Market Roundup
• US trade deficit falls 9.6% (-43.6b v -48.2b previous) as exports hit two-year high (+0.2%).
• US Factory Orders Feb +1% as per forecast, vs 1.5% previous.
• US Durables Feb m/m +1.8% v 1.7% previous.
• Fed's Lacker leaves US central bank over role in Medley leak.
• Atlanta Fed’s GDPNow model forecast for real GDP growth in Q1 ‘17 is 1.2%, unchanged from April 3.
• Sen. Ryan dampens hopes for quick revival of U.S. healthcare overhaul, new bill in conceptual stage.
• U.S. business seeks action, not trade war, in Xi-Trump summit; Steel prices, access to China market at issue.
• German economy ministry advisers see risks in ECB's zero-interest policy.
• Britain's May must prove "no deal is better than a bad deal"- Parliamentary committee.
• All euro business should be moved from London after Brexit- EPP’s Manfred Weber
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Services Index Mar 49- previous
• 00:30 Japan Nikkei Japan PMI Services Mar 51.3- previous
• 00:30 Japan Nikkei Japan PMI Comp Mar 52.2- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0611 levels and currently trading at 1.0657 levels. The pair has made session high at 1.0667 and hit lows at 1.0634 levels. The euro was little changed against dollar on Tuesday, as investors fretted over the ability of President Donald Trump to deliver on his policy plans, and ahead of his potentially tense meeting with Chinese President Xi Jinping. The upcoming French presidential election also kept investors cautious as political risk concerns remained active ahead of the Trump-Xi meetings this Thursday and Friday. Tuesday's data was largely positive for the dollar. The U.S. trade deficit in February narrowed more than expected to $43.6 billion in February, a number that could boost first-quarter growth. U.S. factory orders in February also rose 0.1 percent, expanding for a third straight month. The euro, meanwhile, dropped against the yen, off 0.5 percent at 117.78 yen. Earlier, the euro fell as low as 117.43, the lowest since Nov. 22. The euro against the dollar fell to a three-week trough earlier and was last trading at $1.0669, down 0.1 percent.
GBP/USD is supported in the range of 1.2375 levels and currently trading at 1.2430 levels. It reached session high at 1.2464 and dropped to session low at 1.2419 levels. Sterling declined against the U.S. dollar on Tuesday as sterling was weighted down by uncertainty over the terms of Britain's exit from the European Union, though the currency was becoming less sensitive to domestic political developments. The pound's biggest moves were against the safe-haven yen, falling 1 percent to a 12-week low of 137.12 yen as the Japanese currency climbed across the board amid risk aversion across markets. The broad fall in risk appetite was driven by worries over an upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping and French elections beginning at the end of the month. For sterling, political risk has been in the driving seat for nine months, with the currency losing around 17 percent against the dollar since Britain's vote to leave the European Union last June. Markets moved last month to price in a chance of an interest rate rise in the next year, after outgoing MPC member Kristin Forbes unexpectedly voted for a hike. But many economists say that despite accelerating inflation, the central bank is unlikely to tighten monetary policy while Britain is negotiating its exit from the EU in talks over the next two years.
USD/CAD is supported at 1.3372 levels and is trading at 1.3416 levels. It has made session high at 1.3455 and lows at 1.3403 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday as Canadian dollar was pressured by a loss of risk appetite and domestic data showing an unexpected trade deficit. Canada swung to an unexpected trade deficit in February as exports tumbled by the most in nearly a year, suggesting economic momentum may have hit a speed bump and giving the Bank of Canada room to maintain its cautious stance next week. Following three consecutive months of surpluses, Canada posted a trade gap of C$972 million ($724 million), Statistics Canada said on Tuesday, short of economists' expectations for a surplus of C$500 million. January was revised down to a surplus of C$421 million from the initially reported C$807 million. Risk aversion helped support the yen at the expense of commodity-linked currencies, such as the Canadian dollar, that tend to underperform when investors turn less optimistic about the economic outlook. Appetite for risk has been curtailed by market nerves ahead of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping and following Monday's suspected suicide bombing in St. Petersburg, Russia.
AUD/USD is supported around 0.7510 levels and currently trading at 0.7559 levels. It hit session high at 0.7570 and made session lows at 0.7543 levels. The Australian dollar declined against its US counterpart on Tuesday as investors sold riskier assets and rushed towards safe havens, such Japanese Yen and gold as investors grew cautious about a possibly contentious meeting between U.S. President Donald Trump and Chinese President Xi Jinping. The Australian dollar fell a quarter of a U.S. cent to $0.7575, pulling away from a recent peak of $0.7750 touched last month. Key chart support is found at $0.7552, then $0.7510. The Reserve Bank of Australia (RBA) held its cash rate, as expected, at a record low of 1.5 percent following two easing last year, seeing moderate economic growth. But its dovish comments on the labour market surprised some Aussie dollar bulls. Also undermining the Aussie was the RBA's considerable caution on the housing market as prices continue to rise.
Equities Recap
The muted start to the second quarter continued on Tuesday with European shares ending a choppy session slightly in positive territory as gains in oil-related stocks and miners more than offset weakness in the autos sector.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.19 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day up by 0.2 percent.
U.S. stocks were little changed on Tuesday, trading in a tight range, as investors stayed on the sidelines ahead of the first-quarter earnings season and fretted over the ability of President Donald Trump to deliver on his policy plans.
Dow Jones closed down by 0.01 percent, S&P 500 ended down0.09 percent, Nasdaq finished the day down by 0.05 percent.
Treasuries Recap
Benchmark U.S. Treasury yields touched their lowest in more than five weeks on Tuesday before edging higher to trade little changed on doubts about the ability of U.S. President Donald Trump to win enactment of fiscal stimulus.
U.S. 10-year notes were last up just 3/32 in price to yield 2.337 percent, from a yield of 2.350 percent late Monday.
U.S. 30-year bonds were last up 6/32 in price to yield 2.973 percent, from a yield of 2.984 percent late Monday.
Two-year notes last yielded 1.246 percent, compared with 1.242 percent late Monday.
Commodities Recap
Gold prices rose on Tuesday, hitting a one-month high as the dollar weakened, but gold retraced gains as U.S. President Donald Trump laid out aggressive plans for infrastructure spending and deregulation.
Spot gold was up 0.2 percent at $1,255.2 an ounce by 2:01 EDT (1801 GMT). U.S. gold futures ended the session 0.4 percent higher at $1,258.4.
Oil prices on Tuesday rose to a near one-month high as expectations of a drawdown in U.S. crude and product inventories outweighed news of higher Libyan production.
Brent futures were up 91 cents, or 1.7 percent, at $54.03 a barrel by 11:27 a.m. EDT (1527 GMT). That pushed the global benchmark over its 100-day moving average, into overbought territory for the first time since the end of December.
U.S. West Texas Intermediate crude was up 70 cents, or 1.4 percent, at $50.94 per barrel.
