Market Roundup
• Consumer Confidence Aug, 122.9, 120.3 forecast, 121.1 previous.
• US Redbook w/e, 2.0% m/m, 4.3% y/y, -0.2%, 3.2% previous.
• Case-Shiller 20 MM SA Jun, 0.1%, 0.2% forecast, 0.1% previous.
• Case-Shiller 20 MM NSA Jun, 0.7%, 0.8% forecast, 0.8% previous.
• Case-Shiller 20 YY Jun, 5.7%, 5.7% forecast, 5.7% previous.
• Texas Serv Sect Outlook Aug, 15.1, 10.5 previous.
• Dallas Fed Services Revenues Aug, 14.2, 15.7 previous.
• S&P sees US keeping AA+ rating if it avoids default.
• Canada producer prices drop 1.5%, biggest fall in 2-1/2 years.
• Mexico minister sees risk of US NAFTA exit, flags plan B -paper.
• All options on table after N. Korea fires missile over Japan -Trump.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Building Consents Jul, -1.0% previous
• 22:50 Japan Retail Sales YY Jul, 1.0% forecast, 2.1 previous
• 01:30 Australia Building Approvals Jul, -5.0% forecast, 10.9% previous
• 01:30 Australia Private House Approvals Jul, 3.4% previous
• 01:30 Australia Construction Work Done Q2, 1.0% forecast, -0.7% previous
Looking Ahead - Events, Other Releases (GMT)
• 13:15 Fed’s Jerome Powell speaks at Conference in Chicago
Currency Summaries
EUR/USD is likely to find support at 1.1913 levels and currently trading at 1.1964 levels. The pair has made session high at 1.2052 and hit lows at 1.1946 levels. Euro was little against dollar on Tuesday as U.S. dollar recovered most of the lost against euro as traders brushed aside concerns surrounding a North Korean missile launch over Japan. The action prompted a warning from U.S. President Donald Trump, calls to residents to take cover and drew a sharp reaction from Japanese Prime Minister Shinzo Abe.The dollar, which had touched its lowest level against the euro earlier in the session on widespread risk aversion following North Korea's launch of a ballistic missile over northern Japan's Hokkaido island into the sea, recovered strongly in the late U.S. trading. The euro was last roughly flat against the greenback at $1.1963 after earlier hitting a more than 2-1/2-year high and breaking through the critical $1.20 level to $1.2069. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.1 percent at 92.336 after touching its lowest since January 2015 of 91.621 earlier.
GBP/USD is supported in the range of 1.2866 levels and currently trading at 1.2918 levels. It reached session high at 1.2953 and dropped to session low at 1.2915 levels. Sterling dipped against the greenback on Tuesday as political uncertainty elsewhere drove investors in search of relative safety. With a general risk-averse mood prevailing broadly across financial markets following a missile launch from North Korea, the dollar struggled against its major rivals, falling to more than a 2-1/2 year against a trade-weighted basket. By 1940 GMT, sterling was trading 0.07 percent lower at $1.2922, after hitting $1.2974 earlier, its highest level since August 15.Investors had their focus trained on the third round of Brexit negotiations which started on Monday, with the European Union's chief negotiator saying he was concerned at the slow progress of the talks. The British government has laid out a series of position papers that have outlined compromises over some of the issues likely to block progress in talks this year, but EU officials say Britain needs to settle its divorce bill with the bloc before a trade agreement can be discussed.
USD/CAD is supported at 1.2610 levels and is trading at 1.2662 levels. It has made session high at 1.2703 and lows at 1.2653 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as oil prices dipped, while the greenback pared losses as investors shrugged off concerns over North Korea's latest missile test. The dollar index, which measures the greenback against a basket of six major currencies, was 0.22 higher at 92.406 after earlier hitting 91.621, its lowest since mid-January 2015. Prices of oil, one of Canada's major exports, fell as the market grappled with the shutdown of some 13 percent of U.S. refining capacity after a hurricane ripped through the heart of the country's oil industry. On the data front, Canadian producer prices declined by 1.5 percent in July from June on lower prices for motorized and recreational vehicles, Statistics Canada said. The Canadian dollar was last trading slightly lower at C$1.2525 to the greenback, or 80.00 U.S. cents. The currency's weakest level of the session was C$1.2549, while it touched its strongest since July 31 at C$1.2440.
AUD/USD is supported around 0.7902 levels and currently trading at 0.7952 levels. It hit session high at 0.7982 and made session lows at 0.7948 levels. The Australian dollar dipped against US dollar on Tuesday as heightening tensions between North Korea and the United States rattled markets, pushing commodity related currencies lower. North Korea fired a missile that passed over northern Japan, the latest act of provocation by Pyongyang that has ramped up tensions in the region over the past month. That has forced funds to pare back riskier positions in carry trades which typically favour the higher-yielding Antipodeans. The United States, Japan and South Korea considered that launch to have been a ballistic missile test while North Korea said it was a rocket carrying a communications satellite into orbit. The Aussie slipped to $0.7951 against the U.S. dollar from the previous session's $0.7981. The Aussie has found support around 79 cents after hitting stiff chart resistance at a two-year peak of $0.8066 in late-July.
Equities Recap
Political tensions and a surging euro sent European shares to their lowest in six months on Tuesday after a missile launch by North Korea sapped global risk appetite.
UK's benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.94 percent, Germany's Dax ended down by 1.5 percent, France’s CAC finished the day down by 1 percent.
U.S. stocks ended higher on Tuesday after recovering from steep early losses brought by fears of escalation of hostilities in the Korean Peninsula.
Dow Jones closed up by 0.26 percent, S&P 500 ended up 0.09 percent, Nasdaq finished the day up by 0.31 percent.
Treasuries Recap
U.S. benchmark 10-year Treasury note yields fell on Tuesday to their lowest since last November after North Korea fired a ballistic missile over northern Japan and into the sea, sparking safety buying of the bonds.
Ten-year Treasury yields dropped as low as 2.086 percent, the lowest since Nov. 10, 2016 - two days after Trump won the U.S. presidential election - before rising back to 2.14 percent.
The yield curve between two- and 10-year Treasuries flattened as far as 77 basis points, from 83 basis points late on Monday and the narrowest level since June.
Commodities Recap
Gold jumped to its highest since November on Tuesday, extending the prior day's rally above $1,300 per ounce as investors bought bullion as insurance against falling prices of other assets after North Korea tested a ballistic missile over Japan.
Spot gold was up 0.4 percent at $1,314.52 an ounce by 1:54 p.m. EDT (1754 GMT), after touching $1,325.9399, its highest since Nov. 9.U.S. gold futures for December delivery settled up 0.3 percent at $1,318.90.
Crude prices slipped more than 1.5 percent lower on Tuesday as the market grappled with the shutdown of more than 16 percent of refining capacity in the United States after a hurricane ripped through the heart of the country's oil industry.
Brent crude futures rose 11 cents to settle at $52.00 a barrel, while U.S. crude futures settled at $46.44, down 13 cents.
