Market Roundup
• US Jun JOLTS Job Openings, 6.662 mln, 6.646 mln forecast, 6.638 mln previous, 6.659 mln revised.
• CA Jul Ivey PMI, 56.7, 65.1 previous.
• CA Jul Ivey PMI SA, 61.8, 63.1 previous.
• Trump says firms doing business in Iran to be barred from US as sanctions hit.
• Ex-Manafort aide Gates testifies his mentor hid income in Cyprus.
• Trump faces political test in Ohio as five states cast votes.
• Canada to ask allies to help cool Saudi dispute as kingdom blocks its grain.
• Bank of England's McCafferty says fewer EU bankers coming to London.
Looking Ahead - Economic Data (GMT)
• 7 Aug 23:50 Japan Jun Current Account NSA JPY, 1195.8 bln forecast, 1938.3 bln previous
• 8 Aug NA China Jul Exports y/y, 10.0% forecast, 11.3% previous, 11.2% revised
• 8 Aug NA China Jul Imports y/y, 16.2% forecast, 14.1% previous
• 8 Aug NA China Jul Trade Balance USD, 39.33 bln forecast, 41.61 bln previous, 41.47 bln revised
• 8 Aug 01:30 Australia Jun Housing Finance, 0.2% forecast, 1.1% previous
Looking Ahead - Events, Other Releases (GMT)
• 12:30 Richmond Fed's Tom Barkin speaks on "Unlocking Our Potential" before a group of local business and community leaders in Virginia, United States.
Currency Summaries
EUR/USD is likely to find support at 1.1500 levels and currently trading at 1.1597 levels. The pair has made session high at 1.1607 and hit lows at 1.1581 levels. The euro strengthened against dollar on Tuesday as expectations grew that the dollar's recent rally on the back of escalating trade tensions may be coming to an end. Since mid-April, the dollar has gained more than 6 percent against a basket of its peers and an index of emerging market rivals as the U.S. central bank raised interest rates and trade tensions prompted investors to buy the greenback. But with markets expecting another three rate hikes until mid-2019, investors are wary of pushing the greenback higher with long dollar positions consolidating at a one-year high. Of the three rate hikes penciled in by markets, investors expect roughly two of them through the remainder of this year after two rate hikes so far in 2018.The dollar index was down 0.10 percent at 95.264. It had risen to 95.652 on July 19, its highest since July 2017. It has struggled to break much above the 95.5 level, which it has tested multiple times in the past two months.The euro gained 0.24 percent against the greenback to $1.1595. It has some technical support at around $1.15.The main U.S. economic focus this week will be Friday’s consumer price inflation report for July, which is expected to show a 0.2 percent increase in core inflation in the month.
GBP/USD is supported in the range of 1.2914 levels and currently trading at 1.2940 levels. It reached session high at 1.2926 and dropped to session low at 1.2922 levels. Britain's pound declined against the dollar on Tuesday as investors were worried that Britain could crash out of the European Union without securing a trade deal. Sterling, which has had a tougher time against the dollar in recent months, hit 11-month low on Tuesday. If Britain leaves the EU without a transition agreement, it would revert to trading under World Trade Organization rules. Most economists think that would cause serious harm to the world's fifth-largest economy as trade with the EU, Britain's biggest market, would become subject to tariffs. Supporters of Brexit say there may be some short-term pain for Britain's $2.9 trillion economy, but that long-term it will prosper when cut free from the EU and able to strike trade deals with faster-growing countries and regions elsewhere. The pound has fallen more than 10 percent since mid-April, and with the government yet to agree a divorce deal with Brussels, currency traders are growing edgy about its outlook. A lack of Brexit headlines and a pause in a rally by the dollar on Tuesday brought some respite for the currency, but analysts said that would likely only be temporary.
USD/CAD is supported at 1.2960 levels and is trading at 1.3053 levels. It has made session high at 1.3074 and lows at 1.2970 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday, with the currency pulling back from a nearly eight-week high intraday as a diplomatic dispute worsened between Canada and Saudi Arabia. Losses for the loonie came as Canadian asset markets reopened following a civic holiday on Monday and as the U.S. dollar pared some of its earlier losses against a basket of major currencies. Traders revealed the Saudi government, which has denounced Canada for urging the release of rights activists, would no longer buy Canadian wheat and barley. Still, the bilateral trade relationship between the two countries, which is worth less than $4 billion a year, may be too modest to damage the Canadian dollar. The loonie had benefited over recent days from data showing stronger-than-expected growth in Canada's economy in May and a record high for the country's exports in June. The price of oil, one of Canada's major exports, was boosted by revived U.S. sanctions against major crude exporter Iran that could tighten global supply. U.S. crude oil futures settled 0.2 percent higher at $69.17 a barrel. The Canadian dollar was trading 0.4 percent lower at C$1.3052 to the greenback, or 76.59 U.S. cents.
AUD/USD is supported around 0.7372 levels and currently trading at 0.7421 levels. It hit session high at 0.7437 and made session lows at 0.7413 levels. The Australian dollar strengthened against the US dollar on Tuesday after the central bank kept policy settings on hold and the Chinese stock market rallied strongly towards the close, boosting risk appetite. Australia's central bank has marked two whole years with no move in interest rates, the longest policy pause in its modern history, as optimism on the economy is tempered by miserly wage growth and muted inflation. The Reserve Bank of Australia (RBA) ended its August policy meeting on Tuesday with rates held at a record low of 1.50 percent, and showed every intention of keeping them there. The economy grew a surprisingly brisk 3.1 percent in the year to March and recent robust data on retail sales and trade suggest it maintained momentum through the June quarter. The bank will issue updated economic forecasts this Friday and Lowe offered a taster on the outlook, noting that inflation would likely be softer than expected in the second half of this year due to declines in government-set prices. The Aussie dollar was idling at $0.7423, sandwiched between support at $0.7350 and resistance at $0.7440. Major chart levels at $0.7311 and $0.7484 have hemmed-in the currency for more than seven weeks now.
Equities Recap
European shares rose on Tuesday and made their way back to positive territory for 2018 as investors cheered UniCredit results, oil prices boosted energy groups and a positive open on Wall Street lifted sentiment.
UK's benchmark FTSE 100 closed up by 0.8 percent, the pan-European FTSEurofirst 300 ended the day up by 0.63 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.9 percent.
The S&P 500 inched nearer to a record high on Tuesday, lifted by Amazon, Alphabet and Microsoft, and by a strong second-quarter earnings season that fueled optimism about the strength in the U.S. economy.
Dow Jones closed up by 0.49 percent, S&P 500 ended up by 0.29 percent, Nasdaq finished the day up by 0.31 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday as investors scaled back their bond holdings on higher Wall Street stock prices and pressure to make room for $78 billion in coupon-bearing supply from this week's quarterly government refunding.
On late Tuesday trading, the benchmark 10-year yield increased nearly 4 basis points to 2.975 percent. It fell to a two-week low of 2.925 percent on Monday on safe-haven demand spurred by U.S.-China trade frictions.
Commodities Recap
Gold climbed nearly 1 percent on Tuesday, having drifted near $1,200 an ounce this week, as the U.S. dollar fell versus China's yuan against a backdrop of U.S.-China trade tensions.
Spot gold gained 0.3 percent at $1,210.06 per ounce by 1:38 p.m. EDT (1738 GMT), while U.S. gold futures for December delivery settled up 60 cents, or 0.1 percent, at $1,218.30.
Oil prices rose on Tuesday after U.S. sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages.
Brent futures rose 90 cents, or 1.2 percent, to settle at $74.65 a barrel, after hitting a session high of $74.90.
U.S. West Texas Intermediate (WTI) crude futures settled 16 cents, or 0.2 percent, higher at $69.17 a barrel, down from an earlier high of $69.83.
