Market Roundup
• Increase in US home prices slightly less than forecast, CaseShiller 20YY Jun 5.1% vs 5.2% forecast.
• US Consumer Confidence Aug 101.1 vs 97 forecast, 96.7 previous; Highest since Sept 2015.
• U.S. shares slip on Fed rate hike worries, Dollar's gains hurts oil, gold prices.
• Italy Q2 GDP likely to be revised up - Treasury source.
• Japan’s Suga signals readiness to stem yen gains; defends BOJ's negative rate policy.
• France's Macron resigns in step to prepare for run at presidency.
• Eurozone bonds edge lower as US rate hike expectations grow.
• Iraq to support oil output freeze at OPEC meeting.
• Sterling slips back towards 1.30 as transatlantic rate paths diverge.
• Latin American currencies weaken on Vice-Chair Fischer’s comments, US cons sentiment beat.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Industrial output prelim mm Jul f/c 0.80%, 2.3%-previous
• 23:50 Japan IP Forecast 1 Mth Ahead Jul 2.4%- previous
• 23:50 Japan IP Forecast 2 Mth Ahead Jul 2.3%- previous
• 01:00 New Zealand NBNZ Business Outlook Aug 16%- previous
• 01:00 New Zealand NBNZ Own Activity Aug 31.4%- previous
• 01:00 Australia HIA New Home Sales m/m Jul 8.2%- previous
• 01:30 Australia Private Sector Credit* Jul forecast 0.40%, 0.2%- previous
• 01:30 Australia Housing Credit* Jul 0.5%- previous
• 05:00 Japan Construction Orders YY* Jul -2.4%- previous
• 05:00 Japan Housing Starts YY* Jul forecast 7.40%, -2.5%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1110 levels and currently trading at 1.1142 levels. The pair has made session high at 1.1171 and hit lows at 1.1131 levels. The dollar rose against the euro on Tuesday after U.S. consumer confidence rose to an 11-month high in August, indicating that US economy is progressing well. The dollar was also boosted by hawkish comments from Federal Reserve on interest rates, while attention turned to U.S. payrolls data this week for further clues on the pace of rate hikes. Hawkish comments on Friday by Fed Chair Janet Yellen and Vice Chair Stanley Fischer increased expectations the U.S. central bank could hike at its September policy meeting, though most investors and economists view a single increase at the December meeting as more likely. The dollar index, which measures the currency against a basket of six majors, rose as high as to 96.143, its highest level since Aug. 9, before falling back to 96.062, up 0.50 percent on the day.
GBP/USD is supported in the range of 1.3018 currently trading at 1.3075 levels. It reached session high at 1.3103 and hit low at 1.3073 levels. The British pound declined against US dollar on Tuesday as comments by a high-ranking Federal Reserve policymaker and strong U.S. economic data kept investors guessing about the possibility of a September rate hike. Fed Vice Chair Stanley Fischer told Bloomberg TV that the U.S. job market is nearing full strength and the pace of rate increases will depend on the economy's health. Data on Tuesday showed U.S. consumer sentiment rose to 101.1 in August, handily beating expectations for a reading of 97.0. Sterling has fallen more than 1 percent against the dollar since Friday's comments from Yellen and Fischer at a meeting of global central bankers. On Tuesday it traded 0.1 percent lower on the day at $1.3080, though it was up 0.3 percent against a broadly weaker euro at 85.13 pence.
USD/CAD is supported at 1.2970 levels and is trading at 1.3099 levels. It has made session high at 1.3102 and lows at 1.3060 levels. The Canadian dollar weakened against US dollar on Tuesday as oil prices declined and the dollar was boosted after strong U.S. economic data strengthened the case for Federal Reserve to hike interest rate hike this year. The U.S. dollar rose against a basket of currencies as investors waited to see if Friday's U.S. jobs report would support expectations that the Federal Reserve will raise interest rates soon.Oil prices fell for a second straight day on the dollar's strength and worries about crude oversupply. Canada's gross domestic product data for the second quarter is due for release on Wednesday. Economists expect a contraction at a 1.5 percent annualized pace as growth was shaken by wildfires in northern Alberta that disrupted oil production. GDP figures for June that are also set for release on Wednesday are expected to show growth picked up by 0.4 percent, which should bolster expectations that the economy will rebound in the third quarter.
AUD/USD is supported around 0.7490 levels and currently trading at 0.7508 levels. It hit session high at 0.7542 and made session lows at 0.7499 levels. The Australian dollar declined against greenback on Tuesday after an upbeat US economic data combined with decline in oil prices weighted on the Aussie. The Conference Board said its consumer confidence index rose to 101.1 this month, an 11-month high. The data supported expectations that the Fed could raise rates this year after top Fed officials have said recently that such a move was possible. Fed Chair Janet Yellen said on Friday the case for higher rates was strengthening, though she gave little clarity on the timing of a move. In an interview on Tuesday, Vice Chair Stanley Fischer said the U.S. job market is nearly at full strength and that the pace of rate increases by the Fed will depend on how well the economy is doing. The Aussie has been on a downtrend since hitting a near 3-1/2 month high of $0.7760 earlier in August. It has found solid chart support around $0.7530 but a break there could see it touch $0.7450, a level last visited on July 27.
Equities Recap
European equities climbed to a two-week high on Tuesday, with financial stocks gaining ground on mounting expectations of a possible U.S. rate hike this year.
UK's benchmark FTSE 100 closed down 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.60 percent, Germany's DAX ended up by 1.1 percent, France’s CAC finished the day up by 0.9 percent.
Apple Inc was the largest weight on U.S. stock indexes on Tuesday after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government, but gains in bank shares partly offset the decline.
Dow Jones closed down by 0.26 percent, S&P 500 ended down by 0.20 percent, Nasdaq finished the day down by 0.18 percent.
Treasuries Recap
U.S. Treasury debt prices were little moved on Tuesday with investors largely holding their positions after comments from Federal Reserve Vice Chair Stanley Fischer that put a spotlight on Friday's non-farm payrolls report.
Benchmark 10-year Treasury notes fell 1/32 in price to yield 1.570 percent. Two-year Treasury notes also hovered near their late Monday levels, yielding 0.801 percent.
Commodities Recap
Gold fell to a six-week low on Tuesday after Federal Reserve officials sounded a hawkish note on interest rates, boosting the dollar, while attention turned to U.S. payrolls data this week for further clues on the pace of rate hikes.
Spot gold was down 0.8 percent at $1,312.71 an ounce by 2:49 p.m. EDT (1849 GMT), after falling as low as $1,311.65, the lowest since July 21. U.S. gold futures for December delivery settled down 0.8 percent at $1,316.5 per ounce.
Oil prices fell Tuesday, with Brent losing nearly 2 percent, as the dollar rallied and glut worries grew amid forecasts for higher U.S. crude stockpiles and Iran's remark that it was on target to reach peak production.
Brent crude futures settled down 89 cents, or 1.8 percent, at $48.37 per barrel. U.S. West Texas Intermediate (WTI) crude futures fell 63 cents, or 1.3 percent, to close at $46.35.
