Market Roundup
- BOE's Carney says has no set timetable for rate rise, low oil means UK inflation to stay low for longer, sees risks of financial contagion from challenges in China & other Ems.
- ECB's Villeroy stimulus boosting growth by 1 percent between 2015-2017.
- Fall in US crude cuts short Wall Street rally, Iran to cut prices; weak global growth weighs as well.
- Dairy prices fall (1.4%), volumes drop 14.6% at auction -NZ's Fonterra.
- IEA says oil market may "drown in oversupply" in 2016.
- IMF cuts global growth forecast as China slows, World seen growing at 3.4 percent this year.
- Brazil central bank cast doubt on rate hike as outlook worsens, futures price 25bp hike.
- Fitch says economic, fiscal and political risks drove Brazil's loss of investment grade.
Looking Ahead - Economic Data (GMT)
- 21:45 New Zealand CPI QQ Q4*forecast -0.2%, 0.3%-previous
- 21:45 New Zealand CPI YY Q4*forecast 0.4%, 0.4%- previous
- 23:30 Australia Consumer Sentiment *Jan -0.8%- previous
- 23:30 Japan Reuters Tankan DI* Jan 9- previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0850 levels and currently trading at 1.0913 levels. The pair has made session high at 1.0936 and hit lows at 1.0931 levels. The dollar declined against euro on Tuesday after US stocks shed some gains as US crude prices fell, cutting short a rally inspired by raising hopes for more stimulus measures in china and earnings reports in the United States. Data released overnight showed China's economic growth matched expectations but its growth rate for the year was slowest in 25 years, boosting expectations that monetary easing measures are imminent for the worlds second-largest. The dollar index, which measures the greenback against six major world currencies, gained 0.2 percent. The currency's strongest level of the session was $1.0933, while its weakest level was $1.0833.
GBP/USD is supported in the range of 1.4100 and currently trading at 1.4167 levels. It reached session high at 1.4225 and hit low at 1.4125 levels. Sterling slipped sharply to hit seven-year low against the dollar on Tuesday after Central Bank head of England warned slowing Chinese economy may damage hopes of interest rate hike in the Britain. After Mark Carney's comments the pair reversed from earlier rally declining to hit $1.4130 levels, its lowest against the dollar since early 2009. Against the euro, sterling added almost another percentage point to falls registered since the start of December. It was down 9 percent against both currencies in that time, putting it at its weakest in a year on a trade-weighted basis. Sterling has suffered from a wave of speculation and bets on derivatives markets against risks from a referendum on Britain's European Union membership, widely expected this year.
AUD/USD is supported around 0.6880 levels and currently trading at 0.6914 levels. It hit session high at 0.6936 and made session lows at 0.6902 levels. The Australian dollar reversed early losses against US dollar to rebound to trade around 0.6930 levels on Tuesday erasing earlier losses suffered in the Asian session due to weak Chinese retail sales and industrial output data that underlined concerns about global growth. Data also showed China's economy grew 6.8 percent in the fourth quarter from a year earlier, the slowest since 2009. Initially in the Asian session the Australian dollar fell to $0.6842, from a session peak of $0.6893, pulling close to a seven-year trough of $0.6827 set on Friday. However, the pair recovered to trade around 0.6930 levels in the late American trading hours. The Aussie has skidded more than 6 percent this year largely on concerns that the Chinese economy's troubles might be beyond Beijing's ability to fix.
USD/CAD is supported at 1.4480 levels and is trading at 1.4560 levels. It has made session high at 1.4564 and lows at 1.4414 levels. The Canadian dollar declined against its U.S. counterpart on Tuesday reversing the earlier gains after Brent crude gave up its earlier gains after the worlds energy watch dog warned that market could drown in oversupply limited gains and sent U.S crude down to its lowest since 2003. Canadian government bond prices fell across the maturity curve, with the two-year price down 6.5 Canadian cents to yield 0.337 percent and the benchmark 10-year falling 42 Canadian cents to yield 1.205 percent. The yield hit a record low on Friday at 1.143 percent. The currency's strongest level of the session was C$1.4433, while its weakest level was C$1.4570. On Monday, it hit its weakest since April 2003 at C$1.4650.
Equities Recap
European equities bounced back from 13-month lows on Tuesday following rebound in mining and energy stocks as prices of major industrial metals and crude oil jumped higher after the release of Chinese growth data.
Britain's blue-chip FTSE 100 index inched up by 1.58 percent, France's benchmark CAC-40 index was 1.92 percent, Germany's DAX ended up 1.43 percent, meanwhile the pan-European FTSEurofirst 300 index was up by 1.25 percent.
U.S. stocks retreated on Tuesday from a global equities rally spurred by speculation Beijing would boost stimulus efforts, but a renewed drop in U.S. oil prices raised a cautionary flag.
Dow Jones closed up by 0.16 percent, S&P 500 ended up by 0.05 percent, Nasdaq finished the day up by 0.27 percent.
Treasuries Recap
U.S. Treasury debt prices fell on Tuesday with 30-year yields hovering at their lowest levels in 2-1/2 months as Wall Street stocks reversed its earlier gains due to concerns about slowing Chinese economic growth and falling oil prices.
Benchmark 10-year Treasuries notes were down 5/32 in price for a yield of 2.052 percent, up 2 basis points from late on Friday.
The 30-year bond yield was up 1 basis point at 2.822 percent after touching 2.790 percent, the lowest since early October.
Commodities Recap
Brent crude rebounded on Tuesday from 12-years lows after data showed record demand in China, but a warning by the world's energy watchdog that the market could "drown in oversupply" limited the global benchmark's gains and sent U.S. crude down to its lowest since 2003.
Brent settled up 0.7 percent or 21 cents at $28.76 a barrel. It traded as high as $30.24, rebounding from $27.67 on Monday, its lowest since November 2003.
U.S. crude settled at $28.46 a barrel, down 96 cents or 3.26 percent, at its lowest level since September 2003. The U.S. market was shut on Monday due to a public holiday.
Gold steadied on Tuesday, as the dollar turned lower, U.S. crude oil prices fell below $29 per barrel and U.S. equity markets pared gains.
Spot gold was up 0.05 percent at $1,089.15 an ounce at 2:47 p.m. EST (1947 GMT) after a lethargic session on Monday when U.S. markets were shut for the Martin Luther King Jr. holiday. U.S. gold for February delivery settled down 0.1 percent at $1,089.10.
