Market Roundup
• US May ISM N-Mfg PMI, 58.6, 57.5 forecast, 56.8 previous.
• US May ISM N-Mfg Bus Act, 61.3, 59.3 forecast, 59.1 previous.
• US May ISM N-Mfg Employment Index, 54.1, 53.6 previous.
• US May ISM N-Mfg New Orders Index, 60.5, 60.0 previous.
• US May ISM N-Mfg Price Paid Index, 64.3, 61.8 previous.
• US May Markit Comp Final PMI, 56.6, 55.7 previous.
• US May Markit Svcs PMI Final, 56.8, 55.7 previous.
• US Apr JOLTA Jobs Openings, 6.689 mln, 6.400 mln forecast, 6.550 mln previous.
• CA Q1 Labor Productivity Rate, -0.3%, 0.2% previous.
• Eye on Trump strongholds, Mexico hits back with pork, bourbon tariffs.
• Trump to meet trade advisers over $70 billion China offer –sources.
• Trump may seek separate trade deals with Canada, Mexico -U.S. adviser.
• U.S. lawmakers set bill seeking to control Trump on tariffs - key lawmaker.
• Trump-Kim summit set for Singapore's Sentosa Island -White House.
• Italy's new PM vows radical change, flanked by party bosses.
• Expect frank trade talks at G7 summit -Canada official.
• G7 to pledge joint defence of democracies from foreign threats - EU official.
Looking Ahead - Economic Data (GMT)
• 00:00 Japan Apr Overtime Pay, 1.8% previous
• 01:00 Australia Oct HIA New Home Sales m/m, -6.1% previous
• 01:30 Australia Q1 GDP QQ, 0.9% forecast, 0.4% previous
• 01:30 Australia Q1 GDP YY, 2.8% forecast, 2.4% previous
• 01:30 Australia Q1 GDP Final Consumption QQ, 1.1% previous
• 01:30 Australia Q1 GDP Capital Expenditure, -1.2% previous
• 01:30 Australia Q1 GDP Chain Price Index, 0.8% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A BoE's interest-rate setter Ian McCafferty takes part in a question-and-answer session with listeners of LBC radio in London
• N/A Bank of Slovenia's Primoz Dolenc and Slovenian Finance Minister Mateja Vranicar Erman speak at a banking conference in Ljubljana, Slovenia
• 07:00 ECB's Praet gives Keynote speech at the International Congress of Actuaries 2018 organised by Deutsche Aktuarvereinigung e.V. in Berlin, Germany
• 09:30 David Bailey: Panellist at the Futures Industry Association International Derivatives Expo in London
• 10:00 BoE's Tenreyro: CBI Economic briefing in Belfast during a regional visit to Northern Ireland
• 11:30 Irish Finance Minister Paschal Donohoe speaks at financial services lunch in Dublin, Ireland
• 13:30 ECB's Pentti Hakkarainen gives Keynote speech on "The Digitalisation Of Banking - Supervision Implications" at Lisbon Research Centre on Regulation and Supervision of the Financial Sector (CIRSF) Conference in Lisbon, Portugal
• 16:10 Speech by Deutsche Bundesbank Board member Johannes Beermann, Title: "Our money - a journey through time" at Exhibition opening at the State Ministry of Finance in Dresden, Germany
• 17:10 ECB's Ignazio Angeloni Participates in a panel discussion on "Completing the Banking Union" organised by the Association of German Public Banks in Brussels, Belgium
Currency Summaries
EUR/USD is likely to find support at 1.1641 levels and currently trading at 1.1713 levels. The pair has made session high at 1.1732 and hit lows at 1.1649 levels. The euro strengthened against US dollar on Tuesday as euro was boosted after Italian Prime Minister Giuseppe Conte said the government had never considered leaving the euro zone. Conte told parliament on Tuesday that his new government had no plans to leave the euro zone. Italy's ruling coalition's original choice as economy minister, euro-skeptic economist Paolo Savona, was turned down by the head of state because of his views on the euro. He was replaced by a more reassuring figure for financial markets. The euro also benefited on speculation that the European Central Bank could conclude its next policy meeting this month with a public announcement on when its quantitative easing program would end. Markets have not been expecting an announcement on QE this month given the uncertainty caused by the Italian political situation. The euro rose 0.1 percent against the dollar to $1.1712, which pushed the dollar index, 0.1 percent lower to 93.894. Strong U.S. employment data published on Friday revived bets that the Federal Reserve will raise interest rates three more times this year. Still, market players cautioned that the U.S. currency could suffer a fresh setback if worries about a trade war between the United States and the rest of the world intensify.
GBP/USD is supported in the range of 1.3293 levels and currently trading at 1.3389 levels. It reached session high at 1.3408 and dropped to session low at 1.3331 levels. Sterling rose against the dollar on Tuesday after a survey showed companies in Britain's dominant services sector grew more quickly than expected in May after a winter slump in early 2018.But the mood concerning the pound's outlook remained more subdued due to uncertainty surrounding Britain's planned exit from the European Union in March 2019 and the Bank of England's path for monetary tightening. After slumping 3.43 percent against a resurgent dollar in May, sterling started June on the front foot, buoyed by data showing signs of a possible strengthening of the British economy after a sluggish first quarter. The IHS Markit/CIPS services purchasing managers' index (PMI) rose to a three-month high in May, better than forecast in a poll of economists. That pushed sterling up to $1.3391 close to a two-week high, it was last trading at 1.3389 in the late US session. Against the euro, the pound also rose to a four-day high of 87.25 pence. Investors are now pricing in a roughly 40 percent chance of the BoE raising borrowing costs in August the next time it updates its economic forecasts.
USD/CAD is likely to find support at 1.2886 levels and is trading at 1.2976 levels. It has made intraday high at 1.3067 and lows at 1.2915 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday as U.S. President Donald Trump mulled moving toward bilateral discussions on NAFTA. Trump is considering a shift in the effort to revamp the North American Free Trade Agreement to separate talks with Canada and Mexico, White House economic adviser Larry Kudlow said. Canada sends about 75 percent of its exports to the United States so its economy could be hurt if a deal on NAFTA is not reached. Brent crude initially fell but reversed course after hitting its lowest price in nearly a month following a report that the U.S. government asked Saudi Arabia and other major exporters to increase oil output. U.S. crude rose 77 cents to settle at $65.52, while Brent gained 9 cents to settle at $75.38.Canadian labor productivity fell by 0.3 percent in the first quarter, reflecting a deceleration in business output from the previous quarter, while hours worked accelerated, Statistics Canada said. The Canadian dollar was last trading 0.4 percent lower at C$1.2974 to the greenback, or 77.04 U.S. cents. The currency traded in a range of C$1.2915 to C$1.3067.
AUD/USD is supported around 0.7564 levels and currently trading at 0.7611 levels. It hit session high at 0.7629 and made session lows at 0.7593 levels. The Australian dollar hovered near six-week highs as the country's central bank sounded upbeat about future economic growth, while dollar fell reversing earlier gains. The Australian dollar was last trading at $0.7611, down 0.2 percent on the day and within striking distance of Monday's $0.7665, a level not seen since April 23. Earlier, the Reserve Bank of Australia (RBA) held interest rates at 1.50 percent for a 22nd straight meeting, citing lukewarm inflation and wage growth. However, it said the country's gross domestic product (GDP) growth was expected to accelerate to "a bit above" 3 percent in 2018 and 2019. The upbeat outlook came as analysts upgraded forecasts for first-quarter GDP, due Wednesday, following a run of better-than-expected data this week. Australia’s A$1.8 trillion economy is expected to have expanded a brisk 0.9 percent in the March quarter from 0.4 percent in December, according to a consensus of 19 economists polled. The annual pace likely accelerated to a healthy 2.8 percent, from 2.4 percent in December. Before this week's data, economists had expected growth of 0.8 percent for the quarter and 2.7 percent for the year. However, there was caution around reading too much into the quarterly numbers.
Equities Recap
A buoyant European tech sector, which hit a 17-year peak on Tuesday, was not enough to lift the broader European market as jitters over politics in the periphery persisted.
UK's benchmark FTSE 100 closed down 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.25 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day down by 0.1 percent.
The S&P 500 edged higher on Tuesday as investors were encouraged by U.S. economic data, and the Nasdaq closed at a record high for the second day in a row with help from the technology and consumer discretionary sectors.
Dow Jones closed down by 0.06 percent, S&P 500 ended up by 0.07 percent, Nasdaq finished the day up by 0.41 percent.
Treasuries Recap
U.S. Treasury yields fell on Tuesday as traders piled back into lower-risk government debt after Italy's new prime minister vowed to enact economic policies that could balloon the nation's already-heavy debt load.
The yield on benchmark 10-year Treasury notes was 2.915 percent, down 2 basis points from late on Monday. It reached a one-week high of 2.946 percent the prior session due to reduced fears about political turmoil in Italy and Spain.
Commodities Recap
Gold prices increased on Tuesday as the dollar retreated slightly from close to a six-month high even as strong U.S. economic data sealed the case for the U.S. Federal Reserve to increase interest rates.
Spot gold gained 0.5 percent at $1,298.45 per ounce by 1:32 p.m. EDT (1732 GMT).U.S. gold futures for August delivery settled up $4.90, or 0.4 percent, at $1,302.20 per ounce.
Brent crude reversed losses on Tuesday, after hitting its lowest price in nearly a month following a report that the U.S. government asked Saudi Arabia and other major exporters to increase oil output.
Brent crude futures rose 9 cents to settle at $75.38 a barrel, a 0.12 percent gain. It touched a low of $73.81, its lowest since May 8.
U.S. West Texas Intermediate (WTI) crude futures rose 77 cents to settle at $65.52 a barrel, a 1.2 percent gain. Earlier, WTI hit a session low of $64.22, the lowest since April 10.
