Market Roundup
• US Q4 current account deficit narrowed to USD112.4 billion vs USD -128.2bln forecast, 116 bln previous.
• US Redbook m/m -0.6% v -0.6% previous, y/y 1.2% v 1.3% previous.
• UK inflation shoots above 2%, adding to BoE conundrum, First time CPI above BoE target since Nov 2013.
• Fed’s George: some monetary policy stimulus can be removed, Balance sheet decision likely not made soon.
• Trump warns Republican lawmakers of backlash for healthcare failure.
• EU's Tusk: EU leaders to meet for special Brexit summit on Apr 29, priority to create clarity for citizens, companies & member states.
• High-grade EZ bonds sell off as French debate soothes nerves; German bond yields rise 4 bps, peers, up 1 to 4 bps
• Oil advances on talk of extension to OPEC cuts, inventories weigh
• Dairy prices rise 1.7% w/an avg selling price of NZD 3,101 per tonne, volumes +0.8% at auction -GDT Events
• Investors add to bullish U.S. bond bets after Fed meeting -JPM
• World stocks seen as most overvalued in 17 years, USD most expensive since3 Jun 2006 - BAML survey
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Exports YY* Feb forecast 10.6%, 1.30%-previous
• 23:50 Japan Imports YY* Feb forecast 0.6%, 8.50%- previous
• 23:50 Japan Trade Balance Total Yen* Feb forecast 822.0b, -1086.9b- previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan BOJ Minutes of Jan. 30-31 Meeting
• 01:30 Japan BOJ Funo speaks in Shizuoka
• 01:40 Australia RBA's Debelle Speech in Singapore
Currency Summaries
EUR/USD is likely to find support at 1.0749 levels and currently trading at 1.0812 levels. The pair has made session high at 1.0819 and hit lows at 1.0791 levels. Euro inched slightly against the dollar on Tuesday as concerns about how quickly the Trump administration can implement pro-growth policies pushed the greenback further lower against euro. The greenback has been under pressure after comments from the U.S. Federal Reserve last week disappointed dollar bulls. On Tuesday, the dollar index, which measures the greenback against a basket of six major currencies, dipped below the 100 level for the first time since Feb. 7. The upcoming French elections also helped the euro after centrist Emmanuel Macron's performance in a television debate boosted a view he would win the presidential race over the far-right's Marine Le Pen. The euro inched higher after Macron cemented his position as the front-runner in the French presidential race in the first televised debate on Monday versus anti-European Union contender Marine Le Pen. The dollar index, which measures the greenback against a basket of six major currencies, dipped below the 100 level for the first time since Feb. 7.
GBP/USD is supported in the range of 1.2400 levels and currently trading at 1.2485 levels. It reached session high at 1.2494 and dropped to session low at 1.2437 levels. Sterling rose against the dollar on Tuesday as sterling was boosted after some investors assessed that accelerating inflation would push the Bank of England to raise interest rates sooner than expected. Data released earlier in the day showed British inflation jumped in February above BoE's 2 percent target for the first time since the end of 2013, with consumer prices rising by a stronger-than-expected 2.3 percent. Sterling jumped to as high as $1.2495 as investors brought forward their expectations for when the BoE would hike rates from their record lows. Sterling also climbed against a broadly stronger euro, up almost half a percent at 86.55 pence. Britain's unemployment rate fell unexpectedly to its lowest in more than a decade in the three months to January, but pay growth worsened, in an unpromising sign for the economy ahead of its divorce with the EU.
USD/CAD is supported at 1.3210 levels and is trading at 1.3352 levels. It has made session high at 1.3359 and lows at 1.3273 levels. The Canadian dollar initially strengthened against its U.S. counterpart after upbeat domestic retail sales, but gave up most of the ground as the loonie was weighted down by falling oil prices. Canadian retail sales rebounded in January with the largest gain in nearly seven years, Statistics Canada said. The 2.2 percent increase topped economists' expectations for a gain of 1.1 percent, while volumes were also robust, up 1.3 percent. Oil prices fell on Tuesday, with U.S. crude dropping to its lowest since November, as concerns about new supplies overshadowed the latest talk by OPEC that it was looking to extend output cuts beyond June. The decline also came ahead of the release of U.S. crude inventory data later Tuesday and on Wednesday that is expected to show a crude stock build of 2.8 million barrels for last week. The Canadian dollar was trading at C$1.3351 to the greenback, or 75.36 U.S. cents, slightly stronger than Monday's close of C$1.3354, or 74.88 U.S. cents.
AUD/USD is supported around 0.7662 levels and currently trading at 0.7692 levels. It hit session high at 0.7749 and made session lows at 0.7681 levels. The Australian dollar held near four-month peaks on Tuesday as Reserve Bank of Australia cautioned about overheating in the housing market, leading investors to pare the already scant chance of a further cut in interest rates. The Aussie was standing at $0.7710 after reaching $0.7748 overnight, which was the highest since early November when it got as far as $0.7778.A break of November's barrier would put it in territory not visited since April last year and set up a push to the next chart target around $0.7836. That also makes these levels extremely tough resistance, which could be hard to pierce. The gains have mostly been driven by broad weakness in the U.S. dollar after the Federal Reserve emphasised further tightening would be gradual following its rate hike last week. The Reserve Bank of Australia (RBA) is nowhere near raising rates itself, but any chance of a cut has vanished as it highlighted risks in the local housing market. Minutes of its March policy meeting out Tuesday showed housing was very much on the mind of board members.
Equities Recap
European shares ended lower on Tuesday, reversing earlier gains as jitters about U.S. President Donald Trump's ability to push through reforms overshadowed soothing news from the French presidential debate.
UK's benchmark FTSE 100 closed down by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.52 percent, Germany's Dax ended down by 0.7 percent, France’s CAC finished the day down by 0.3 percent.
Wall Street fell sharply on Tuesday as investors worried that President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness deepening ahead of a key healthcare vote.
Dow Jones closed down by 1.14 percent, S&P 500 ended down by 1.24 percent, Nasdaq finished the day down by 1.82 percent.
Treasuries Recap
U.S. Treasury yields fell to three-week lows on Tuesday as stock markets tumbled, raising demand for low-risk U.S. government debt, with analysts citing frustration with the pace of the Trump administration's fiscal plans as a factor behind the move.
Benchmark 10-year U.S. Treasuries gained 11/32 in price to yield 2.43 percent, the lowest yield since March 1 and down from 2.50 percent earlier on Tuesday.
Commodities Recap
Oil prices fell on Tuesday, with U.S. crude dropping to its lowest since November, as concerns about new supplies overshadowed the latest talk by OPEC that it was looking to extend output cuts beyond June.
Brent futures for May delivery fell 66 cents, or 1.3 percent, to settle at $50.96 a barrel, its lowest since March 14.
Brent futures for May delivery fell 66 cents, or 1.3 percent, to settle at $50.96 a barrel, its lowest since March 14.
U.S. West Texas Intermediate crude, meanwhile, shed 88 cents, or 1.8 percent, to settle at $47.34 per barrel on the last day for the April contract, falling to its lowest since Nov. 29, before a global effort to shore up prices
Gold rallied to the highest level in nearly three weeks on Tuesday after a strong debate performance from French centrist presidential candidate Emmanuel Macron and as fading expectations for near-term U.S. interest rate hikes pushed the dollar lower.
Spot gold was up 0.9 percent at $1,244.48 an ounce by 2:50 p.m. EDT (1850 GMT), just off the session high of $1,247.60, its highest level since March 2. U.S. gold futures for April delivery settled up 1 percent at $1,246.50.
