Market Roundup
•US Exports (Aug) 271.80B 266.60B previous
•US Imports (Aug) 342.20B 345.40B previous
•US Trade Balance (Aug) -70.40B -70.10B -78.90B previous
•Canada Exports (Aug) 64.31B 64.94B previous
• Canada Trade Balance (Aug) -1.10B -0.40B forecast, -0.29B previous
•US Redbook (YoY) 5.4% 5.3% previous
•US IBD/TIPP Economic Optimism (Oct) 46.9 47.2 forecast,46.1 previous
•US Atlanta Fed GDPNow (Q3) 3.2% 2.5% forecast,2.5% previous
Looking Ahead Economic Data(GMT)
•No Data Ahead
Looking Ahead Events And Other Releases(GMT)
• RBNZ Interest Rate Decision 4.75% forecast, 5.25% previous
Currency Forecast
EUR/USD: The euro strengthened on Tuesday as investors assessed the outlook for U.S. rate cuts. Traders have drastically shifted their expectations of monetary easing from the U.S. Federal Reserve this year. A strong jobs report last week gave credence to Fed Chair Jerome Powell's comments that the central bank would stick to its usual quarter-percentage-point rate reductions after it began its easing cycle with a big cut in September. Markets are no longer fully pricing in a rate cut in November and are ascribing around a 90% chance of a 25-basis-point reduction, the CME FedWatch tool showed. The euro inched 0.1% higher to $1.098575, not far from the seven-week low of $1.09515 hit last week. Immediate resistance can be seen at 1.1005(38.2%fib), an upside break can trigger rise towards 1.1053(50%fib).On the downside, immediate support is seen at 1.0944(23.6%fib), a break below could take the pair towards 1.0920 (Lower BB).
GBP/USD: The British steadied against the dollar on Tuesday as investors assessed geopolitical risks in the Middle East and the next steps in the Bank of England's easing cycle. The pound firmed to $1.30945 , about 2.5% below its more than two-and-a-half year peak in late-September when speculation about a slower easing cycle from the BoE boosted its appeal versus most major currency pairs. Later in the month, investors will look to the first tax-and-spending budget statement on Oct. 30 from the new Labour government of Prime Minister Keir Starmer. Immediate resistance can be seen at 1.3127(38.2%fib), an upside break can trigger rise towards 1.3188(50%fib).On the downside, immediate support is seen at 1.3064(23.6%fib), a break below could take the pair towards 1.3000(Psychological level).
USD/CAD: The Canadian dollar weakened to a seven-week low against its U.S. counterpart on Tuesday as the price of oil fell 4% and investors reassessed the outlook for Federal Reserve interest rate cuts. The price of oil fell to $74.02 a barrel, giving back some recent gains, as fears of supply interruptions from the conflict between Israel and Iran and a massive Gulf of Mexico hurricane eased.Oil is one of Canada's major exports, which declined in August, contributing to a widening in the trade deficit to C$1.1 billion ($806 million). Analysts had forecast a C$500 million deficit.The loonie was trading 0.4% lower at 1.3665 to the U.S. dollar, after touching its weakest intraday level since Aug. 19 at 1.3675.. Immediate resistance can be seen at 1.3677 (23.6%fib), an upside break can trigger rise towards 1.3741 (Aug 14th high).On the downside, immediate support is seen at 1.3640 (38.2%fib), a break below could take the pair towards 1.3604(50%fib).
USD/JPY: The dollar initially fell against the yen on Tuesday, but recovered as investors focused on escalating conflict in the Middle East and expected US inflation statistics. This week, investors will be focused on the inflation report due on Thursday and the Fed's September meeting minutes, which will be issued on Wednesday.On the statistical front, real incomes in Japan, the world's fourth-largest economy, fell 0.6% in August compared to the same month last year. The pair dropped 0.02% to 148.15, having recovered from a day low of 147.65. Strong resistance can be seen at 148.24(Daily high), an upside break can trigger rise towards 149.18(23.6 %fib). On the downside, immediate support is seen at 147.61(38.2 %fib), a break below could take the pair towards 147.00(Psychological level).
Equities Recap
European stocks settled lower on Tuesday, as a lack of fresh details over China's stimulus measures sparked a selloff in sectors linked to the world's second-largest economy such as mining and luxury.
UK's benchmark FTSE 100 closed up by 1.36 percent, Germany's Dax ended down by 0.20 percent, France’s CAC finished the day up by 0.72 percent.
Wall Street's benchmarks finished up on Tuesday, recouping some of the previous session's losses, as investors bought back in to technology stocks and investors shifted their focus to upcoming inflation data and the start of third-quarter earnings season.
Dow Jones closed up by 0.30% percent, S&P 500 closed up by 0.97% percent, Nasdaq settled up by 1.45% percent.
Commodities Recap
Gold prices fell over 1% on Tuesday and were on track for their biggest drop on a percentage basis in 1-1/2 months as recent U.S. employment data lowered expectations for a bigger rate cut, while markets awaited minutes of the U.S. Federal Reserve's latest policy meeting for fresh signals.
Spot gold fell 1.1% to $2,614.49 per ounce by 1:59 p.m. ET (1759 GMT), falling for the fifth-straight session and moving further from the Sept. 26 record peak of $2,685.42.U.S. gold futures settled 1.1% lower at $2,635.40.
