- GBP rises after UK inflation beats expectations.
- GBP/USD up to 1.5717 from 1.5563. EUR/GBP sharply lower to 0.7059 from 0.7116.
- Dollar index up 0.29% to 96.996, easier at 96.818 into NY.
- EUR/USD sidelined, plays relatively tight 1.1051/1.1094 range.
- DAX back below 200 DMA (10,940) after recovery to 10,976.
- UK July CPI -0.2% m/m, +0.1% y/y vs previous 0.0%/0.0%. -0.3%/0.0% expected.
- UK July RPI -0.1% m/m, +1.0% y/y vs previous 0.2%/1.0%. -0.1%/1.0% expected.
- UK July PPI input prices -0.9% m/m. -12.4% y/y vs previous -1.8%/-13.1% revised. -1.9%/-12.7% expected.
- UK July PPI output prices -0.1% m/m, -1.6% y/y vs previous -0.1%/-1.6% revised. -0.1%/-1.5% expected.
- UK July core output prices 0.1% m/m, 0.3% y/y vs previous 0.0%/0.1%. 0.0%/0.2% expected.
- Tsipras not set to rush decision on snap elections.
- Indonesia Central Bank Governor- Rupiah is undervalued.
- Indonesia CB leaves rate unchanged at 7.5%, as expected.
- SSEC down 6% on policy outlook, biggest fall in 3 weeks.
- (0830 ET/1230 GMT) US July housing starts, 1.19 mln AR eyed; last 1.17 mln, +9.8% m/m.
- (0830 ET/1230 GMT) US Jul building permits, 1.23 mln AR eyed; last 1.34 mln, +7.0% m/m.
- (0855 ET/1255 GMT) US Redbook Same Store Sales Index (August 15 week) previous +1.9% y/y.
- (1500 ET/1900 GMT) Argentina releases the unemployment rate for the second quarter.
Key Events Ahead
- (1145 ET/1545 GMT) Fed Trade operation 30-yr Fannie Mae/Freddie Mac (max $2.025 bn).
FX Recap
EUR/USD is supported below 1.1100 levels and currently trading at 1.1072 levels. It has made intraday high at 1.1093 and low at 1.1052 levels. After facing rejection just shy of 1.11 barrier, EUR/USD retraced to familiar range and trades muted around 1.1070 levels mainly driven weakness seen in EUR/GBP following the release of UK CPI print. Markets remain nervous ahead of a looming big debt repayment to the ECB on Thursday. Greece is waiting for the last step in its current bailout saga: approval of eleven euro zone parliaments before Athens could receive the first tranche from the third rescue package. Meanwhile, the pair is likely to remain influenced by USD moves with market now shifting focus towards US housing starts and building permits data due for release in the New York session ahead of crucial US CPI and Fed minutes due tomorrow. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported above 124.00 levels and posted a high of 124.51 levels. It has made intraday low at 124.18 and currently trading at 124.25 levels. Pair is trading in between 30 pips movement only as today was data thin calendar for Japan. Market will eye on US macro economic data for the further directions. Initial resistance is seen at 125.68 and support is seen at 120.63 levels.
GBP/USD is supported around $1.5700 levels. It made an intraday high at 1.5717 and low at 1.5563 levels. Pair is currently trading at 1.5702 levels. Sterling rose towards a 7-1/2-year high on a trade-weighted basis on Tuesday after UK inflation data beat expectations, bolstering bets that the Bank of England will raise interest rates in the coming months. Sterling rose 0.6 percent to hit an intraday high of $1.5676 after the data, having traded around $1.5594 before its release. The pound gained 0.7 percent against the euro to 70.62 pence. Meanwhile, core inflation hit a five-month high. A smaller fall in the price of clothing compared with last year's decline pushed the CPI up above expectations in July to 0.1%, while core inflation, a less volatile measure stripped of energy and food prices, soared above estimates to 1.2%, its highest rate in five months, figures from the Office for National Statistics (ONS) showed on Tuesday. In a separate ONS release, data showed house prices increased by 5.7% in the year to June up from 5.6% in the year to May. House price increases were driven by a rise in the east and south east of England. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported below 0.6600 levels and trading at 0.6580 levels and made intraday low at 0.6570 and high at 0.6605 levels. The New Zealand dollar enjoyed more than 40 pips worth of gains on Tuesday after Russia decided to allow 29 New Zealand companies to sell dairy products to Russia, partly lifting a ban which had been operating for two years. Russia put a ban on New Zealand dairy products following a botulism scare by New Zealand dairy giant Fonterra in August 2013. The removal of the ban will be hugely welcomed by New Zealand's dairy sector which has put up with a 70% tumble in global dairy prices over the last two years. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7348 levels. It has made intraday high at 0.7386 levels and low at 0.7331 levels. Minutes from the bank's August 4 meeting when the bank left the cash rate at 2.0%, released on Tuesday, signalled that the central bank is much more comfortable with how the economy is evolving, with the weaker level of the Australian dollar and record-low interest rates stimulating demand. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equities Roundup
Stocks dropped on Tuesday, with European markets buckling under heavy selling pressure carried over from Asia after Chinese shares slumped 6 percent and emerging market currencies and oil prices remained anchored at historic lows.
The FTSEuroFirst index of 300 leading shares fell 0.3 percent in early trading, Germany's fell a quarter of a percent and France's CAC 40 was down a third of a percent. Britain's FTSE 100 slipped 0.2 percent.
China's main Shanghai Composite and Shenzhen 300 indices both lost 6.2 percent as investors drew in their horns and bet that demand in China will cool further, weighing on the trade-reliant region. The MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent to its lowest since August 2013. Japan's Nikkei dipped 0.3 percent.
Commodities Recap
U.S. oil prices fell towards six-year lows on Tuesday after stock markets tumbled in China, the world's largest energy consumer, adding to worries about global fuel demand at a time of heavy oversupply. U.S. crude futures were 35 cents weaker at $41.52 a barrel by 0850 GMT, close to their lowest since early 2009. North Sea Brent was at $48.39 a barrel, down 35 cents but still some way from its 2015 low of $45.19.
Gold traded little changed on Tuesday, as investor focus shifted back to the prospect of a rate rise by the Federal Reserve. Spot gold was up 0.2 percent at $1,119.18 an ounce by 0937 GMT, while U.S. gold for December delivery was flat at $1,118.30 an ounce.
Treasuries Recap
The U.S. 10-year yield was 1 basis point lower on Tuesday at 2.14 percent.
JGB prices ended the day higher, sending yields down 1.5bp to 2bp on the day in the 7-yr and longer zone. JGBs opened slightly firmer in the wake of modest rebound in German Bunds and US TSY overnight, and then extended their earlier gains moderately in extremely thin trading on the back of decent results of today's monthly JPY1.2tn 20-yr JGB auction.
German 10-year yields were 1 basis point lower on Tuesday at 0.62 percent, while all other European equivalents were flat to slightly lower. Greek bonds were the best performers in early trading, with 10-year yields down 2 bps at a 7-month low of 9.14 percent, as its international creditors put the finishing touches to a new 86 billion euro ($95.2 billion) bailout package.
UK Gilts opened 17 ticks higher than the settlement of 117.94, as predicted, with Gilts underpinned by data expectations, Gilts are sharply lower at 117.97, around 20 ticks lower than just before the data.
New Zealand government bond yields 0#NZTSY= were marginally lower. Australian government bond futures rose, with the 3-year bond contract up 2 ticks at 98.050. The 10-year contract added 3 ticks to 97.2200.
