Market Round
• US Core PCE Price Index MM Apr 0.2% vs 0.1% forecast, -0.1% previous.
• US Consumer Confidence May 117.9 vs 119.8 forecast, 119.4 previous.
• US Consumption Adjusted MM Apr 0.4% vs 0.4% forecast, 0.3% previous.
• US Personal Income MM Apr 0.4% vs 0.4% forecast, 0.2 previous.
• US CaseShiller 20 YY 5.9% vs 5.7% forecast, 5.9% previous.
• US Dallas Fed Mfg Bus Index May 17.2, 16.8 previous.
• Atlanta Fed raises US Q2 GDP growth view to 3.8% from 3.7% calculated on May 26.
• Two Fed banks supported discount rate rise before May meeting -minutes.
• Fed's Brainard: another US rate hike likely appropriate soon, but slowing inflation a concern.
• Brainard: expects to begin shrinking bond portfolio 'before too long', perhaps this year.
• Trump's communications aide steps down as president grapples with Russia issue.
• German foreign minister: we have a difficult situation now in ties with the US.
• UK PM May's election landslide in doubt as poll lead slips.
• Mexico central bank hikes shouldn't affect growth expectations-Carstens.
• Brazil Supreme Court minister authorizes interrogation of President Temer - source.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Industrial Output Prelim Apr 4.3% forecast, -1.9 previous
• 01:00 China NBS Mfg PMI May 51 forecast, 51.2 previous
• 01:45 China Caixin Mfg PMI Final May 50.1 forecast, 50.3 previous
• 01:30 Australia Private Sector Credit MM Apr 0.3% previous
• 01:30 Australia Housing Credit MM Apr 0.5% previous
• 01:00 New Zealand NBNZ Business Outlook May 11.0% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1140 levels and currently trading at 1.1187 levels. The pair has made session high at 1.1205 and hit lows at 1.1160 levels. Euro rose against the dollar on Tuesday as the greenback was weighed down by a drop in U.S. Treasury yields amid a cautious global sentiment with political worries in Europe and weaker stock and commodity markets after a long U.S. holiday weekend. The euro gained as the dollar struggled. The dollar has been soft the past two weeks on concerns over U.S. President Donald Trump's administration. Benchmark U.S. 10-year Treasury yields fell to a more than one-week low, and the dollar was further undermined by weaker-than-expected U.S. consumer confidence data. U.S. consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded. Consumer spending, accounting for more than two-thirds of U.S. economic activity, increased 0.4 percent last month. In late trading, the dollar index was down 0.1 percent at 97.30, with the euro up 0.2 percent at $1.1184.
GBP/USD is supported in the range of 1.2833 levels and currently trading at 1.2858 levels. It reached session high at 1.2888 and dropped to session low at 1.2837 levels. Sterling strengthened against the dollar on Tuesday as investors shrugged off opinion polls showing British Prime Minister Theresa May's lead over the labour opposition narrowing less than two weeks before a general election. Polls last week showed the labour Party catching up with May's Conservatives, shaving off almost half of the pound's 4 percent gain since the election announcement as investors pulled back some bets that May would win by a landslide majority. But the belief May would win the election largely remained intact among investors as polls confirmed the narrowing trend still showed the Conservatives with a sizeable lead. Minutes after an ICM poll showed May's Conservatives Party's lead narrowing to 12 points from 14 points last week, sterling rose nearly half a percent on the day to touch $1.2860 its highest level since Friday.
USD/CAD is supported at 1.3437 levels and is trading at 1.3462 levels. It has made session high at 1.3505 and lows at 1.3448 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday as the risk-sensitive commodity-linked Canadian dollar gained after greenback gave up ground on concerns about the political outlook in Europe and U.S. economic growth. Canada's current account deficit widened more than expected in the first quarter of the year on an increase in imports of both good and services, data from Statistics Canada showed. The C$14.05 billion gap exceeded economists' expectations for a deficit of C$12 billion. Oil prices declined, keeping U.S. crude below the $50 a barrel mark, on concerns output cuts by the world's big exporters may not be sufficient to lessen a global glut that has depressed the market for almost three years. The Canadian dollar was last trading at C$1.3460 to the greenback. The currency traded in a range of C$1.3445 to C$1.3504.
USD/JPY is supported around 110.50 levels and currently trading at 110.69 levels. It peaked to hit session high at 111.13 and made session lows at 110.63 levels. The U.S. dollar weakened against the Japanese yen on Tuesday as investors turned cautious amid political worries in Europe as well as weaker stock and commodity markets after a long U.S. holiday weekend. The lack of progress on tax cuts and other stimulus measures from Washington has also weighed on the greenback. Investors were concerned about next week's election in Britain, as well as the prospect of early elections in Italy and worries over Greek debt. Data showed that April U.S. consumer spending recorded its biggest increase in four months, while inflation rebounded. Consumer spending, accounting for more than two-thirds of U.S. economic activity, increased 0.4 percent last month. The so-called core personal consumption expenditure price index, the Fed's preferred inflation measure, also bounced back 0.2 percent. April's increase was the biggest since December and eased concerns about second-quarter economic growth after weak reports on core capital goods orders, the goods trade deficit and inventory investment in April. Consumer spending was previously reported to have been unchanged in March. Against the yen, the dollar dropped 0.5 percent to 110.77 yen, after earlier falling to a two-week trough of 110.67.
Equities Recap
European shares fell on Tuesday, marking their fourth straight day of losses, with banks leading the decline on fresh political jitters and following a downgrade by a top global broker.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.23 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.6 percent.
U.S. stocks dipped on Tuesday, with the S&P 500 retreating from a record closing high as weakness in the energy and financial sectors outweighed gains in technology shares.
Dow Jones closed down by 0.125 percent, S&P 500 ended down 0.12 percent, Nasdaq finished the day down by 0.12 percent.
Treasuries Recap
Yields on most U.S. Treasury bonds and notes fell to their lowest levels in more than a week on Tuesday on month-end buying and after U.S. inflation data reinforced doubts that the Federal Reserve would raise interest rates more than one more time in 2017.
Yields on U.S. Treasuries maturing between three and 30 years hit their lowest levels in 12 days. Benchmark 10-year U.S. Treasury yields touched 2.211 percent and 30-year yields hit 2.881 percent.
Commodities Recap
Gold prices eased after hitting a one-month high on Tuesday as economic data from the United States showed increased signs that the Federal Reserve would raise interest rates next month.
Spot gold touched a one-month high of $1,270.47 before pulling back 0.3 percent to $1,262.76 per ounce by 2:15 p.m. EDT (1815 GMT). U.S. gold futures slipped to end the session 0.5 percent lower at $1,262.1 an ounce.
Oil prices fell about 1 percent on Tuesday, on signs of resurgent crude output in Libya and concerns that extended production cuts by leading exporting countries may not be enough to drain a global glut that has depressed prices for almost three years.
Brent crude ended the session 45 cents, or 0.9 percent, lower at $51.84 a barrel, while U.S. light crude fell 14 cents, or 0.3 percent, to $49.66.
