Market Roundup
• Sterling fall "undoubtedly" on agenda at BoE rate meeting-Carney.
• Interference with Bank of England would hurt UK assets –Carney.
• ECB aware ultra-low rates have rising cost: Draghi.
• Fitch: China hard landing, yuan risks recede.
• Schaeuble says monetary policy has reached its limits.
• US Oct Conference Board consumer confidence index 98.6 vs forecast 101.0, previous 103.5.
• US Aug Case Shiller home prices +5.1% y/y (forecast +5.0%).
• French Sept jobless drops 66,300 to 3,490,500, steepest monthly drop ever.
• Brazil's central bank sees limits to rate cuts –minutes.
• Brazil financial inflows spike ahead of amnesty program deadline.
Looking Ahead - Economic Data (GMT)
• 0:30 Australia CPI QQ Q3 0.50% forecast 0.40% -previous
• 0:30 Australia CPI YY Q3 1.10% forecast 1.00% - previous
• 0:30 Australia RBA Trimmed Mean CPI QQ Q3 0.40% forecast 0.50% - previous
• 0:30 Australia RBA Trimmed Mean CPI YY Q3 1.70% forecast 1.70% - previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0851 levels and currently trading at 1.0887 levels. The pair has made session high at 1.0906 and hit lows at 1.0851 levels. The euro slightly inched higher against US dollar on Tuesday as green back slipped from multi-month highs after Bank of England Governor Mark Carney cast doubt on expectations for more monetary stimulus. Expectations that the Fed would hike rates in December remained strong and limited the dollar's losses. The dollar index, which measures the greenback against a basket of six major currencies, has risen 3.4 percent this month. Expectations that the Federal Reserve would tighten monetary policy in December while central banks overseas engage in loose easing policies have fueled the dollar's gains. The euro was last up 0.09 percent against the dollar at $1.0890, recovering from a roughly 0.3 percent loss earlier in the session that had taken the currency to a nearly eight-month low of $1.0851.
GBP/USD is supported in the range of 1.2040 and currently trading at 1.2192 levels. It reached session high at 1.2200 and hit low at 1.2079 levels. The Sterling initially slipped against the greenback to hit daily lows at 1.2080, but recovered most of the losses after comments from Bank of England Governor Mark Carney cast doubt on expectations for more monetary stimulus in Europe. Carney said the BoE would "undoubtedly" take sterling's weakness into account at its rate-setting meeting next week. His comments doused expectations that the central bank would cut rates again soon and also hurt expectations that the European Central Bank would lean toward more aggressive easing, analysts said. Carney testimony comes at a time when relations between the BOE and the government appear tense after Prime Minister Theresa May warned that quantitative easing was having an adverse effect on savers and pensioners. Sterling shed 1.2 percent to $1.2082, its lowest since Oct. 7, but recovered to trade at $1.2174 in the late US session.
USD/CAD is supported at 1.3275 levels and is trading at 1.3346 levels. It has made session high at 1.3372 and lows at 1.3316 levels. The Canadian dollar slightly firmed against its U.S. counterpart on Tuesday after dollar declined across the board as investors looked for clues regarding the timing of the next interest rate hike ahead of a Fed meeting next week. Growing expectations that the U.S. Federal Reserve would raise interest rates in December had boosted the dollar to its highest level in more than seven months against the Canadian dollar. Oil prices fell more than 1 percent, with U.S. crude breaking below $50 per barrel for a second straight day, ahead of weekly data that could show a build in inventories. Before this week, prices rose about 13 percent over a three-week span after OPEC announced on Sept 27 its first planned output cut in eight years to combat the steep slump in crude prices, which are far below 2014 highs above $100 a barrel. The Canadian dollar last trading at C$1.3151 to the greenback, or 75.94 U.S. cents, stronger than Thursday's close of C$1.3205, or 75.73 U.S. cents.
AUD/USD is supported around 0.7588 levels and currently trading at 0.7647 levels. It hit session high at 0.7655 and made session lows at 0.7615 levels. The Australian dollar inched higher against dollar on Tuesday ahead of inflation data that is expected to dim prospects for another cut in interest rates this year. The Australian dollar was last trading at $0.7642, having found solid support around $0.7590 for three straight sessions. The Aussie is up 4.5 percent so far this year. It has been resilient in recent weeks against a resurgent U.S. dollar, helped by a rebound in the price of iron ore and coal Australia's top exports and data showing China's economy was stabilising. Also helping the Aussie is speculation the Reserve Bank of Australia's (RBA) easing cycle could be over if consumer price index figures out Wednesday confirm underlying inflation steadied around 1.5 percent in the third quarter.
Equities Recap
European shares turned lower after a strongly start on Tuesday, with Germany's DAX briefly touching a new peak for 2016, after sentiment was knocked by mixed earnings on Wall Street and in Europe.
UK's benchmark FTSE 100 closed up by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.36 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.4 percent.
U.S. stocks slipped from two-week highs on Tuesday as results and forecasts from companies in sectors including housing and consumer products failed to live up to expectations.
Dow Jones closed down by 0.29 percent, S&P 500 ended down by 0.38 percent, Nasdaq finished the day down by 0.49 percent.
Treasuries Recap
U.S. long-dated Treasury yields slipped on Tuesday after data showed a decline in U.S. consumer confidence this month, although the outlook on yields remained intact as investors see the Federal Reserve raising interest rates in December.
In late trading, U.S. 10-year Treasury notes were up 1/32 in price, yielding 1.756 percent, down from 1.763 percent late on Monday. Earlier in the session, 10-year yields hit a one-week peak at 1.788 percent.
U.S. 30-year bonds were 9/32 higher in price to yield 2.501 percent, down from Monday's 2.516 percent. U.S. 30-year yields touched a one-week peak of 2.541 percent earlier on Tuesday.
U.S. two-year note yields were at 0.856 percent, up from Monday's 0.840 percent. Earlier, two-year yields hit a two-week high of 0.86 percent.
Commodities Recap
Oil prices fell more than 1 percent on Tuesday, with U.S. crude breaking below $50 per barrel for a second straight day ahead of weekly data that could show a build in domestic inventories.
Brent crude futures settled down 67 cents, or 1.3 percent, at $50.79 a barrel. In post-settlement trade, it got down to as low as $50.56.
U.S. West Texas Intermediate (WTI) crude futures fell 56 cents, or 1.1 percent, to settle at $49.96. It was the first close below $50 since Oct 18. WTI fell to $49.72 in post-settlement trade.
Gold rose to an almost three-week high on Tuesday as the U.S. dollar retreated from multi-month highs and physical demand rose before India's late-October festival season.
Spot gold was up 0.9 percent at $1,275.11 an ounce by 3:07 p.m. EDT (1907 GMT), after rising to $1276.67, the highest since Oct. 5.
U.S. gold futures settled up 0.8 percent at $1,273.60 an ounce.
