Market Roundup
- Demand for rental apartments buoys U.S. housing starts, Sep +1.206m v forecast 1.15m.
- BoE's McCafferty (hawk): says he is not isolated among rate-setters, there is good debate to be had on rates at turn of the year, impact of china slowdown on UK economy could easily be overstated.
- Wall St little changed as earnings gain momentum, IBM slumps after results, biggest drag on Dow, S&P 500.
- CAD stronger after initial weakness following Liberal victory.
- Dairy prices fall, volumes drop at auction -New Zealand's Fonterra.
- Gold snaps three-day losing streak, rises as euro reclaims ground ahead of ECB.
- Copper steadies on weaker dollar, short-covering.
- Ireland names economics professor Philip Lane as central bank chief.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Exports YY* Sep forecast 3.4%, 3.10%-previous
- 23:50 Japan Imports YY*Sep forecast -11.7%, -3.10%-previous
- 23:50 Japan Trade Balance Total Yen* Sep forecast 84.4b, -569.7b-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1324 levels. The pair has made session high at 1.1367 and hit lows at 1.1322 levels. The euro rose against the dollar on Tuesday, after falling for three straight sessions, bolstered by solid regional economic data and comments from European Central Bank officials suggesting further monetary easing may not be imminent. Quarterly lending data from the ECB showed euro zone banks had loosened their lending standards more than expected over the last few months despite recent global market volatility. That lessened the need for the ECB to ramp up its 1 trillion euro asset purchase program, this week at least. Separately, current account data from the euro zone showed portfolio inflows continued at a brisk pace, a factor that has been supporting the euro in recent months. In mid-morning New York trading, the euro was up 0.2 percent at $1.1348, rebounding from a 10-day low hit on Monday. That put pressure on the dollar index, which was down 0.1 percent at 94.807. To the upside, immediate resistance can be seen at 1.1360. To the downside, immediate support level is located at 1.1330 levels.
GBP/USD is supported in the range of 1.5430 levels and currently trading at 1.5447 levels. It reached session high at 1.5484 and hit session low at 1.5435 levels. Sterling slipped lower against on the dollar Tuesday, with investors awaiting cues from Bank of England policymakers scheduled to speak in coming days. Sterling traders will look to a testimony from Bank of England Governor Mark Carney before lawmakers on Tuesday to see if he reiterates his position that rates in Britain could rise whether the Federal Reserve tightens policy or not. Ian McCafferty, another policymaker and a voter for rate hikes, is also scheduled to speak at Bloomberg. On Friday, BoE policymaker Kristin Forbes said rates in Britain would rise sooner rather than later, reigniting a debate over whether rates in the UK should head higher or not in the coming months. Forbes, who is seen as a hawk and an advocate for a BoE rate hike, said Britain had limited direct exposure to the problems seen so far in developing nations, even taking into account how they might hit key trading partners such as Germany. Against the dollar, sterling was up 0.2 percent at $1.5495, having risen to a high of $1.5506 earlier in the day. To the downside, immediate support level is located at 1.5420 levels. To the upside, immediate resistance can be seen at 1.5471.
USD/JPY is supported around 119.60 levels and currently trading at 119.84 levels. It hit session high at 119.96 and made session lows at 119.67 levels. The dollar continued edged higher against Japanese yen for the second day in a row on Tuesday, the pair made steady gains in the US session by inching closer to 120.00 levels. On the data front, U.S. housing starts rose solidly in September on soaring demand for rental apartments, a sign that the housing market continues to steadily improve even as economic growth has slowed. The Commerce Department said on Tuesday groundbreaking increased 6.5 percent to a seasonally adjusted annual pace of 1.21 million units. It was the sixth straight month that starts were above 1 million units, suggesting a sustainable housing recovery that could shield the economy against global headwinds. Economic activity has braked sharply, with third-quarter growth estimates running below a 1.5 percent annualized rate. The economy grew at a 3.9 percent rate in the second quarter. Economists say strong domestic demand and firming housing strengthen the argument for the Federal Reserve to raise interest rates this year. The currency's strongest level of the session was 119.97, a level last seen on October 13th, while its weakest level was 119.67 yen. To the upside, immediate resistance can be seen at 120.00. To the downside, immediate support level is located at 119.55 levels.
USD/CAD is supported at 1.2900 levels and is trading at 1.2978 levels. It has made session high at 1.3000 and lows at 1.2932 levels. The Canadian dollar strengthened on Tuesday after voters elected a majority Liberal government that pledged to spend money to stimulate growth, which could limit the need for the Bank of Canada to cut interest rates. Liberal leader Justin Trudeau rode a late campaign surge to a stunning election victory on Monday, toppling the incumbent Conservatives with a far more resounding victory than polls had indicated. On the data front, the value of Canadian wholesale trade unexpectedly fell 0.1 percent in August as sales declined in sectors including machinery and motor vehicles, data from Statistics Canada showed on Tuesday. Economists had forecast a gain of 0.2 percent on the month. In volume terms, August wholesale sales fell 0.5 percent. July's reading was revised downward to a 0.1 decline. The Canadian dollar was trading at C$1.2981 to the greenback, or 77.04 U.S. cents, stronger than Monday's close of C$1.3019, or 76.81 U.S. cents. To the upside, immediate resistance can be seen at 1.3000. To the downside, immediate support level is located at 1.2960 levels.
Equities Recap
European shares fell on Tuesday after reaching five-week highs the day before as energy stocks extended losses, but biotech firm Actelion rose after lifting its profit outlook.
UK's benchmark FTSE 100 was flat, the pan-European FTSEurofirst 300 ended the day up by 0.4 percent, Germany's Dax ended up flat, France's CAC finished the day down by 0.5 percent.
U.S. stocks were flat on Tuesday as a drop in healthcare and biotech stocks offset gains in United Technologies and Verizon. A 5.6-percent drop in IBM also weighed on the market.
Dow Jones closed down by 0.05 percent, S&P 500 ended down by 0.13 percent, Nasdaq finished the day down 0.50 percent.
Treasuries Recap
U.S. Treasury bond yields rose for a fourth straight session on Tuesday, getting a lift from unexpectedly strong data showing that home building remains a bright sector in the slowing U.S. economy.
Yields on the 30-year Treasury moved the most on Tuesday and last traded at 2.92 percent. That reflected a decline of 26/32 in price, but left the maturity's yield below the month's high of 2.97 percent hit Oct. 9.
The bellwether 10-year Treasury was last down 12/32 in price and yielded 2.07 percent.
U.S. three-year Treasury notes were off 3/32 in price to yield 0.93 percent. U.S. five-year notes were down 6/32 and yielding 1.38 percent.
Commodities Recap
Oil prices settled mixed on Tuesday, with New York based futures down slightly, as market participants awaited the US government's Inventory data amid a global oversupply that was pressuring prices.
Brent futures for December delivery, settled 10 cents up at $48.71 a barrel. US crude futures for November, which expired at Tuesday's settlement, finished down 34 cents at $45.55 per barrel.
The December US Contract, which will become front month on Wednesday, settled up one cent at $46.29 was down 37 cents in post settlement.
Gold rose on Tuesday as solid lending data helped the euro rebound against the dollar ahead of a European Central Bank meeting this week, which is expected to clarify the outlook for monetary policy.
Spot gold was up 0.5 percent at $1,176.41 an ounce at 5:15 p.m., EDT (2113 GMT).The front -month contract in U.S gold futures, December, settled up $ 4.70 an ounce at $1,117.50.
