Market Roundup
• US Markit Mfg PMI Flash 52.1 v 52.7 forecast, 52.9 previous.
• US New home sales, 9-yr high, +12.4% in July v -2% forecast, supply of new homes lowest since last November.
• US Richmond Fed composite index -11 in August v +10 in July.
• Eurozone consumer confidence falls again in August. -8.5 v -7.9 in July.
• Eight Fed banks urge discount rate increase; up from 6 (Philadelphia & Dallas join) – minutes.
• S&P revises Mexico sovereign credit outlook down to negative from stable.
• Stocks creep up amid Fed limbo, most stock indexes firmer, Euro Zone PMI data supports mood.
• Cable jumps above 1.32 as speculators cut unfavorable bets.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Trade - Imports Jul forecast 4.45b, 4.13b-previous
• 22:45 New Zealand Trade Balance Jul forecast -350.0m, 127.0m- previous
• 22:45 New Zealand Trade Balance YY Jul forecast -2.98b, -3.31b- previous
• 22:45 New Zealand Trade - Exports Jul forecast 4.07b, 4.26b- previous
• 01:30 Australia Construction Work Done Q2 -2.60%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1264 levels and currently trading at 1.1304 levels. The pair has made session high at 1.1324 and hit lows at 1.1300 levels. Euro declined against the dollar on Tuesday following strong U.S. housing data, but caution prevailed ahead of Fed Chair Janet Yellen's speech on Friday. New U.S. single-family home sales unexpectedly surged in July, reaching their highest level in nearly nine years amid robust demand, brightening the housing market outlook and bolstering views that economic growth will pick up in the third quarter. It was the fifth straight monthly gain in new home sales. The housing data helped traders fill the gap as markets await further clues on whether the Federal Reserve will raise U.S. interest rates this year. Global central bankers gather in the mountains of Wyoming later this week and investors are focused on a speech by Fed Chair Janet Yellen on Friday. The bump in new home sales helped the U.S. dollar trim losses. But having hit a five-day high of 94.958 against a currency basket on Monday, the greenback was flat at 94.533 late in the day.
GBP/USD is supported in the range of 1.3163 currently trading at 1.3197 levels. It reached session high at 1.3210 and hit low at 1.3182 levels. Sterling edged higher against the U.S. dollar on Tuesday as speculators cut bearish bets against the currency as recent domestic data suggested that Britain's economy is holding up surprisingly well in the aftermath of the Brexit vote. July inflation and retail sales numbers released last week beat forecasts, adding to signs that consumers had yet to rein in spending after June's vote to leave the European Union. Lower than expected jobless claims also gave the pound a lift. Sterling rose as much as half a percent to $1.3210, its highest since Aug. 4. It rose 0.3 percent against the euro to hit 85.85 pence, its strongest in 11 days, as speculators and hedge funds trimmed bets against the pound. Orders for British manufacturing exports hit a two-year peak in August, data released on Tuesday showed. The Confederation of British Industry said its measure of overall factory orders dipped slightly in August to -5. That beat a median forecast of -9 while export orders improved to -6 from -22, their highest since August 2014.
USD/CAD is supported at 1.2800 levels and is trading at 1.2916 levels. It has made session high at 1.2916 and lows at 1.2856 levels. The Canadian rose against U.S. dollar on Tuesday as higher oil prices and skepticism that the Federal Reserve will hike interest rates supported the risk-sensitive commodity-linked currency. The U.S. dollar dipped against a basket of major currencies amid doubts Fed Chair Janet Yellen will be able to convince financial markets in a speech later this week that she can steer a divided U.S. central bank to raise interest rates at least once in 2016. Higher oil prices also helped push the Canadian dollar through resistance around C$1.2900, although it pared some gains In the afternoon session. Oil rallied after a reported showed that Iran was sending positive signals that it may support joint OPEC action to prop up the market. The Canadian dollar last traded at C$1.2916 to the greenback, or 77.46 U.S. cents, stronger than Monday's close of C$1.2950, or 77.22 U.S.
AUD/USD is supported around 0.7580 levels and currently trading at 0.7613 levels. It hit session high at 0.7636 and made session lows at 0.7612 levels. The Australian dollar declined against US dollar on Tuesday as investors focused on whether Federal Reserve Chair Janet Yellen will adopt a more hawkish tone in a speech on Friday. Numerous Fed officials including Vice Chair Stanley Fischer, New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart have expressed an upbeat view of the economy in the past week, indicating a rate increase this year is likely. Yellen's speech will be closely watched to see if she too takes a more upbeat tone, and for any new indications on when the U.S. central bank is likely to raise interest rates again. The Australian dollar was a last trading at $0.7614, from $0.7628 early, having recovered from a two-week low of $0.7584 touched on Monday. It touched a three-month high of $0.7760 earlier in August.
Equities Recap
European shares advanced on Tuesday, with house builders leading the market higher and mining companies rebounding from their declines the day before.
UK's benchmark FTSE 100 closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 0.95 percent, Germany's Dax ended up by 1 percent, France’s CAC finished the day up by 0.7 percent.
U.S. stocks rose modestly on Tuesday, as gains in the tech sector helped buoy the Nasdaq to a record intraday high and solid housing market data provided more evidence the economy may be picking up momentum.
Dow Jones closed up by 0.09 percent, S&P 500 ended up by 0.19 percent, Nasdaq finished the day up by 0.28percent.
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Treasuries Recap
The long-dated yield curve flattened to the lowest in one-and-a-half years on Tuesday as investors focused on whether Federal Reserve Chair Janet Yellen will adopt a more hawkish tone in a speech on Friday.
Benchmark 10-year notes ended down 4/32 in price to yield 1.55 percent, up from 1.54 percent on Monday. The yields have traded in a range between 1.45 percent and 1.63 percent since mid-July.
Commodities Recap
Oil prices rose on Tuesday after Reuters reported Iran was sending positive signals that it may support joint OPEC action to prop up the market, before the market pared gains on trade data showing a surprise build in U.S. crude stocks.
Brent crude settled up 80 cents, or 1.6 percent, at $49.96 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 69 cents, or 1.5 percent, to close at $48.10.|
Gold edged higher on Tuesday as markets shifted focus from hawkish comments by a Federal Reserve official at the weekend to a meeting of global central bankers this week, awaiting further guidance on U.S. interest rates.
Spot gold rose 0.3 percent to $1,342.06 an ounce by 1437 GMT, having hit a two-week low of $1,331.35 in the previous session. U.S. gold was flat at $1,344.
