Market Roundup
• US Oct existing homes sales rise 2% v forecast -0.5%, 9.5-year high; Median price +6% y/y, inventory -4.3% y/y.
• Wall St at record high, Dow tops 19k for first time, S&P 500 tops 2,200 mark, boosted by consumer stocks.
• OPEC to debate oil o/p cut next week, Iraq foreign minister: would be unfair for OPEC to ask it to cut, Iran still insists on production targets above 4 mln bpd.
• Fitch: lengthy renegotiation of NAFTA would create uncertainty, delay investment in Canada’s new export capacity.
• IMF cuts 2017 Mexico growth forecast from 2.6% to 2.2% & ’16 from 2.5% to 2.1%, amid trade worries & lower oil.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Data
Currency Summaries
EUR/USD is likely to find support at 1.0553 levels and currently trading at 1.0626 levels. The pair has made session high at 1.0640 and hit lows at 1.0583 levels. Euro slipped lower against dollar on Tuesday as upbeat U.S. existing home sales data further cemented expectations that Federal Reserve will hike interest rate next month. Data on Tuesday showed U.S. home resales rose two percent in October to an annual rate of 5.6 million units, the highest level in more than 9-1/2 years. That pushed the dollar to session highs versus the yen and drove a turnaround in the dollar index. The dollar index rose 0.1 percent to 101.19 as the euro fell 0.3 percent against the dollar to $1.0598. The shared currency was not far from a nearly one-year low against the dollar hit last week. Trump's victory in the Nov. 8 U.S. election initially saw a flight to safe-haven assets such as gold but the trend quickly reversed as the dollar and bond yields surged on expectations of higher U.S. spending and interest rates.
GBP/USD is supported in the range of 1.2326 and currently trading at 1.2419levels. It reached session high at 1.2443 and hit low at 1.2383 levels. Sterling slipped lower on Tuesday against the dollar as the sterling was dragged down by rallying dollar on upbeat US economic data and market expectations for higher growth and more spending from a Donald Trump presidency. The data reinforced expectations not only that the U.S. Federal Reserve would raise interest rates next month, but would tighten monetary policy further next year. The pound jumped above $1.25 on Monday after Prime Minister Theresa May pledged to address business concerns that Britain could fall off a "cliff edge" into uncertainty when it leaves the European Union, hinting at some form of a transitional agreement. But having initially built on those gains on Tuesday, touching a one-week high of $1.2514 in Asian trade, sterling slid steadily throughout Tuesday, trading at $1.2419 down 0.7 percent on the day.
USD/CAD is supported at 1.3375 levels and is trading at 1.3445 levels. It has made session high at 1.3466 and lows at 1.3380 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday as higher oil prices were offset by broader gains for the greenback and investors waited for prospects of an output cut by major oil producers. Oil prices reached their highest this month before turning lower. A growing consensus has emerged in the market that OPEC will overcome internal disputes and scepticism to strike a deal that materially reduces crude output. On the data front, Canadian retail sales rose 0.6 percent in September, in line with economists' expectations, but would have been flat without the increased purchases of cars and parts, data from Statistics Canada showed. After removing the effects of price changes, retail sales climbed 0.6 percent. The Canadian dollar was last trading at C$1.3440 to the greenback, or 74.66 U.S. cents, weaker than Monday's close of C$1.3380, or 74.55 U.S. cents.
AUD/USD is supported around 0.7308 levels and currently trading at 0.7400 levels. It hit session high at 0.7405 and made session lows at 0.7373 levels. The Australian dollar edged slightly higher against US dollar on Tuesday as gains in key commodity prices offered some fundamental support to Aussie dollar. Aiding the Aussie were gains in copper, coal and iron ore prices, all major export earners for Australia. Coal, in particular, has enjoyed huge gains in the last few months and promises to sharply shrink the country's monthly trade deficit. The Australian dollar was last trading $0.7400 and away from a five-month trough of $0.7311 touched on Monday. The Aussie is still down four cents in the two weeks since Republican Donald Trump won the U.S. Presidency and triggered a jump in inflation wagers and Treasury yields. Oil prices fell in volatile trade on worries Iran and Iraq were not ready to agree on an OPEC output freeze. Prices earlier rose to their highest levels this month on reports that cartel members had overcome their internal disputes.
Equities Recap
European mining shares rose more than 3 percent on Tuesday, underpinning Europe's benchmark STOXX 600 index as the global reflation trade in the wake of Donald Trump's victory in the U.S. presidential election continued.
The pan-European STOXX 600 ended up 0.2 percent, UK's benchmark FTSE 100 closed up by 0.6 percent, FTSEurofirst 300 ended the day up by 0.15 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day up by 0.4 percent.
U.S. stocks extended their post-U.S. election rally on Tuesday with moderate gains that pushed the Dow above 19,000 and the three major indexes to record closing levels for a second straight day.
Dow Jones closed up by 0.35 percent, S&P 500 ended up 0.21 percent, Nasdaq finished the day up by 0.31 percent.
Treasuries Recap
Most U.S. Treasuries were steady on Tuesday after the U.S. Treasury Department saw solid demand for its $34 billion sale of five-year notes, the second sale of $88 billion in new supply this week.
Two-year note yields rose as high as 1.107 percent earlier, the highest level since April 2010, before falling back to 1.08 percent. The yields have soared from 0.81 percent before Trump's victory.
Five-year note yields were trading just below 11-month highs, at 1.78 percent.
Benchmark 10-year note yields ended little changed on the day to yield 2.32 percent.
Commodities Recap
Gold edged lower on Tuesday after U.S. equities hit all-time highs on market expectations for higher growth and more spending from a Donald Trump presidency.
Spot gold was down 0.14 percent at $1,211.97 an ounce by 2:18 p.m. EST (1918 GMT). The previous day, bullion advanced 0.4 percent to snap three sessions of losses.
U.S. gold futures settled up 0.1 percent at $1,211.20 per ounce.
Oil ended little changed on Tuesday in a volatile trade that saw prices rise and fall by $1 a barrel depending on the latest comment from OPEC officials at a technical conference in Vienna on whether the cartel members would agree to an output cut.
Brent futures gained 22 cents, or 0.45 percent, to settle at $49.12 a barrel, its highest close since the end of October, while U.S. crude lost 21 cents, or 0.44 percent, to finish at $48.03.
