Market Roundup
• U.S. Mar Housing Starts number, 1,319 mln, 1.262 mln forecast, 1.236 mln previous (1.295 mln revised).
• U.S. Mar Building Permits number, 1.354 mln, 1.323 mln forecast, 1.321 mln previous.
• U.S. Mar Industrial Production m/m, 0.5%, 0.4% forecast, 0.9% previous (1.0% revised).
• U.S. Mar Capacity Utilization m/m, 78.0%, 77.9% forecast, 77.7% previous.
• U.S. Mar Manufacturing Output m/m, 0.1%, 0.1% forecast, 1.3% previous (1.5% revised).
• Fed's Williams sees U.S. inflation at or above goal for years.
• Fed's Evans sees little pressure pushing inflation beyond 2 pct.
• CA Feb Manufacturing Sales m/m, 1.9%, 1.0% forecast, -1.0% previous (-1.3% revised).
• IMF warns rising trade tensions threaten to derail global growth.
• China seeks trade firewall with U.S. allies in rush of ambassador meetings – sources.
• China central bank announces surprise cut in bank reserve requirements.
• Trump, Japan's Abe seek consensus on North Korea amid strains.
• German investor morale tumbles as trade war worries grow.
• Merkel sounds upbeat on euro zone reform as coalition wrangles.
• Lowest jobless rate since 1975 fails to spur UK wage growth.
• British PM May faces embarrassing Brexit defeat in upper house.
Looking Ahead - Economic Data (GMT)
• 17 Apr 23:50 Japan Mar Trade Balance total Yen, 498.3 bln forecast, 3.4 bln previous (2.6 bln revised)
• 17 Apr 23:50 Japan Mar Exports y/y, 4.7% forecast, 1.8% previous
• 17 Apr 23:50 Japan Mar Imports y/y, 5.4% forecast, 16.5% previous
• 18 Apr 01:30 China Mar House Prices y/y, 5.2% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A BoE Deputy Governor for Financial Stability Jon Cunliffe participates in G20 meetings in Washington D.C.
• 14:00 Bank of Canada key policy interest rate announcement and monetary policy report
• 15:15 Bank of Canada’s Stephen Poloz and Carolyn Wilkins will hold a press conference to discuss the contents of the Monetary Policy Report
• 18:00 Fed issues its Beige Book on economic condition
• 19:00 New York Fed President William Dudley speaks on "The U.S. Economic Outlook and the Implications for Monetary Policy" before a conversation on the state of the economy hosted by Lehman College, City University of New York
• 20:15 Fed's Vice Chair for Supervision Randal Quarles participates in discussion, "Navigating New Opportunities: Transatlantic Regulatory Reform" before the Bretton Woods Committee 2018 Annual Meeting in Washington
Currency Summaries
EUR/USD is likely to find support at 1.2300 levels and currently trading at 1.2372 levels. The pair has made session high at 1.2380 and hit lows at 1.2336 levels. Euro declined against the dollar on Tuesday as dollar recovered from a three-week low and a monthly survey showed morale among German investors was deteriorating. A survey showed on Tuesday, mood among German investors deteriorated in April, reflecting weak economic data and growing unease about possible damage to Europe's largest economy from a trade dispute between the United States and China. The ZEW research institute said its monthly survey showed a reading for economic sentiment among investors dropped for a third month in a row to -8.2, the lowest since November 2012. This compared with the Reuters consensus forecast for a reading of -1.0.A separate gauge measuring investors' assessment of the economy's current conditions edged down to 87.9 from 90.7 last month. The consensus forecast was for a reading of 88.0. The dollar index, which measures the greenback against six other major currencies, rose 0.11 percent, strengthened by the weaker euro and sterling and by stronger-than-expected U.S. housing starts in March and a positive reading on industrial production. While, the euro, fell 0.1 percent to $1.2376.
GBP/USD is supported in the range of 1.4231 levels and currently trading at 1.4289 levels. It reached session high at 1.4306 and dropped to session low at 1.4286 levels. The British pound rose to hit 22-month high against dollar on Tuesday as expectations swelled that the central bank will raise interest rates for the second time in seven months. Though weaker than expected wage data pulled the currency back from those highs, markets were pricing in a more than an even chance of a May rate increase of a quarter of a percentage point. The pound rose against the dollar, boosted by seasonal inflows from foreign companies sending dividend payments to British shareholders and diminishing concern about a disorderly exit from the EU next year. After rising as high as $1.4378, the pound gave up some ground and was last trading at $1.4284, still up 6 percent this year. Wages rose by 2.8 percent, unchanged from the three months to January and weaker than a median forecast of 3 percent in a poll of economists. Tuesday's data is important because the Bank of England has signalled that it needs wage pressures to rise before it starts to boost rates to curb inflation. Against the euro, sterling fell 0.1 percent to 86.26 pence, still close to 11-month highs.
USD/CAD is supported at 1.2500 levels and is trading at 1.2551 levels. It has made session high at 1.2580 and lows at 1.2527 levels. The Canadian dollar steadied against its U.S. counterpart on Tuesday, holding near last week's seven-week high, as investors digested stronger-than-expected domestic manufacturing data ahead of a Bank of Canada interest rate decision on Wednesday. Canadian factory sales grew by 1.9 percent in February from January on higher sales in the transportation equipment industry, Statistics Canada said. Analysts had forecast an increase of 1.0 percent. The modest decline for the loonie came as the price of oil, one of Canada's major exports, fell despite investors' growing concern over the potential for disruptions to crude supply, especially in the Middle East. Money markets do not expect the Bank of Canada to raise interest rates this week. But central bank optimism about the country's economic outlook could raise expectations for a hike as soon as next month. The Canadian dollar was last trading 0.1 percent higher at C$1.2550 to the greenback. The currency traded in a narrow range between C$1.257 to C$1.2579. On Monday, it reached its strongest level in more than seven weeks at C$1.2527.
AUD/USD is supported around 0.7746 levels and currently trading at 0.7769 levels. It hit session high at 0.7777 and made session lows at 0.7760 levels. The Australian dollar edged lower against dollar on Tuesday as the latest batch of Chinese data proved frustratingly mixed, though the world second's largest economy did manage to pip forecasts for growth in the first quarter. The Aussie dollar was 0.2 percent lower at $0.7767, after earlier running into resistance at $0.7787.The currency continued to benefit from generalised softness in its U.S. counterpart, but needs to clear the 200-day moving average at $.7815 to turn the technical outlook bullish. Hopes that Chinese data might provide some momentum proved misplaced. While economic growth and retail sales just beat forecasts, misses for industrial output and fixed asset investment limited the market reaction. At home, minutes of the Reserve Bank of Australia's (RBA) latest policy meeting only served to underline how little chance there was of an interest rate rise anytime soon. Oil prices steadied as investors took profit on last week's rally and amid concern over the potential for supply disruptions.
Equities Recap
European shares rose on Tuesday to their highest since the end of February as sentiment on tensions between the U.S. and Russia eased and attention shifted to deal-making and first-quarter earnings season.
UK's benchmark FTSE 100 closed up by 0.54 percent, the pan-European FTSEurofirst 300 ended the day up by 0.91 percent, Germany's Dax ended up by 1.64 percent, France’s CAC finished the day up by 0.92 percent.
U.S. stock indexes rallied on Tuesday on broad-based gains while Netflix and UnitedHealth earnings impressed investors and boosted optimism about the U.S. corporate reporting season.
Dow Jones closed up by 0.88 percent, S&P 500 ended up 1.06 percent, Nasdaq finished the day up by 1.75 percent.
Treasuries Recap
The U.S. yield curve on Tuesday was at its flattest in over a decade, driven by rising short-dated Treasury yields and a fall at the long end, even as geopolitical and trade risks eased.
The spread between two- and 10-year Treasury bond yields hit 41.80 basis points, its lowest level since 2007. The spread between five- and 30-year yields fell to 31.70 basis points, a low of more than a decade.
The benchmark 10-year government bond was last at 2.819 below its last close at 2.832.
Commodities Recap
Gold turned positive on Tuesday as some investors held onto positions, while a sharper risk appetite benefited cyclical assets at bullion's expense as the U.S. dollar's recovery from three-week lows versus the euro added pressure on the metal.
Spot gold gained 0.06 percent at $1,346.40 an ounce by 1:37 p.m. EDT (1737 GMT), while U.S. gold futures for June delivery settled down $1.20, or 0.1 percent, at $1,349.50 per ounce.
Oil prices rose on Tuesday, as support from the possibility of supply disruptions and a strong equities market offset the effects of profit-taking following last week's rally above three-year highs.
Brent crude oil futures gained 16 cents to settle at $71.58 a barrel, while U.S. crude futures rose 30 cents to settle at $66.52.
