Market Roundup
• Rise in U.S. import prices below expectations (0.2% m/m, -6.2% y/y); Export prices unchanged.
• Fed's Harker: three rate hikes this year still possible, cites good job/JOLTS data, firming inflation.
• Fed’s Kaplan: Hiking in Dec was not a mistake, China to be slower for extended period of time.
• Germany's Schaeuble: ECB low rate policy causing 'extraordinary problems', Europe needs structural reforms.
• IMF cuts ’16 global growth forecast to 3.2% from 3.4%, ’17 to 3.5% from 3.6%; US growth to 2.4% from 2.6%.
• Brexit "Out" ahead by 3 points in Britain's EU referendum campaign ( 45% for Brexit, 42% to stay).
• Oil rallies on talk of Russia/Saudi o/p freeze, lifting stocks lead by energy shares.
• EIA forcast ’16 oil o/p to fall 830k BPD vs 760k BPD previous, ’17 o/p to fall 560k BPD from 480k BPD previous.
• Mexico central bank sees inflation converging to 3% by YE 2016, will closely watch US Fed to determine policy stance.
• Brazil's Rousseff denounces plot to unseat her, attacks VP Temer.
Looking Ahead - Economic Data (GMT)
• --:-- China Exports YY Mar forecast 2.5%, -25.4%-previous
• --:-- China Imports YY Mar forecast -10.2%, -13.8%- previous
• --:-- China Trade Balance USD Mar forecast 30.85b, 32.59b- previous
• 23:50 Japan Corp Goods Price MM Mar forecast 0%, -0.2%- previous
• 23:50 Japan Corp Goods Price YY Mar forecast -3.5%, -3.4%- previous
• 00:30 Australia Consumer Sentiment Apr -2.2%- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan Bank of Japan board member Yutaka Harada to speak to business leaders in Shimonoseki
Currency Summaries
EUR/USD is likely to find support at 1.1348 levels and currently trading at 1.1388 levels. The pair has made session high at 1.1399 and hit lows at 1.1346 levels. The euro decline sharply against US dollar on Tuesday as investors sold off the euro as investors’ appetite for risk and higher-yielding assets improved with the rise in oil prices. The improved investor sentiment boosted the greenback to a session high against euro which last traded down 0.14 percent at $1.1390 after hitting a roughly six-month high of $1.1464 earlier in the session. On the data front, U.S. import prices rose in March for the first time in nine months. The Labor Department said on Tuesday import prices gained 0.2 percent last month after a downwardly revised 0.4 percent drop in February. Meanwhile Investors are awaiting for U.S. retail sales data on Wednesday as retail sales is a key data which will show further direction in this pair in the short term.
GBP/USD is supported in the range of 1.4165 currently trading at 1.4266 levels. It reached session high at 1.4274 and hit low at 1.4197 levels. The Sterling rose on Tuesday, putting strong performance against greenback to hit 2-weeks high, as the sterling was boosted by British inflation which hit its highest level in 15 months in March. Data showed consumer prices edged up to 0.5 percent year on year, picking up speed from 0.3 percent in February and posting better figures than forecast of 0.4 percent by economists. Sterling rose half a percent after the data to $1.4312, its highest since April 4, up from around $1.4283. Meanwhile a recent poll result showed favorable views for Britain to leave the European Union. Analysts expect uncertainty stemming from the referendum to keep the pound choppy in the coming months and possibly force the central bank to keep rates lower for longer.
USD/CAD is supported at 1.2750 levels and is trading at 1.2762 levels. It has made session high at 1.2795 and lows at 1.2752 levels. The Canadian dollar strengthened against its U.S. counterpart on Tuesday after crude oil prices rose sharply giving a boost to commodity related currencies. U.S. crude prices were hovered around $45 a barrel, extending earlier gains after a report that some top oil-producing countries have agreed to freeze output ahead of a much-anticipated OPEC meeting on Sunday. The dollar weakened against commodity-linked currencies such as the Canadian dollar, Mexican peso, the Russia rouble, and the Australian and New Zealand dollars. The dollar fell more than 1 percent against the Mexican peso to an eight-day low of 17.4423 pesos. Meanwhile Bank of Canada meets on Wednesday, to decide monetary policy. The central bank is expected to keep policy rate unchanged at 0.50% and reiterate its neutral policy bias. The currency's strongest level of the session was C$1.2756, while its weakest was C$1.2921.
AUD/USD is supported around 0.7300 levels and currently trading at 0.7348 levels. It hit session high at 0.7374 and made session lows at 0.7344 levels. The Australian dollar surged higher against US dollar on Tuesday after an upbeat local data combined with rally in commodities prices supported Aussie bulls. National Australia Bank’s monthly survey of more than 400 firms showed its index of business conditions rose four points to +12 last month it’s highest since early 2008. Its business confidence index climbed three points to +6. The bullish outlook was further enhanced by a rally in the price of iron ore, which bounced nearly 5 percent on Monday. The Australian dollar jumped to $0.7685, from $0.7596 early, nearing a nine-month peak of $0.7723 touched late March.
Equities Recap
European shares rose on Tuesday at the end of a choppy session, helped by gains among mining companies, but Italy underperformed as its banks snapped a two-day winning streak.
UK's benchmark FTSE 100 closed up 0.65 percent, the pan-European FTSEurofirst 300 ended the day up by 0.60 percent, Germany's DAX ended up by 0.83 percent, France’s CAC finished the day up by 0.74 percent.
U.S. stocks gained on Tuesday, led by surging energy shares that were buttressed by rising oil prices, as investors scooped up equities with an expected tepid corporate earnings season under way.
Dow Jones closed up by 0.93 percent, S&P 500 ended up by 0.96 percent, Nasdaq finished the day up by 0.79 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday as oil and stock prices jumped on reports that Saudi Arabia and Russia had agreed to freeze crude output, reducing demand for safe-haven debt.
Benchmark 10-year notes dropped 17/32 in price to yield 1.78, up from 1.72 percent on Monday.
Commodities Recap
Gold was flat after rising to three-week highs on Tuesday as the dollar nudged up from a near 8-month low against a basket of currencies, with the rally in oil helping to improve risk appetite, while silver rose to a 5-1/2-month high.
Spot gold touched a high of $1,262.60 an ounce before easing back to $1,257.01 by 3:49 p.m. EDT (1949 GMT). U.S. gold futures for June delivery settled up 0.2 percent at $1,260.90 an ounce.
Global oil prices hit four-month highs on Tuesday, hovering just under $45 a barrel after a report that top producers Russia and Saudi Arabia have agreed to freeze output ahead of a much-anticipated producers meeting on Sunday.
Brent crude prices settled up $1.86, or 4.3 percent, at $44.69 a barrel.U.S. crude settled up $1.81, or 4.48 percent at $42.17 a barrel.
