Market Roundup
• US Markit Comp Flash PMI May 53.9, 53.20 previous.
• US New Home Sales Units Apr 0.569 mln vs 0.610 mln forecast, 0.642 mln previous.
• US Rich Fed Comp. Index May +1, 20 previous.
• Fed's Kashkari: US economy is closer to full employment, but inflation going the wrong way.
• Kashkari: wants to see more economic data before making decision on June rate hike.
• Kashkari: publication of balance sheet plan could create some tightening, don't know how much.
• Eurozone IHS Markit's Comp Flash PMI for May stood at 56.8, matching April’s 6-year high.
• Eurozone PMI points to Q2 GDP growth of 0.7% –Markit.
• ECB's Coeure: no need to change negative rates guidance.
• Trump seeks to slash $3.6 trillion of government spending in the budget.
• Trump budget to increase growth by boosting investment, labor force -Mnuchin.
• CIA ex-chief cites signs of possible Trump campaign ties to Russia.
• Canadian foreign min: NAFTA talks should be trilateral.
• Mexico's foreign min: NAFTA talks will be a "rollercoaster", markets should not overreact.
• After Brexit, EU plans "offer you cannot refuse" to expand euro zone- Moscovici.
• South Africa's ANC dismisses Zuma removal report as "fabrication"
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Trade Balance YY Apr -3.67 bln previous
• 22:45 New Zealand Imports Apr 4.31 bln previous
• 22:45 New Zealand Exports Apr 4.65 bln previous
• 23:00 Japan Reuters Tankan DI May 26 previous
• 01:30 Australia Construction Work Done Q1 -0.2% forecast, -0.2% previous
Looking Ahead - Events, Other Releases (GMT)
• 21:00 Philadelphia Fed President Patrick Harker speaks on the economic outlook before the MNI Connect Roundtable
• 00:00 BOJ Governor Kuroda will give remarks at the 2017 BOJ-IMES Conference
• 00:30 Minneapolis Fed President Neel Kashkari participates in a Town Hall forum
Currency Summaries
EUR/USD is likely to find support at 1.1116 levels and currently trading at 1.1181 levels. The pair has made session high at 1.1248 and hit lows at 1.1173 levels. The euro declined against the U.S. dollar on Tuesday as the dollar recovered from its worst week of losses in a year drove some profit-taking and investors turned their attention to Wednesday's release of the minutes of the U.S. Federal Reserve's meeting early this month. Worries over U.S. President Donald Trump's recent firing of FBI Director James Comey, who was overseeing a probe into possible links between the president's team and Russia, and concerns about possible delays in Trump's efforts to implement his economic stimulus plans have recently pressured the dollar. The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.2 percent to 97.178. The index fell to a more than six-month low on Monday. The euro was down 0.29 percent against the dollar at $1.181. The common currency rose as high as $1.1267, its highest since Nov. 9, earlier in the session.
GBP/USD is supported in the range of 1.2920 levels and currently trading at 1.2961 levels. It reached session high at 1.3032 and dropped to session low at 1.2957 levels. Sterling fell to one-month low against the dollar on Tuesday as sterling was weighted down as investors awaited further developments in Britain's suspended election campaign after a suicide bombing rocked the English city of Manchester. Britain's main political parties agreed to suspend campaigning ahead of the June 8 election until further notice following Monday night's explosion in Manchester that killed 22 people at a concert. Sterling has gained nearly 4 percent since May surprised financial markets with her April announcement of a general election in June, prompting speculators to trim record high bets against the pound. The pound traded lower for most of the day, it was last down 0.2 percent at $1.2961, below its highest level since Sept. 29 hit last week.
USD/CAD is supported at 1.3470 levels and is trading at 1.3538 levels. It has made session high at 1.3557 and lows at 1.3514 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday as the dollar recovered ahead of U.S. Federal Reserve's meeting on Wednesday, offsetting higher oil prices. The value of Canadian wholesale trade grew by 0.9 percent in March from February to hit a record, pushed up by demand for building materials and supplies, Statistics Canada said on Tuesday. Statscan revised February's data to a 0.3 percent increase from an initial 0.2 percent decline and slashed January's growth to 1.7 percent from 3.0 percent. The price of oil, one of Canada's major exports, rose as expectations that the Organization of the Petroleum Exporting Countries and other producers will extend output cuts offset U.S. President Donald Trump's plan to sell off half of the country's huge oil stockpile. The currency's strongest level of the session was C$1.3450, while it touched its weakest at C$1.3520.
USD/JPY is supported around 110.67 levels and currently trading at 111.77 levels. It peaked to hit session high at 111.84 and made session lows at 110.94 levels. The U.S. dollar jumped higher against Japanese yen on Tuesday as investors were relieved by the release of President Donald Trump's budget proposal and oil prices inched up in spite of a White House proposal to sell half the country's petroleum reserves. Trump's first full budget plan calls for an increase in military and infrastructure spending but also a raft of cuts, including healthcare and food assistance. Trump's budget in its current form is unlikely to be approved by Congress, which will craft its own tax and spending plans. The dollar rose against a basket of major currencies as its worst week of losses in a year drove some profit taking, and investors turned their attention to Wednesday's release of the minutes of the U.S. Federal Reserve's meeting earlier this month.
Equities Recap
Nokia shares jumped more than 6 percent on Tuesday to their highest levels in more than a year, joined by a rise in banking stocks which helped European stock markets edge higher.
The UK's benchmark FTSE 100 closed flat, FTSEurofirst 300 ended the day up by 0.29 percent, Germany's Dax ended up 0.4, and France’s CAC finished the day up by 0.6 percent.
Wall Street ended higher on Tuesday after the release of President Donald Trump's budget plan but gains were tempered by declines in consumer discretionary stocks amid weakness in auto-parts companies.
Dow Jones closed up by 0.20 percent, S&P 500 ended up 0.18 percent, Nasdaq finished the day up by 0.08 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday as some investors pared their bond positions to make room for this week's federal and corporate supply while others reduced their safe-haven bond holdings in favor of stocks.
The benchmark 10-year Treasury yield was 2.287 percent, up three basis points from late on Monday, while the 30-year yield was more than three basis points higher at 2.949 percent.
Commodities Recap
Gold prices fell on Tuesday, as the U.S. dollar rebounded from 6-1/2-month lows and investors shrugged off heightened political risk following a deadly suicide attack in Britain.
Spot gold was about 0.7 percent lower at $1,250.93 an ounce by 3:27 p.m. EDT (1927 GMT), having gained about 3 percent since May 9 when it tumbled to near a two-month low. U.S. gold futures settled 0.5 percent lower at $1,255.50 an ounce.
Oil prices settled a bit higher on Tuesday as expectations of an extension to OPEC-led supply cuts overshadowed a White House proposal to sell half of U.S. petroleum reserves.
Brent crude settled up 28 cents at $54.15 per barrel. U.S. light crude was up 34 cents at $51.47.
