Market Roundup
• Show the EU what Brexit you want, PM May tells British lawmakers
• Most pro-Brexit ERG Conservative lawmakers likely to support Brady amendment
• U.S. sanctions on Venezuelan oil reverberate globally
• Another shutdown spells deeper pain for U.S. economy - Moody's
• US Jan Consumer Confidence, 120.2, 124.7 forecast, 128.1 previous, 126.6 revised
• Mnuchin says Huawei case 'separate' from U.S.-China trade talks
• Oil prices rally as U.S. sanctions on Venezuela ease supply worries
Looking Ahead - Economic Data (GMT)
• 29 Jan 23:50 Japan Dec, Retail Sales YY, 0.8% forecast, 1.4% previous
• 30 Jan 00:30 Australia Q4 CPI QQ, 0.4% forecast, 0.4% previous
• 30 Jan 00:30 Australia Q4 CPI YY, 1.7% forecast, 1.9% previous
• 30 Jan 00:30 Australia Q4 RBA Weightd Medn CPI QQ, 0.5% forecast, 0.3% previous
• 30 Jan 00:30 Australia Q4 RBA Weightd Medn CPI YY, 1.7% forecast, 1.7% previous
• 30 Jan 05:00 Japan Jan Consumer Confid. Index, 42.7 previous
Looking Ahead - Events, Other Releases (GMT)
• 19:00 U.S. FOMC announces its decision on interest rates followed by statement in Washington D.C.
• 19:30 Federal Reserve Chairman Jerome Powell holds news conference in Washington
Currency Summaries
EUR/USD: The euro slipped lower against the U.S. dollar on Tuesday, as large derivatives market positions discouraged traders from taking large bets in an event-filled week.Trade tensions between the United States and China escalated overnight after U.S. officials announced criminal charges against China's Huawei Technologies Co Ltd, escalating a fight with the world's biggest telecommunications equipment maker, which denies wrongdoing. Market participants are also focused on the U.S. Federal Reserve's policy meeting on Jan. 29-30, at which Chairman Jerome Powell is expected to acknowledge growing risks to the U.S. economy as global momentum weakens.The euro was last trading at $1.1434 at the time of writing. Immediate resistance can be seen at 1.1448 (100 DMA), an upside break can trigger rise towards 1.1478 (61.8% retracement level).On the downside, immediate support is seen at 1.1386 (50 DMA), a break below could take the pair towards 1.1330 (Jan 22nd Low).
GBP/USD: Sterling fell sharply against greenback on Tuesday, after British lawmakers voted against a bid in parliament to prevent a potentially disorderly no-deal Brexit.With two months left until Britain is due by law to leave the European Union, parliament was trying to find a way forward by voting on different amendments, though none of the first five that were voted on were approved. Growing expectations that Britain can avoid a no-deal Brexit have fuelled a 3 percent rally in the pound this month against the dollar and the euro.But sterling tumbled after lawmakers voted down a proposal by lawmakers to wrest control of the negotiations from Prime Minister Theresa May if she fails to secure concessions from Brussels. Sterling fell 0.70 percent to the day's low of $1.3066. It also dropped to the day's low against the euro, falling 0.8 percent to 87.33 pence .Immediate resistance can be seen at 1.3113 (5 DMA), an upside break can trigger rise towards 1.3215 (23.6% retracement level).On the downside, immediate support is seen at 1.3033 (9 DMA), a break below could take the pair towards 1.2953 (23rd Jan low).
USD/CAD: The Canadian dollar edged lower against its U.S. counterpart on Tuesday despite higher oil prices, as investors kept their powder dry ahead of a Federal Reserve U.S. rate decision and Canada's monthly gross domestic product data this week. The Fed is expected on Wednesday to leave its key overnight lending rate in a range of 2.25 percent to 2.50 percent and to acknowledge growing risks to the U.S. economy as global momentum weakens.The price of oil, one of Canada's major exports, rose after Washington imposed sanctions on Venezuelan state-owned oil firm PDVSA in a move that may curb the OPEC member's crude exports. At (2105 GMT), the Canadian dollar was trading last trading 0.1 percent lower at 1.3281 to the greenback, or 75.30 U.S. cents. The currency, which on Monday touched its strongest intraday in more than two weeks at 1.3204, traded in a range of 1.3242 to 1.3285. Immediate resistance can be seen at 1.3291 (9 DMA), an upside break can trigger rise towards 1.3325 (21 DMA).On the downside, immediate support is seen at 1.3205 (Ichimoku Cloud Base), a break below could take the pair towards 1.3125 (Lower Bollinger Band).
USD/JPY: The U.S. dollar was little changed against the yen on Tuesday, as investors avoided from making new bets on greenback before a U.S. Federal Reserve meeting, with investors cautious about an escalation in U.S.-China trade tensions. The United States on Monday charged Chinese telecommunications equipment maker Huawei, its chief financial officer and two affiliates with bank and wire fraud in a case that has escalated tensions with Beijing. Investors fear the charges could complicate high-level U.S.-China trade talks set to begin on Wednesday. Investors expect the U.S. central bank to show a more cautious stance when policymakers release a statement on Wednesday after a two-day meeting. U.S. economic data in December that was softer than expected and a sharp downturn in financial markets are likely to keep the Fed from raising rates.The dollar was flat versus the Japanese yen at 109.32. Immediate resistance can be seen at 109.52 (38.2% retracement level), an upside break can trigger rise towards 110.08 (Higher Bollinger Band).On the downside, immediate support is seen at 109.00 (21 DMA), a break below could take the pair towards 108.35 (61.8% retracement level).
Equities Recap
European shares closed higher ahead of a blizzard of political, economic and corporate events, with a Brexit vote and Apple results on Tuesday and a Federal Reserve decision and Sino-U.S. trade talks on Wednesday.
The UK's benchmark FTSE 100 closed up by 1.2 percent, FTSEurofirst 300 ended the day up by 0.79 percent, Germany's Dax ended flat, and France’s CAC finished the up by 0.8 percent.
Wall Street was mixed on Tuesday, with technology shares dipping ahead of Apple's quarterly report while a rebound in 3M and other industrials elevated the Dow Jones Industrial Average.
Dow Jones closed up by 0.21 percent, S&P 500 ended down 0.15 percent, Nasdaq finished the day down by 0.82 percent.
Treasuries Recap
The price of seven-year Treasury notes jumped on Tuesday after strong demand at auction for $32 billion of new issues, with yields down across maturities ahead of the Federal Reserve's policy statement on Wednesday.
The benchmark 10-year yield was down 3.2 basis points, last at 2.71 percent. The two-year yield, which reflects market expectations of rate hikes was down 2 basis points, last at 2.57 percent.
Commodities Recap
Gold jumped to its highest in more than eight-months on Tuesday, on doubts surrounding U.S.-China trade relations and ahead of a Federal Reserve meeting with increasing expectations for a pause to the central bank's rate hike trajectory.
Spot gold was up 0.5 percent to $1,310.49 per ounce as of 1:44 p.m. EST (1844 GMT), having hit its highest since May 15 at $1,311.67 in the session.U.S. gold futures settled up 0.4 percent at $1,308.90 per ounce.
Oil prices gained more than 2 percent on Tuesday after the United States imposed sanctions on state-owned Venezuelan oil company PDVSA, a move likely to reduce the OPEC member's crude exports and relieve some global oversupply worries.
International Brent crude oil futures were up $1.39 to settle at $61.32 a barrel, a 2.32 percent rise, while U.S. West Texas Intermediate (WTI) crude futures increased $1.32 to settle up $53.31 a barrel, or 2.54 percent.
