Market Roundup
• U.S. June housing data beats forecasts slightly.
• US June housing starts 1.189 million vs forecast 1.170 million, May 1.135 million.
• US housing permits 1.153 million, forecast 1.150 million, May 1.136 million.
• Brexit uncertainty prompts IMF to cut global growth forecasts again.
• China growing, but at only half official estimates-SMI survey.
• After failed coup, Turkey's central bank cuts rates again, 25 bps as forecast.
• Turkish central bank says to stick to tight policy after cutting rates again.
• Erdogan targets more than 50,000 in purge after failed Turkish coup.
• Turkey's lira tumbles after report on dismissal of all university deans.
• Britain will not start EU divorce this year, government lawyer says.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1017 levels. The pair has made session high at 1.1026 and hit lows at 1.1000 levels. Euro declined against the dollar on Tuesday after the release of data which showed U.S. housing starts rose more than expected in June, underpinning a theme of strength in the U.S. economy. U.S. housing starts rose more than expected in June. Groundbreaking on single-family homes, the largest segment of the market, surged 4.4 percent to a 778,000-unit pace in June. Single-family starts rose in all four regions, jumping by 31.6 percent in the Northeast and 7.3 percent in the Midwest. But with permits for the construction of single-family homes increasing 1.0 percent last month to a 738,000-unit rate, single-family homebuilding could slow in the near term. The dollar index, which tracks the greenback against six major currencies, rose to 97.126, its highest level since mid-March. The rise in the dollar index was backed by a sizeable fall in the euro, which dipped to an 11-day low against the dollar of $1.1000. The euro was last down 0.5 percent at $1.1017.
GBP/USD is supported in the range of 1.3050 currently trading at 1.3105 levels. It reached session high at 1.3154 and hit low at 1.3072 levels. Sterling edged lower against the U.S. dollar on Tuesday as higher than forecast British inflation numbers for June did little to alter expectations that the Bank of England would ease monetary policy as early as next month. The muted reaction to the inflation data was more evidence that investors will tend to sell any rise in the pound in expectation of a grim economic aftermath to last month's Brexit vote. In the late US session, Sterling was trading 1 percent lower at $1.3105, retreating from a two-week high of $1.3344 struck on Friday. It had gained on Monday too on expectations of hefty inflows from SoftBank's deal to buy British technology company ARM. The pound saw its best performance since 2009 last week as many of those who had sold the pound in a 14-percent slide after the referendum took some of the profit they had earned in the process.
USD/CAD is supported at 1.2970 levels and is trading at 1.3020 levels. It has made session high at 1.3052 and lows at 1.3010 levels. The Canadian dollar edged lower against the U.S. dollar on Tuesday, as the loonie was pressured by decline in crude oil and stronger-than -expected U.S. housing data. Worries that the U.S. Federal Reserve could increase rates this year if financial markets remain calm also drove investors to sell commodity-related currencies. Oil prices slipped as the rallying dollar and a global fuel glut offset forecasts for a ninth straight weekly drop in U.S. crude stockpiles. The dollar index, which tracks the greenback against six major currencies, rose to its highest level since March 10 to 97.148. The U.S. dollar rose on a combination of economic news from the U.S. and Europe, with the euro dipping to a three-week low against the dollar of $1.1000. The implied probability of a rate cut this year has fallen below 10 percent, overnight index swaps data showed. It had been above 30 percent in the week following the British referendum vote on June 23 to leave the European Union.
AUD/USD is supported around 0.7463 levels and currently trading at 0.7504 levels. It hit session high at 0.7510 and made session lows at 0.7474 levels. The Australian dollar slumped against US dollar on Tuesday as investors ramped up bets that Reserve Bank of Australia could ease monetary policy as early as next month. The Australian dollar fell after minutes from the latest central bank meeting left the door open for a possible interest rate cut in August. Australia's central bank said it is watching data on inflation, jobs and housing to determine whether it needs to change policy again. The central bank felt it is prudent to hold rates at a record low of 1.75 percent earlier this month, but left the door open for an easing in August. Many analysts suspect that a soft inflation report next week would greatly strengthen the case for a cut to 1.5 percent at the RBA's meeting on Aug. 2. Financial markets imply around a 50-50 chance of an easing, following a previous cut in May.
Equities Recap
European shares touched a one-week low on Tuesday as weak earnings updates from the likes of Ericsson ERICb.ST and AkzoNobel weighed on markets, although online fashion retailer Zalando surged.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.44 percent, Germany's Dax ended down by 0.8 percent, France’s CAC finished the day down by 0.6 percent.
The S&P 500 pulled back from record highs on Tuesday, while the Dow industrials held slim gains as investors digested a mixed bag of earnings reports as well as lowered expectations for global economic growth.
Dow Jones closed up by 0.14 percent, S&P 500 ended down by 0.15 percent, Nasdaq finished the day down by 0.39 percent.
Treasuries Recap
U.S. Treasury debt prices gained on Tuesday as risk appetite waned following declines in stocks, hurt by the drop in oil prices as well as soft consumer sentiment data in Germany.
In late trading, benchmark U.S. 10-year Treasury notes were up 8/32 in price for a yield of 1.557 percent, down from 1.587 percent late on Monday.
U.S. 30-year bond prices were higher as well, up 19/32 in price, yielding 2.2746 percent, down from 2.302 percent late Monday.
U.S. two-year notes were little changed in price, with a yield of 0.693percent, while U.S. five-year notes were up 3/32 in price, yielding 1.11 percent.
Commodities Recap
Oil prices fell as much 1 percent for a second day in a row on Tuesday as a rallying dollar and a global fuel glut offset forecasts for lower U.S. crude stockpiles that typically would have been bullish for the market.
Brent crude settled down 30 cents, or 0.6 percent, at $46.66 barrel. It fell 1.4 percent on Monday.
U.S. West Texas Intermediate (WTI) crude fell 59 cents, or 1.3 percent, to settle at $44.65. WTI lost 1.6 percent in the previous session.
Gold cut some earlier gains on Tuesday, as the dollar hit a four-month high after data showed a surge in U.S. housing starts in June, although weaker equities provided support.
Spot gold was up 0.2 percent at $1,331.10 an ounce by 3:25 p.m. EDT (1925 GMT), off a session high of $1,334.88. U.S. gold settled up 0.2 percent at $1,332.3 per ounce.
