Market Roundup
• US ISM Manufacturing PMI Jul 56.3, 56.5 forecast, 57.8 previous.
• US Texas Serv Sect Outlook Jul 10.5, 10.1 previous.
• US Dallas Fed Services Reve Jul 15.7, 14.8 previous.
• US Personal Consump Real MM Jun 0.0, 0.2% previous.
• US Personal Income MM 0.0, 0.4% forecast, 0.3% previous.
• US Core PCE Price Index YY Jun 1.5%, 1.5% previous.
• US PCE Price Index YY 1.4%, 1.5% previous.
• US Redbook MM w/e -1.2%, -1.3% previous.
• US Redbook YY w/e 2.8%, 2.1% previous.
• US Construction Spending MM Jun -1.3%, 0.4% forecast, 0.3% previous.
• US ISM Mfg Prices Paid Jul 62.0, 55.5 forecast, 55.0 previous.
• US ISM Manuf Employment Index Jul 55.2, 55.1 forecast, 57.2 previous.
• US ISM Manuf New Orders Index Jul 60.4, 63.5 previous.
• US auto sales fall in July as carmakers slash rental fleet sales.
• Trump extols corporate profits while seeking corporate tax cut.
• Euro zone economy outperforms Britain for second straight quarter.
• German jobless drop, manufacturing grows in boost to Merkel campaign.
• British consumer morale steadies in July but at low levels - YouGov/Cebr.
• Brazil central bank signals another deep rate cut in September.
• New Zealand July house prices grow at slowest pace in 2.5 years - QV.
• Mexico factory activity slips from over 1-year high in July
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand HLFS Unemployment Rate Q2 4.8% forecast, 4.9 previous
• 22:45 New Zealand HLFS Job Growth QQ 0.7% forecast, 1.2% previous
• 22:45 New Zealand Labour Cost Index - QQ Q2 0.4% forecast, 0.4% previous
• 01:30 Australia Building Approvals MM Jun 1.5% forecast, -5.6% previous
• 05:00 Japan Consumer Confidence Index Jul 43.3 previous
Looking Ahead - Events, Other Releases (GMT)
• 15:30 Cleveland Fed President Mester to speak at Ohio Annual Convention – Cincinnati
• 19:30 SF Fed President Williams speaks at the Economic Club of Las Vegas - Las Vegas
• BOJ member Funo speaks at a meeting with business leaders – Sapporo
• ECB Governing Council meeting. No interest rate announcements scheduled - Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1732 levels and currently trading at 1.1800 levels. The pair has made session high at 1.1835 and hit lows at 1.1781 levels. The euro slipped from 2-1/2-year high against the U.S. dollar on Tuesday as dollar edged higher after investors consolidated positions, but it was still not far from its lowest in more than a year against major rivals as political uncertainty was expected to continue weighing on the greenback following President Donald Trump's ouster of White House communications chief Anthony Scaramucci on Monday. Market concerns also persisted about whether the Fed would raise interest rates again this year. Traders' bets last reflected a roughly 46 percent chance of a Fed rate hike in December, according to CME Group's FedWatch tool. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.2 percent at 93.060 after touching 92.777, the lowest since early May 2016. The euro was down 0.3 percent against the dollar at $1.1800 but not far from a 2-1/2-year high of $1.1845 touched on Monday.
GBP/USD is supported in the range of 1.3134 levels and currently trading at 1.3205 levels. It reached session high at 1.3244 and dropped to session low at 1.3195 levels. Sterling stood near 11-month high against the dollar on Tuesday as sterling was boosted after data showed that UK factory growth rebounded in July on the back of a surge in new exports. The Purchasing Managers' Index (PMI) survey for Britain's manufacturing sector climbed to 55.1, exceeding the 54.4 consensus in a poll of economists, helped by the biggest influx of new export orders since 2010. The numbers should hearten policymakers at the Bank of England, which will make a policy decision and release its latest quarterly Inflation Report on Thursday, and should soothe investors' fears that economic growth is deteriorating rapidly after a sluggish start to the year. A run of weak data has along with deep uncertainty about the impact of Brexit on the economy cooled speculation that the BoE is poised to start removing its crisis-level stimulus, which followed a series of hawkish remarks by policymakers at the banks in recent months. Sterling climbed as high as $1.3240 after the data's release and but retreated to trade at $1.3204 in the late US session.
USD/CAD is supported at 1.2455 levels and is trading at 1.2537 levels. It has made session high at 1.2545 and lows at 1.2477 levels. The Canadian dollar lost ground against its U.S. counterpart on Tuesday as oil prices slipped from two-month highs, while the greenback stabilized a day after being pressured by political turmoil in Washington. The dollar bounced slightly from a 15-month low against major currencies, although the outlook remained cautious due to political turmoil in Washington and uncertainty about the Federal Reserve's path of rate hikes. Oil slipped from a two-month high as ample global supplies countered strong demand and expectations for another drop in U.S. crude inventories. The Canadian dollar was last trading at C$1.2541 to the greenback. The currency traded in a range of C$1.2452 to C$1.2540, after hitting on Thursday its strongest in more than two years at C$1.2414.It has jumped more than 10 percent since early May, including a 3.9 percent gain last month when the Bank of Canada raised interest rates for the first time in nearly seven years.
AUD/USD is supported around 0.7930 levels and currently trading at 0.7965 levels. It hit session high at 0.7997 and made session lows at 0.7960 levels. The Australian dollar declined y against US dollar on Tuesday as the Australian dollar was weighted down by fall in oil prices and dovish comments Reserve Bank of Australia which cautioned that Aussie dollar strength could harm the economy. The Aussie dollar declined to trade at $0.7965, from $0.7997 early, having touched $0.8066 touched last week. The Reserve Bank of Australia (RBA) left interest rates at 1.5 percent at its August policy meeting, as widely expected, but ratcheted up its disapproval against the higher currency. The Aussie has climbed about 8 percent in the past two months, threatening economic growth and employment. Previously, the central bank had merely said that a rising dollar would complicate the economic outlook. Yet the RBA has also played down any chance of a cut in interest rates to curb the dollar, in large part for fear of inflating a debt-driven bubble in the housing market. Data out on Tuesday showed home prices surged in July as double-digit annual growth in Melbourne and Sydney belied efforts by regulators to tame the market.
Equities Recap
European shares rose on Tuesday, looking to recover after two straight months of losses, with corporate earnings reports spurring brisk trading ahead of a is typically a sleepy summer period for markets.
UK's benchmark FTSE 100 closed up by 0.7 percent, FTSEurofirst 300 ended the day up by 0.65 percent, Germany's Dax ended up by 1.1 percent, France’s CAC finished the day up by 0.7 percent.
The Dow Jones Industrial Average racked up a fifth straight record high on Tuesday and neared the 22,000 mark, powered by Goldman Sachs, JPMorgan Chase and other banks.
Dow Jones closed up by 0.32 percent, S&P 500 ended up 0.24 percent, Nasdaq finished the day up by 0.22 percent.
Treasuries Recap
U.S. Treasury yields fell on Tuesday as weak auto sales raised concerns about slow economic growth, before Friday’s highly anticipated employment report for July.
Benchmark 10-year notes rose 10/32 in price to yield 2.26 percent, down from 2.29 percent late on Monday.
Commodities Recap
Gold prices rose to a seven-week high on Tuesday, after U.S. economic data showed lukewarm inflation and nearly flat consumer spending, raising the question of whether the Federal Reserve will raise interest rates in the coming months.
Spot gold rose 0.3 percent to $1,273.26 an ounce by 1:49 p.m. EDT (1749 GMT), after rising to $1,273.97, the highest since June 14. It rose 2.2 percent last month, its biggest monthly gain since February. U.S. gold futures for August settled up 0.5 percent at $1,279.40.
Oil dropped about 2 percent from a two-month high on Tuesday as major world oil producers kept pumping out supply, causing investors to worry that several weeks of steady gains had pushed the rally too far, too fast.
Brent crude, the international benchmark, settled down 94 cents, or 1.8 percent, to $51.78 a barrel, while U.S. crude ended down $1.01, or 2 percent, to $49.16 a barrel.
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