Market Roundup
- NY Fed's Empire State Idx -16.64vs forecast -10, employment & prices paid rise, Mfg remains weak.
- Canada's factory sales rise more than expected in December, helped by weak CAD.
- NZ's Fonterra: Dairy prices fall (2.8%), volumes drop at auction.
- Fed's Harker: might be prudent to wait for inflation rise before 2nd rate hike.
- Fed's Harker: upbeat on US econ despite market risks wants to move rates above 1% before shrinking bond portfolio.
- Fed's Kashkari: Fed carefully watching financial markets, does not expect negative rates, congress should consider breaking up big banks.
- Iran oil minister says Tehran won't give up its market share.
- US firms face record maturities in next five years: Moody's.
- Brazil December retail sales plunge worst in over a decade.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Machinery Orders MM Dec* forecast 4.7%, -14.4%-previous
- 23:50 JP Machinery Orders YY Dec forecast -3.1%, 1.2%-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1098 levels and currently trading at 1.1140 levels. The pair has made session high at 1.192 and hit lows at 1.4704 levels. The dollar rose against euro on Tuesday as an agreement between the world's top oil producers increased investors' appetite for riskier assets. The dollar also benefited from higher U.S. stock markets and leftover optimism from Friday's positive gains. The S&P 500 rose more than 0.8 percent in early trading Tuesday after gaining nearly 2 percent on Friday. The dollar did, however, rise against other major currencies, including to a two-week high against the British pound. Poor manufacturing numbers battered sterling on Tuesday, and the currency has struggled so far in 2016 because of worries that Great Britain might leave the euro zone. Meanwhile The German economic index worsened in February for the second consecutive month on concerns about the global economy and uncertainty over falling oil prices. German ZEW Economic Sentiment index fell to 1.0 points in February from January's 10.2 against the forecast for a reading of 0.0.
GBP/USD is supported in the range of 1.4221 and currently trading at 1.4285 levels. It reached session high at 1.1358 and hit low at 1.4275 levels. Sterling declined sharply against dollar on Tuesday, as appetite for riskier assets waned and worries about Britain's future in the European Union intensified, overshadowing data that showed British annual inflation edging up to a 12-month high last month. Pound fell to $1.4278, having traded at around $1.4495 just before the inflation data which was released at 0930 GMT. It was down 1 percent on the day. The pound also fell sharply against the euro. The euro was up 1 percent at 78 pence, having traded at 77.085 pence before the data was released. UK markets are facing a key week ahead of two-day summit starting on Thursday at which Prime Minister David Cameron will try convince other leaders to pledge their support for a deal to keep Britain in the European Union.
NZD/USD is supported around 0. 6544 levels and currently trading at 0. 6576. It hit session high at 0. 6581 and made session lows at 0.6542 levels. The New Zealand dollar slipped lower against dollar on Tuesday after inflation expectations in the country printed one of lowest figures, putting pressure on policy makers for further cuts in interest rates. The kiwi dollar slipped half a U.S. cent to $0.6617 in a matter of minutes and bill futures rallied as the market narrowed the odds on an easing as early as March. A Reserve Bank of New Zealand quarterly survey on the economic outlook showed respondents expected inflation to slow to just 1.09 percent on a one-year horizon. That was down from 1.51 percent three months ago and the lowest result since the survey began in 1987. The outlook for inflation on a two-year horizon also slowed sharply to 1.63 percent, the lowest since 1994.
USD/CAD is supported at 1.3772 levels and is trading at 1.3890 levels. It has made session high at 1.3912 and lows at 1.3707 levels. The Canadian dollar decline sharply against its U.S. counterpart on Tuesday, as gains in global oil prices and higher-than-expected factory sales weakened the loonie.The recent rally in crude oil prices reversed course after Saudi Arabia and Russia agreed to freeze, but not cut, oil output. Meanwhile, Canadian factory sales rose to 1.2 percent higher in December from November on stronger showing by motor vehicles and wood products, data from Statistics Canada showed on Tuesday. Meanwhile, Canadian government bond prices were mixed across the maturity curve, with the two-year price down 0.5 Canadian cent to yield 0.439 percent and the benchmark 10-year rising 16 Canadian cents to yield 1.117 percent. The currency touched its strongest level of the session at C$1.3707, while its weakest level was C$1.3912.
Equities Recap
European shares fell on Tuesday after two sessions of strong gains, with disappointment over a deal to tackle a global oil supply glut dampening sentiment.
UK's benchmark FTSE 100 closed up by 0.58 percent, the pan-European FTSEurofirst 300 ended the day down by 0.58 percent, Germany's Dax ended u down by 1.0 percent, France's CAC finished the day own by 0.24 percent.
Wall Street was higher on Tuesday, extending a rally from Friday, as investors went bargain hunting among beaten-down consumer discretionary, industrial and financial stocks.
Dow Jones closed up by 1.36 percent, S&P 500 ended up by 1.63 percent, Nasdaq finished the day up by 2.24 percent.
Treasuries Recap
U.S. Treasury debt prices fell on Tuesday as a rally in Wall Street stocks and competing corporate bond supply led by Apple trimmed safe-haven demand for bonds, lifting benchmark yields further from their near 3-1/2-year lows set last week.
The 10-year yield fell to 1.53 percent, its lowest since September 2012, while the 30-year bond yield hit 2.38 percent, its lowest in a year.
The 30-year bond last traded 24/32 lower in price, yielding 2.641 percent, up 4 basis points from Friday
Commodities Recap
Gold fell for the third straight session on Tuesday, as global equity markets and the U.S. dollar rose, putting pressure on gold as a safe-haven asset and taking it further below last week's one-year high.Spot gold was down 0.5 percent at $1,203.26 an ounce at 3:05 p.m. EST (2005 GMT). This follows a steep drop of 2.3 percent on Monday.
U.S. gold futures for April delivery settled down 2.5 percent from where they stood late on Friday at $1,208.20. Most U.S. gold trading was closed on oil fell almost 4 percent on Tuesday, erasing early gains after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output if other big exporters joined them.
Brent settled down $1.21 at $32.18 a barrel, after rising earlier to $35.55.U.S. crude settled down 40 cents at $29.04, off the day's high of $31.53.
