Market Roundup
• BoE's Saunders says would not be surprised if sterling fell further.
• Euro area economic resilience depends on easy ECB policy, Mersch says.
• Fed's Kashkari says sees no urgency in raising rates.
• Peso slump has increased risks for Mexican inflation-deputy governor.
• Norway's deputy central bank governor Nicolaisen sees rates on hold.
• OPEC chief says freeze deal likely to last six months, then be reviewed.
• Trump steps up attacks on U.S. House speaker, says "shackles" are off.
• Brazil's lower house scraps vote on asset amnesty program.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia Consumer Sentiment Oct 0.30% -previous
• 23:50 Japan Machinery Orders MM Aug -5.50% forecast, 4.90% - previous
• 23:50 Japan Machinery Orders YY Aug 6.50% forecast 5.20% - previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of Japan board member Yutaka Harada speech and news conference at Nagano
Currency Summaries
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1054 levels. The pair has made session high at 1.1099 and hit lows at 1.1048 levels. The euro declined against dollar on Tuesday as investors increased bets the Federal Reserve would raise interest rates in December following a round of recent upbeat U.S. economic data over the last few weeks. In the United States, investors are looking to Wednesday's minutes from the Fed's policy-setting meeting in September for signs of a December rate hike. Expectations that U.S. rates will rise in December have been growing ahead of Wednesday's release of the minutes from the Fed's September policy meeting. Higher U.S. rates could drive capital away from European markets, though markets generally believe any further increases will be slow. In mid-morning trading, the dollar index which measures the greenback against six major peers jumped 0.5 percent to 97.450, after hitting its highest since late July. The euro fell to a more than two-month low against the dollar, and was last down 0.6 percent at $1.1077.
GBP/USD is supported in the range of 1.2086 and currently trading at 1.2128 levels. It reached session high at 1.2327 and hit low at 1.2086 levels. British pound declined against dollar on Tuesday as pound continued its downward slope following a "flash crash" last Friday, with investors concerned about the impact of a "hard exit" by Britain from the European Union. Over the past week, the British pound has lost more than 4 percent of its value against the dollar. The past four days were the pound's worst since the aftermath of the vote to leave the European Union in June, and Bank of England policymaker Michael Saunders warned a "bumpy" Brexit could sharply reduce British economic growth. The pound traded as low as $1.2126, down 1.4 percent on the day, and also traded weaker against the euro at 90.66 pence. All of that dragged trade-weighted sterling index to its lowest since early 2009, data from the BoE showed.
USD/CAD is supported at 1.3180 levels and is trading at 1.3253 levels. It has made session high at 1.3273 and lows at 1.3185 levels. The Canadian dollar weakened against its U.S. counterpart on Tuesday as the greenback firmed across the board and oil prices slightly declined from yesterday’s highs. Losses for the loonie came one day after its biggest rally since June as oil surged and doubts grew over Republican presidential candidate Donald Trump's prospects to win the White House in the Nov. 8 election. Trump has said he would renegotiate or scrap the North American Free Trade Agreement if he is elected. On the data front, Canadian housing starts surged in September compared with August, the national housing agency reported on Tuesday. The seasonally adjusted annualized rate of housing starts rose to 220,617 units from a 184,201-unit rate in August. The Canadian dollar was last trading at C$1.3256 to the greenback, weaker than Monday's close of C$1.3175.
AUD/USD is supported around 0.7528 levels and currently trading at 0.7539 levels. It hit session high at 0.7562 and made session lows at 0.7533 levels. Australian dollar edged lower against US dollar on Tuesday as the pair was weighted down on expectations that Federal Reserve will hike interest rate as early as December. Chicago Fed President Charles Evans said in Sydney he "could be fine" with raising rates in December, but would first like to see how the economy and inflation progressed. The Australian dollar hit a three-week low of $0.7535, as its U.S. counterpart strengthened on expectations of an interest rate hike by the Federal Reserve as early as December. Meanwhile, investors awaited Wednesday's release of minutes of the latest Federal Reserve Open Market Committee meeting to see how close the central bank came last month to hiking rates.
Equities Recap
European shares closed slightly lower on Tuesday, weighed down by weaker commodity stocks, while shares of major luxury goods companies rose after strong figures from LVMH.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day down by 0.65 percent, Germany's Dax ended down by 0.5 percent, France’s CAC finished the day down by 0.6 percent.
U.S. stocks tumbled on Tuesday, with the S&P 500 and the Nasdaq on track for their worst day in one month, after Alcoa kicked off the earnings season on a dour note.
Dow Jones closed down by 1.08 percent, S&P 500 ended up by 1.24 percent, Nasdaq finished the day up by 1.53 percent.
Treasuries Recap
U.S. Treasury yields rose to a four-month high on Tuesday in technical trading that squared the market with a fall in Treasury futures prices the day before when the cash market for bonds was closed for the Columbus Day holiday.
Yields fell from their highs as stocks trudged lower on Tuesday with benchmark 10-year Treasury notes last down 5/32 in price to yield 1.75 percent.
The 30-year Treasury bond was last down 14/32 in price to yield 2.49 percent. The bond had previously seen yields rise to 2.51 percent, the highest since June 24, the day after Britain's surprise vote to exit the European Union.
Commodities Recap
Gold prices fell on Tuesday as the dollar strengthened on increasing bets that the Federal Reserve will raise U.S. interest rates in December.
Spot gold had dropped 0.3 percent at $1,255.7 an ounce by 1:47 p.m. EDT (1747 GMT), while U.S. gold futures settled down 0.4 percent at $1,255.9 per ounce.
Oil prices on Tuesday retreated from one-year highs after OPEC said it was trying to reach a global agreement to cap production for at least six months amid doubts about how much that would reduce a crude glut.
Brent crude settled down 73 cents, or 1.4 percent, at $52.41 a barrel, retreating from a one-year high of $53.73 hit on Monday.
U.S. West Texas Intermediate (WTI) crude fell 56 cents, or 1 percent, to settle at $50.79.
