Market Roundup
• Automakers to warn Trump of $45 bln higher vehicle costs if tariff imposed.
• Trump says finishing U.S. study on tariffs on cars from EU.
• Trade tensions emerging at a "frustrating moment" - IMF's Lagarde.
• Fed's Kaplan says China is real threat on trade.
• Chevron, Exxon CEOs worry global trade conflict could harm economy.
• New U.S. tax cuts would worsen federal fiscal picture – CBO.
• U.S. Jun Consumer Confidence, 126.4, 128.0 forecast, 128.0 previous.
• U.S. Apr CaseShiller 20 MM SA, 0.2%, 0.4% forecast, 0.5% previous.
• U.S. Apr CaseShiller 20 MM NSA, 0.8%, 1.0% previous.
• U.S. Apr CaseShiller 20 YY, 6.6%, 6.8% forecast, 6.8%previous.
• U.S. Jun Rich Fed Comp. Index, 20, 16 previous.
• U.S. Jun Redbook YY, 3.1%, 4.7% previous.
• New BoE rate-setter Haskel strikes cautious note, sterling falls.
• Euro zone's solid growth will lift inflation: ECB's de Guindos.
Looking Ahead - Economic Data (GMT)
• 27 Jun 01:00 New Zealand Jun NBNZ Business Outlook, -27.2% previous
• 27 Jun 01:00 New Zealand Jun NBNZ Own Activity, 13.6% previous
• 27 Jun 21:00 New Zealand Jun Cash Rate, 1.75% forecast, 1.75% previous
Looking Ahead - Events, Other Releases (GMT)
• 08:00 The European Central Bank releases monthly data on lending and money supply in Frankfurt
• 09:30 Bank of England Financial Stability Report June 2018 in London
• 15:00 Fed's Randal Quarles speaks on "International Regulatory Participation and Cooperation" before the Utah Bankers Association 110th Annual Convention in Sun Valley, Ohio
• 16:30 Fed's Eric Rosengren gives lecture, "Ethics and Economics: Is the Economy Too Sensitive to Economic Downturns?" at an event hosted by the Peterson Institute for International Economics, in Washington
• 19:15 Speech by Bank of Canada Governor Stephen Poloz at Greater Victoria Chamber of Commerce
• 21:00 Reserve Bank of New Zealand announces Official Cash Rate in Wellington
• N/A A roundtable with Javier Guzman, deputy governor and member of the board of governors at the Banco de Mexico in London
• N/A ECB Governing Council meeting. No interest rate announcements scheduled in Frankfurt
Currency Summaries
EUR/USD is supported at 1.1600 levels and currently trading at 1.1636 levels. The pair has made session high at 1.1677 hit lows at 1.1633 levels. The euro declined against US dollar on Tuesday as concerns about a trade conflict between the United States and China pushed markets to unwind their bets in high-yielding currencies. U.S. and European stock markets steadied on Tuesday, a day after tumbling on conflicting signals from the Trump administration over proposed restrictions on foreign investment in U.S. technology companies, along with news that recently imposed import tariffs are starting to disrupt supply chains. China was in bear market territory. The dollar benefited from concerns about a global trade war, particularly against trade-sensitive currencies like the Canadian dollar, the South African rand and the Australian dollar. The dollar index , which measures the greenback against a basket of six currencies, was up 0.49 percent at 94.74, on pace to snap a four-day losing streak. The euro fell 0.46 percent at $1.1636. The greenback which fell 0.2 percent against the safe-haven Japanese yen on Monday, recouped losses to trade up 0.33 on Tuesday.
GBP/USD is supported in the range of 1.3144 levels and currently trading at 1.3215 levels. It reached session high at 1.3255 and dropped to session low at 1.3189 levels. Britain's pound declined sharply against the dollar on Tuesday after an incoming Bank of England policymaker expressed caution over Britain's readiness for higher interest rates and uncertainty over the impact of Brexit on the economy. Sterling fell as much as half a percent as economics professor John Haskel, whose views are relatively unknown and who replaces a policymaker who has called for higher interest rates, spoke to the British parliament's Treasury Select Committee. Sterling had enjoyed a bounce off 7-month lows after a Bank of England meeting last week raised expectations of a rate rise in the coming months. But the rally has proved short-lived. The pound fell to $1.3208, still above the 7-month low of $1.3102 plumbed last week, before settling at $1.3215, down 0.4 percent on the day. The pound had been one of the best-performing currencies in 2018, but weak economic data and a surge in the dollar have erased all of its gains for this year. It is headed for its weakest quarter since that of the Brexit referendum in 2016.
USD/CAD is supported at 1.3259 levels and is trading at 1.3310 levels. It has made session high at 1.3328 and lows at 1.3281 levels. The Canadian dollar steadied against its U.S. counterpart on Tuesday as equity markets grew calmer after they had been buffeted on Monday by rising trade tensions, and investors braced for an upcoming speech by Canada's central bank governor. Bank of Canada Governor Stephen Poloz will give a speech and press conference on Wednesday in Victoria, British Columbia. Markets will be watching for any hints as to whether the central bank will raise interest rates at its upcoming meeting in July. Modest gains from Europe's main bourses relieved nervy investors, after the latest escalation in an increasingly global trade storm pummeled Wall Street and sent Chinese stocks into 'bear' market territory. Canada exports many commodities and runs a current account deficit so its economy could be hurt if the flow of trade or capital slows. Oil prices, meanwhile, soared after a U.S. government official said Washington was pushing its allies to halt imports of Iranian crude. The Canadian dollar was last trading near flat at C$1.3310.The currency traded in a range between C$1.3281 and C$1.3329. On Friday, it touched its weakest level in a year at C$1.3384.
USD/JPY is supported around 109.32 levels and currently trading at 110.13 levels. It peaked to hit session high at 110.20 and made session lows at 109.65 levels. The dollar strengthened against the Japanese yen on Tuesday as concerns lingered that trade wars could harm economic growth, but safety buying was capped by expectations that the Federal Reserve will continue to raise interest rates. Trade war fears were stoked by reports that the Treasury was drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. companies with "industrially significant technology. U.S. Treasury Secretary Steven Mnuchin said on Monday that investment restrictions will not be specific to China. However, White House trade and manufacturing adviser Peter Navarro sought to downplay Mnuchin's remarks, telling CNBC television that any restrictions would just target China. The dollar rose against basket of six currencies as the escalating concerns of a trade conflict between the world's two biggest economies pushed markets to unwind their bets in high-yielding currencies. The dollar index rose 0.42 percent. The Japanese yen weakened 0.33 percent versus the greenback at 110.08 per dollar.
Equities Recap
It was a choppy session for European shares on Tuesday, which initially saw a modest bounce after trade tensions triggered losses the previous day, but ran out of steam to close flat.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.22 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day up by 0.2 percent.
U.S. stocks rose on Tuesday as gains in the technology and energy sectors helped Wall Street recover from a sharp sell-off a day earlier on spiraling global trade tensions.
Dow Jones closed up by 0.12 percent, S&P 500 ended up by 0.22 percent, Nasdaq finished the day up by 0.40 percent.
Treasuries Recap
U.S. Treasury yields edged higher on Tuesday as concerns lingered that trade wars could harm economic growth, but safety buying was capped by expectations the Federal Reserve will continue to raise interest rates.
Benchmark 10-year notes fell 3/32 in price on the day to yield 2.884 percent, up from 2.875 percent late on Monday. The yield curve between two-year and 10-year notes was little changed on the day at 34 basis points, just above the low of 33 basis points on Monday, which was the flattest level since 2007.
Commodities Recap
Gold hit its lowest in over six months on Tuesday as a selloff in global risk assets eased and the precious metal remained under pressure from the prospect that rising U.S. interest rates will further support the dollar.
Spot gold dropped 0.6 percent at $1,257.53 per ounce by 1:34 p.m. EDT (1734 GMT), having hit its weakest since mid-December at $1,254.16.
U.S. gold futures for August delivery settled down $9, or 0.7 percent, at $1,259.90 per ounce.
Benchmark oil prices jumped over 2 percent on Tuesday and U.S. crude topped $70 for the first time in two months, as Washington pushed allies to halt imports of Iranian crude.
Brent crude gained $1.30 to trade at $76.03 a barrel by 2:17 p.m. EDT (1817 GMT). U.S. light crude rose $2.08 to $70.16.
