Market Roundup
• US housing data adds to signs of weak Q1 GDP growth; housing starts fall 8.8% in Mar, building permits -7.7% to 1-yr low.
• Atlanta Fed’s GDPNow model for Q1 unchanged at 0.3%.
• Oil rises as Kuwaiti strike cuts output for third day.
• NZ's Fonterra: Dairy prices rise 3.8%, avg selling price NZD 2263/tonne, volumes -6.5%.
• BOE’s Carney: not a believer in helicopter money, has not indicated an appetite for negative rates.
• BOC’s Poloz: distortions that may emerge from negative rates grow w/length of time used.
• RBA’s Stevens: failure to lift econ growth biggest threat to global financial system.
• Mexico’s Carstens: Banxico hasn't intervened recently, won’t be shy about adjusting rates to meet inflation goal.
• Brazil’s Rousseff: current impeachment process has no legal basis, did not mislead electorate during ’14 campaign.
• Argentina returns to market with USD16.5bn bond, USD68bn in orders; 10-yr priced at 7.5%, 30-yr 8%.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan Reuters Tankan DI Apr 6-prev
• 23:50 Japan Exports YY Mar forecast -6.9%, -4.00%-previous
• 23:50 Japan Imports YY Mar forecas-16.2%, -14.20%- previous
• 23:50 Japan Trade Balance Total Yen Mar forecas834.6b, 242.8b- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Data
Currency Summaries
EUR/USD is likely to find support at 1.1348 levels and currently trading at 1.1366 levels. The pair has made session high at 1.1384 and hit lows at 1.1362 levels. Euro edged higher against US dollar on Tuesday after data showed U.S. housing starts fell more than expected in March and permits for future home construction hit a one-year low, suggesting some cooling in the housing market in line with signs of a sharp slowdown in economic growth in the first quarter. Housing starts decreased 8.8 percent to a seasonally adjusted annual pace of 1.09 million units, the lowest level since October. Single-family starts, the largest segment of the market, tumbled 9.2 percent to a 764,000-unit pace in March, the lowest since October, the Commerce Department said. Despite the slump in groundbreaking activity last month, housing market fundamentals remain strong against the backdrop of a buoyant labor market.
GBP/USD is supported in the range of 1.4342 currently trading at 1.4396 levels. It reached session high at 1.4415 and hit low at 1.4378 levels. British pound surged sharply against US dollar on Tuesday, as speculation about a possible Brexit cooled a little bit after by two polls showed the "In" camp well ahead in the run-up to Britain's referendum on European Union membership. The pair also got support from by a strong recovery in oil prices and risk sentiment, British pound soared by more than 1 percent to hit $1.4420, its highest since March 31. Meanwhile, Bank of England Governor Mark Carney told members of parliament that uncertainty around the referendum was already weighing on the economy, sterling eased back a little, to $1.4394. That still left it up around 0.8 percent on the day. The pound is down around 6 percent since the start of the year on a trade-weighted basis, with most banks saying it would fall sharply in the event of a Brexit.
USD/CAD is supported at 1.2626 levels and is trading at 1.2655 levels. It has made session high at 1.2680 and lows at 1.2628 levels. The Canadian dollar jumped to hit a nine-month high against its U.S. counterpart on Tuesday, as the pair declined by advancing oil prices and weak dollar. Oil gained as a strike by oil workers in Kuwait nearly halved crude production from the OPEC member, overshadowing bearish sentiment following Sunday's failure by producers to agree to freeze output levels. Meanwhile Commercial borrowing by small businesses in Canada cooled for the third month in a row as lower oil prices and weak domestic demand dampened business investment. PayNet's Canadian small business lending index dipped to 123.5 in February from 127.0 the month before. The currency's weakest level of the session was C$1.2798, while it touched its strongest since July 13 at C$1.2702.
USD/JPY is supported around 108.98 levels and currently trading at 109.25 levels. It hit session high at 109.46 and made session lows at 108.98 levels. The dollar declined against Japanese Yen on Tuesday on the view that the Federal Reserve would not raise interest rates as thought earlier given weak U.S. economic data and continued easing from the Bank of Japan. Bank of Japan Governor Haruhiko Kuroda said inflation could be affected if the yen continued to rise excessively, leading to further easing measures to meet the central bank's price target on Tuesday. Kuroda also told the paper that the BOJ was not targeting the exchange rate but that he would continue to monitor the yen's movements. The currency's weakest level of the session was $109.45, while it touched its weakest at $108.94.
Equities Recap
European shares rose to three-month highs on Tuesday, helped by a rally in commodities-related stocks and encouraging trading updates from French cosmetics firm L'Oreal and advertising group Publicis.
UK's benchmark FTSE 100 closed up 0.83 percent, the pan-European FTSEurofirst 300 ended the day up by 1.46 percent, Germany's DAX ended up by 2.24 percent, France’s CAC finished the day up by 1.24 percent.
The S&P 500 rose toward a record high in a choppy session on Tuesday, lifted by energy stocks and a solid quarterly report from Johnson & Johnson.
Dow Jones closed up by 0.30 percent, S&P 500 ended up by 0.96 percent, Nasdaq finished the day up by 0.40 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday, but held in the tight range they have traded in this month, as stock prices gained and as investors awaited next week’s Federal Reserve meeting.
Benchmark 10-year notes fell 4/32 in price to yield 1.78 percent, up from 1.77 percent on Monday. Yields have held in a range between 1.81 percent and 1.69 percent since the beginning of April.
Commodities Recap
Gold rose as much as 2 percent, silver hit a 10-month high and platinum climbed to its highest in six months on Tuesday, as the dollar weakened after U.S. data came in below forecasts.
Gold touched a one-week high of $1,256.80 an ounce and was up 1.8 percent at $1,252.77 by 2:50 p.m. EDT (1850 GMT), while platinum rose 4.1 percent to its highest since Oct. 23 at $1,015.70.
Oil prices jumped more than 3 percent on Tuesday after a strike by workers in Kuwait nearly halved the OPEC member's crude production, overshadowing bearish sentiment after Sunday's failure by producers to agree to freeze output levels.
Brent crude futures settled up $1.12 at $44.03 a barrel while U.S. crude settled $1.30 higher at $41.08.
