 and lows at 1.3183 levels. The Canadian dollar traded flat against its U.S. counterpart on Tuesday, recovering from earlier weakness after governor of the Bank of Canada said interest rates will stay low for longer time given strong economic headwinds. Bank of Canada Governor Stephen Poloz said central bank will remain on the sidelines even as the economy struggles to gain traction and corporations need to adjust their expectations for return on investment given the low interest rate environment. The Canadian dollar was last trading at C$1.3209 to the greenback, or 75.71 U.S. cents, barely weaker than Monday's close of C$1.3207, or 75.72 U.S. cents.
AUD/USD is supported around 0.7513 levels and currently trading at 0.7556 levels. It hit session high at 0.7561 and made session lows at 0.7538 levels. The Australian dollar inched higher against U.S. dollar on Tuesday as Reserve Bank of Australia hinted at a steady policy outlook, but trading was overshadowed by looming meetings of the Bank of Japan (BOJ) and Federal Reserve. The Australian dollar rose as high as $0.7554 after the minutes of the Reserve Bank of Australia's (RBA) September meeting showed it was comfortable with the current policy after holding rates at 1.50 percent earlier this month. Investors expect the Fed to stay pat this month while speculation is rife that the BOJ will make some sort of change to its easing programme, though whether it would be major or minor is uncertain.
Equities Recap
European shares ended little changed on Tuesday as investors remained cautious ahead of monetary policy decisions from the Federal Reserve and Bank of Japan on Wednesday.
UK's benchmark FTSE 100 closed up by 0.3 percent, the pan-European FTSEurofirst 300 ended the day up by 0.08 percent,Germany's Dax ended up by 0.3 percent, France’s CAC finished the flat.
Wall Street ended little changed on Tuesday as healthcare gains countered declines in energy shares, a day before highly anticipated outcomes of monetary policy meetings in the United States and Japan.
Dow Jones closed down by 0.05 percent, S&P 500 ended up by 0.04 percent, Nasdaq finished the day down by 0.12 percent.
Treasuries Recap
U.S. Treasuries' yields fell on Tuesday as traders bought longer-dated bonds on uncertainty over whether the Bank of Japan might decide at a two-day policy meeting to add more stimulus to boost its economy.
The yield gap between five-year and 30-year Treasuries flattened slightly on the day to 123 basis points after contracting to 120 basis points earlier Tuesday. It reached 130 basis points last Thursday, its widest level since June 27.
Commodities Recap
U.S. crude oil settled up on Tuesday on speculation of demand from the planned restart of the country's main gasoline pipeline, before being joined by Brent in a post-settlement rally on data showing a surprise U.S. inventory drawdown.
Brent futures for November delivery settled down 7 cents at $45.88 per barrel.
U.S. West Texas Intermediate (WTI) crude for October delivery closed up 14 cents at $43.44.
Gold steadied on Tuesday as Federal Reserve policy makers began a two-day meeting that investors are betting will leave interest rates unchanged.
Spot gold was up 0.1 percent at $1,314.54 an ounce by 3:02 p.m. EDT (1902 GMT), while U.S. gold futures were little changed, having settled up 0.03 percent at $1,318.20 per ounce.
