Market Roundup
• US Apr Consumer Confidence, 128.7, 126.0 forecast, 127.7 previous.
• US Mar New Home Sales-Units, 0.694 mln, 0.630 mln forecast, 0.618 mln previous.
• US Feb CaseShiller 20 MM SA, 0.8%, 0.7% forecast, 0.8% previous.
• US Feb CaseShiller 20 YY, 6.8%, 6.3% forecast, 6.4% previous.
• US Feb Monthly Home Price YY, 7.2%, 7.3% previous.
• US Feb Monthly Home Price Index, 261.1, 259.3 previous.
• US Mar New Home Sales Chg MM Mar, 4.0%, 1.9% forecast, -0.6% previous .
• US w/e Redbook YY 2.6%, 3.0% previous.
• US Apr Rich Fed Comp. Index, -3, 15 previous.
• US Apr Rich Fed Services Index, 2, 25 previous.
• US Rich Fed Mfg Shipments, -8, 15 previous.
• Trump: "Very good chance" of a U.S.-China trade deal.
• Germany lowers growth forecast as business morale weakens – source.
• Trump and France's Macron seek to resolve differences on Iran deal.
• Trump says talks with North Korea going well ahead of summit.
• Trump opens door for Jackson to leave as veterans agency nominee.
• EU downplays prospect of bespoke Brexit trade deal for banks.
Looking Ahead - Economic Data (GMT)
• No major economic events
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Riksbank monetary policy meeting in Stockholm
• 07:00 ECB’s Francois Villeroy de Galhau opens a conference at the Bank of France entitled "Non-bank finance: trends and alliances" in Paris
• 07:30 ECB policymaker Philip Lane speaks on a panel at a Bank of France conference titled "Non-Bank Finance: Trends and Challenges" in Paris
• 08:30 ECB policymaker Klaas Knot speaks at a Bank of France conference entitled "Non-Bank Finance: Trends and Challenges" in Paris
• 20:15 Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will participate in Senate Standing Committee on Banking, Trade and Commerce on Finance in Ottawa
Currency Summaries
EUR/USD is likely to find support at 1.2180 levels and currently trading at 1.2231 levels. The pair has made session high at 1.2244 and hit lows at 1.2195 levels. The euro was little against the greenback on Tuesday as growing concerns that firmer U.S. Treasury yields would reduce incremental demand for the region's bonds and stocks at a time when hedge funds have amassed record long bets kept investors cautious. The U.S. 10-year Treasury yield rose above 3 percent on Tuesday for the first time in more than four years as investors reduced their U.S. bond holdings on worries about rising inflation and growing government debt supply. The 10-year reached a top of 3.003 percent, above yesterday's close at 2.973 percent. The bond market sell-off since late last week stemmed from inflation worries caused by rising commodity prices and growing Treasury debt supply, as well as bets the Federal Reserve would further raise key borrowing costs. On the data front, U.S. consumer confidence rebounded in April and new home sales increased more than expected in March, pointing to underlying strength in the economy despite signs that growth slowed in the first quarter. Other data on Tuesday also showed house prices increasing solidly in February. Strong consumer confidence and rising house prices should underpin consumer spending, which appears to have braked sharply at the start of the year. The dollar's index against a basket of six major peers rose to as high as 91.076, its strongest since Jan. 12. The dollar index was last steady on the day at 90.989.
GBP/USD is supported in the range of 1.3900 levels and currently trading at 1.3974 levels. It reached session high at 1.3986 and dropped to session low at 1.3938 levels. Sterling firmed against the dollar on Tuesday, breaking a five-day losing streak, after news about a possible takeover of a British pharmaceutical company encouraged investors to put concerns about the British economy to one side. Weaker-than-expected wage growth and inflation data and comments last week from the Bank of England that sowed doubt over a May interest rate hike triggered a selloff in sterling which slid to its lowest since mid-March in early trading. But the currency jumped on Tuesday after Japan's Takeda Pharmaceutical sweetened a 44 billion-pound ($61.4 billion) bid for London-listed drugmaker Shire ahead of a deadline on Wednesday. April has historically proved to be supportive for the pound because of a seasonal rise in capital inflows into Britain from foreign companies paying UK shareholders dividends. But last week, sterling fell almost 1.7 percent on cautious comments from Bank of England Governor Mark Carney that slashed market expectations for a May rate hike. The pound was up 0.3 percent on Tuesday at $1.3974 but remained near its lowest since March 19, in part because of a broadly stronger dollar. Against the euro the pound was up 0.1 percent at 0.8748.
USD/CAD is supported at 1.2772 levels and is trading at 1.2823 levels. It has made session high at 1.2828 and lows at 1.2810 levels. The Canadian dollar edged higher against its U.S. counterpart on Tuesday after hitting a three-week low, as oil prices held near three-year highs and the greenback consolidated its recent gains. The U.S. dollar was little changed against a basket of major currencies. It had climbed earlier in the day to its highest in more than three months, supported by the recent rise in U.S. Treasury yields. The price of oil, one of Canada's major exports, was supported by OPEC-led production cuts, strong demand and the prospect of renewed U.S. sanctions on Iran. The loonie has declined 2.2 percent since the Bank of Canada last week indicated that more interest rate hikes would be coming after it held its benchmark rate steady at 1.25 percent, but said it did not know when or how aggressive it would need to be to keep inflation in check. Bank of Canada Governor Stephen Poloz on Monday gave an upbeat assessment of the economy's prospects after a sluggish first quarter and said that while inflation this year would rise above the central bank's target, it would be temporary. The Canadian dollar was trading 0.1 percent higher at C$1.2831 to the greenback, or 77.94 U.S. cents. The currency's strongest level of the session was C$1.2814, while it touched its weakest since April 3 at C$1.2860.
AUD/USD is supported around 0.7575 levels and currently trading at 0.7603 levels. It hit session high at 0.7616 and made session lows at 0.7590 levels. The Australian dollar broke below key chart support to hit a four-month trough on Tuesday as Australian dollar was weighed down by higher US inflation expectations. The Australian dollar went as deep as $0.7577, a level not seen since mid-December, after breaching critical support of $0.7650 overnight. Technical analysts see the next stop at $0.7505. On the data front, Australian consumer prices stayed soft last quarter as core inflation began a third year below the central bank's target, cementing expectations any hike in interest rates is a long distance off. Annual CPI inflation ran at 1.9 percent, again under estimates. Key measures of underlying inflation favoured by the Reserve Bank of Australia (RBA) averaged around 1.9 percent for the year. Core inflation has now undershot the RBA's long-term target band of 2 percent to 3 percent for nine straight quarters, the longest period on record.A major headwind has been wages growth, which slowed to historic lows even as employment boomed, an unwelcome phenomenon shared with much of the developed world. As a result, the central bank has kept interest rates at an all-time low of 1.5 percent since mid-2016 and sees no strong case for shifting anytime soon.
Equities Recap
European shares steadied on Tuesday as a batch of company updates failed to set a clear trend and chipmakers were weighed down by AMS' warning of a downturn in orders.
UK's benchmark FTSE 100 closed up by 0.30 percent, the pan-European FTSEurofirst 300 ended the day down by 0.08 percent, Germany's Dax ended down by 0.29 percent, France’s CAC finished the day down by 0.04 percent.
Wall Street dropped sharply on Tuesday as concerns over marquee companies warning of higher costs were exacerbated by the benchmark U.S. 10-year Treasury yield piercing the 3-percent level for the first time in four years.
Dow Jones closed down by 1.77 percent, S&P 500 ended down 1.36 percent, Nasdaq finished the day down by 1.73 percent.
Treasuries Recap
U.S. benchmark 10-year Treasury yield rose to 3 percent for the first time in more than four years on Tuesday, reflecting the durability of the U.S. economic expansion and stoking views the three-decade-old bull market in bonds is coming to an end.
The 10-year Treasury yield rose 2 basis points to 2.994 percent after rising to 3.003 percent, which was the highest since January 2014.
The two-year yield touched 2.500 percent, which was last seen in September 2008 before subsiding to 2.470 percent, down 0.4 basis point on the day.
Commodities Recap
Gold prices gained after three days of losses on Tuesday as the dollar retreated from an earlier three-month peak and U.S. equities weakened, even as benchmark U.S. Treasury yields passed 3 percent for the first time in more than four years.
Spot gold gained 0.5 percent to $1,330.84 per ounce by 1:34 p.m. EDT (1734 GMT), while U.S. gold futures for June delivery settled up $9, or 0.7 percent, at $1,333.
Oil prices slipped on Tuesday as concerns over the possibility that the United States might reinstate sanctions against Iran faded somewhat, alleviating worries about the future of Iranian exports.
Brent traded as high as $75.47 and was down 82 cents at $73.80 at 2:09 p.m. EDT (1809 GMT). West Texas Intermediate (WTI) crude fell 93 cents to $67.71, retreating from the November 2014 high it hit on Thursday.
