Market Roundup
• ISM NY Apr biz conditions 57 v 50.4 previous.
• Fed’s Lockhart: no firm view on June FOMC, waiting to see incoming data; says Brexit causing volatility, uncertainty for US; 2 US rate hikes ‘certainly possible’ depends on strength of US economy.
• Fed’s Williams: June rate hike possible on better data, Fed will probably try to avoid using negative rates.
• Japan’s Aso: will keep a close eye on FX market, will respond if necessary.
• BoJ’s Kuroda: will take additional easing measures if necessary.
• France’s Hollande: will propose EZ overhauls after UK referendum.
• EU Commission sees euro zone growth slowing to 1.6% from 1.7% in ‘16, urges more investment.
• ICM poll shows 44% would vote to remain in EU, 45% to leave ( last week- 46 Brexit, 44 Bremain).
• UK "In" camp retains lead, 39 to 36% previous poll was 38-34%, ahead of EU referendum -TNS poll.
• New Zealand’s Fonterra: Dairy prices fall 1.4% to average selling price NZD 2,203/tonne, volumes drop 2.8% at
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand HLFS Unemployment Rate Q1 forecast 5.5%, 5.3%-previous
• 22:45 New Zealand HLFS Job Growth QQ Q1 forecast 0.7%, 0.9%- previous
• 22:45 New Zealand HLFS Participation Rate Q1 forecast 68.6%, 68.4%- previous
• 22:45 New Zealand Labour Cost Index - QQ Q1 forecast 0.3%, 0.4%- previous
• 22:45 New Zealand Labour Cost Index - YY Q1 forecast 1.6%, 1.6%- previous
• 23:30 Australia AIG Services Index Apr 49.5-previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1449 levels and currently trading at 1.1495 levels. The pair has made session high at 1.1538 and hit lows at 1.1499 levels. The dollar rose against euro on Tuesday after Atlanta Fed President Dennis Lockhart said at a conference in Florida that he would have to see strong U.S. economic data to be in favor of a rate hike in June. He also noted the risks to the U.S. economy if Britain voted to leave the European Union in a referendum next month. The central bank president said that he would support an early interest rate hike in June as long has he sees continued progress on the economy. The euro's decline against dollar was also due to weak dollar index, which hit its lowest in over 15 months before finishing up 0.35 percent at 92.949. The euro's turnaround was also due to rebound in the dollar index, which hit its lowest in over 15 months before finishing up 0.35 percent at 92.949.
GBP/USD is supported in the range of 1.4473 and currently trading at 1.4533 levels. It reached session high at 1.4574 and hit low at 1.4526 levels. Sterling declined sharply against US dollar on Tuesday, as renewed worries about a possible British exit from the European Union weighted on the currency pair. The ICM poll, which showed 45 percent of voters favored a Brexit, against 44 percent who believe Britain should stay in the 28-member bloc. The slump in the PMI survey below 50 points, which points to a contraction of the sector had already driven the pound down a third of a cent against the dollar. Having earlier traded at a four-month high of $1.4770, sterling fell to as low as $1.4532 later in the day. Sterling fell by as much as 0.8 percent against the euro to 79.20 pence , its weakest since Feb 19, after the poll was published.
USD/CAD is supported at 1.2567 levels and is trading at 1.2718 levels. It has made session high at 1.2729 and lows at 1.2585 levels. The pair bounced off from 10-month lows on Tuesday as lower oil prices and a sell-off in stocks weighed on the risk-sensitive commodity-linked currency. Oil fell as rising output from the Middle East and North Sea renewed concerns about global oversupply while weak Chinese factory activity worsened the demand outlook. U.S. crude prices were down 0.58 percent to $44.52 a barrel. The pullback for the loonie came as fellow commodity currency the Australian dollar tumbled after the Reserve Bank of Australia surprised some by cutting its cash rate to a record low. The currency's weakest level was C$1.2625, while it touched its strongest since June 30 at C$1.2461.
AUD/USD is supported around 0.7455 levels and currently trading at 0.7489 levels. It hit session high at 0.7536 and made session lows at 0.7484 levels. Australian dollar declined sharply against its American rival on Tuesday after the Reserve Bank of Australia surprised the market by cutting its cash rate to a record low. The RBA cut its cash rate by a quarter-point to a record low of 1.75 percent at its monthly policy meeting, the first easing in a year as it seeks to insulate the economy from creeping deflation. The Australian dollar skidded 1.5 percent to $0.7484 on the day. A break of $0.7548 would target the April low of $0.7490.Meanwhile, monthly U.S. payrolls are due on Friday. Last week, U.S. data showed tepid growth in first-quarter gross domestic product and a softening in the Fed's preferred measure of inflation.
Equities Recap
European shares fell to a three-week low on Tuesday, with Commerzbank leading the decline after a slump in profits and mining stocks falling along with metals prices.
UK's benchmark FTSE 100 down by 1.43 percent, the pan-European FTSEurofirst 300 ended the down by 1.64 percent, Germany's Dax ended down by 1.83 percent, France’s CAC finished the day down by 1.49 percent.
U.S. stocks fell on Tuesday after weak economic data in China and Europe reignited worries about global growth, while oil prices dropped for a second day, dragging down energy shares.
Dow Jones closed down by 0.77 percent, S&P 500 ended down by 0.86 percent, Nasdaq finished the day down by 1.13 percent.
Treasuries Recap
U.S. Treasury yields fell broadly on Tuesday to their lowest levels in nearly two weeks after weak Chinese data and a surprise interest rate cut in Australia raised concerns about the global economy, boosting demand for safe-haven U.S. government debt.
Yields of U.S. Treasuries touched their lowest levels since April 20. Benchmark 10-year notes rose 20/32 in price to yield 1.798 percent, down from 1.865 percent on Monday and 1.941 percent last Tuesday.
Prices on 30-year bonds rose more than 1 point, with yields down 6 basis points from late Monday to 2.659 percent.
Commodities Recap
Gold turned lower on Tuesday, after nearing the prior session's 15-month top, as the U.S. dollar moved higher and a Federal Reserve official pointed to the possibility of two interest rate hikes in 2016.
Spot gold was down 0.4 percent at $1,285.69 an ounce by 2:33 p.m. EDT (1833 GMT), off a session high of $1,302. It reached its strongest level since January 2015 at $1,303.60 an ounce on Monday.
U.S. gold futures for June delivery settled down 0.3 percent at $1,295.80 an ounce
Oil prices fell for a second day on Tuesday, retreating further from the year's highs hit last week, as rising output renewed worries about the global glut of crude, the U.S. dollar rebounded and equity markets weakened..
Brent crude futures settled down 86 cents, or 1.9 percent, at $44.97 a barrel.
U.S. crude's West Texas Intermediate (WTI) futures fell $1.13, or 2.5 percent, to $43.65.
