Market Roundup
- BOJ's Kuroda: cannot yet declare Japan has escaped deflation, 2% inflation target may be delayed by weak oil prices, ready to deploy more stimulus if necessary.
- Canada producer prices fall for fourth straight month in Nov, raw material prices fall as well.
- Wall Street near flat as investors turn cautious; Apple drags.
- Oil prices drop as weak China data and stronger dollar drag, China's rail freight volumes log steepest ever decline in 2015.
- Copper recovers as China battles to shore up equities, China injects USD20b after stock market sell-off.
- U.S. candidate Sanders to lay out plan to break up big banks in 1st year.
Looking Ahead - Economic Data (GMT)
- 22:30 Australia AIG Services Index* Dec 48.2-previous
- 01:45 China Caixin Services PMI* Dec 51.2-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0700 levels and currently trading at 1.0747 levels. The pair has made session high at 1.0756 and hit lows at 1.0709 levels. The euro declined sharply against US dollar on Tuesday, after Euro zone core inflation slowed for the second month in a row in December, giving a big headache for the European Central Bank to take further action on monetary easing, which has printed hundreds of billions of euros to kick-start price growth with little to show for it. Inflation exceeded the ECB's target for nearly three years and even radical policy steps including 1.5 trillion euros of asset purchases will take years at best to push price growth back towards 2 percent, threatening the bank's credibility. Headline inflation, targeted by the ECB, held steady at 0.2 percent, missing expectations for a rise to 0.3 percent and still far short of the bank's target. The euro fell 0.8 percent at $1.0739 after touching a one-month low of $1.0709 earlier Tuesday.
GBP/USD is supported in the range of 1.4600 and currently trading at 1.4667 levels. It reached session high at 1.4697 and hit low at 1.4635 levels. British pound slipped to a nine-month low against the dollar on Tuesday, despite positive construction data, which failed to lift hopes for interest rates rise this year and "Brexit" from Europe debate further weighted on the currency pair. UK construction purchasing manager's index jumped to 57.8 in December, way above the 50 reading that separates economic expansion from contraction and compared to a consensus forecast of 56.0.That gave sterling a small boost but the overall tone remains downbeat with many banks having recommended selling the currency this year after Brexit-debate intensified weighing on the pound in December. Sterling traded at $1.4677, compared to Monday's low of $1.4665.
USD/CAD is supported at 1.3919 levels and is trading at 1.3987 levels. It has made session high at 1.4019 and lows at 1.3973 levels. The Canadian dollar declined against US dollar on Tuesday as concerns related global equities sell-off and declining crude oil prices weakened Canadian dollar across the board. U.S. crude prices fell 0.84 percent to $36.45 a barrel, while Brent crude lost 1.18 percent to $36. the data front, Canadian producer prices unexpectedly fell 0.2 percent in November from October, data from Statistics Canada showed. It was the fourth consecutive monthly decline. Against the euro, the Canadian dollar firmed to C$1.4946, its strongest level since mid-December. Euro weakened on the day after Euro zone core inflation slowed for the second month in a row in December.
USD/JPY is supported around 118.66 levels and currently trading at 119.05 levels. It hit session high at 119.72 and made session lows at 118.66 levels. The Japanese yen inched higher against US dollar on Tuesday as traders switched their investments to safe heaven Japanese yen on anxiety about sluggish global growth, further losses in the Chinese stock market and geopolitical tensions in the Middle East between Iran and Saudi Arabia. The Japanese currency, traditionally sought during volatility in the market, climbed to its strongest level since April against the euro and hovered at its highest since October versus the dollar. It also rose to the loftiest against the sterling since October. However, the yen briefly retreated from Monday's highs after China injected an estimated $20 billion into money markets in a stability effort after Monday's alarming 7-percent drop in stocks. Against the dollar, the yen rose toward an 11-week high of 118.705 hit on Monday, up 0.4 percent on the day at 119.01 yen.
Equities Recap
European shares closed up on Tuesday, supported by a rally in mining and telecoms stocks, despite concerns over China growth worries persisted on the day .
UK's benchmark FTSE 100 closed up by 0.48 percent, the pan-European FTSEurofirst 300 ended the day up by 0.44 percent, Germany's Dax unchanged, and France's CAC finished the day up by 0.7 percent.
U.S. stocks Dow and S&P finished slightly higher on Tuesday, edging higher after weak start to new year, though investors remained worried over global growth concerns.
Dow Jones closed up by 0.07 percent, S&P 500 ended the day up by 0.20 percent, Nasdaq finished the day down by 0.25 percent.
Treasuries Recap
Long-dated U.S. Treasury yields rose on Tuesday as worries eased over global growth, leading traders to sell some safe-haven U.S. government debt, while caution ahead of Friday's U.S. jobs data kept yields in tight ranges.
U.S. five-year Treasury notes were last up 2/32 in price to yield 1.722 percent, down 1 basis point on the day.
U.S. seven-year notes were last up 2/32 to yield 2.057 percent, down 1 basis point from late Monday.
Benchmark 10-year U.S. Treasury notes were last mostly flat in price to yield 2.250 percent, versus 2.245 percent late Monday.
Benchmark yields hit a nearly two-week low of 2.200 percent on Monday.
Commodities Recap
Oil prices fell about 2 percent dragging prices again near 11-year low on Tuesday, as the tensions between two of the world's biggest oil producers Iran and Saudi Arabia, intensified.
Brent crude prices fell 80 cents to settle at $36.42 a barrel. Prices hit an 11-year low of $35.98 a barrel just before Christmas, capping a year where the benchmark's value dropped by more than a third.
U.S. West Texas Intermediate (WTI) crude slipped 79 cents to settle at $35.97 a barrel.
Gold rose for the second straight session on Tuesday after a wave of risk aversion due to growth worries in China and rising tensions in the Middle East triggered demand for the metal, despite the stronger U.S. dollar.
Spot gold was up 0.3 percent at $1,077.87 an ounce at 2:08 p.m. EST (1908 GMT). U.S. gold futures for February delivery settled up 0.3 percent at $1,078.40 an ounce.
