Market Roundup
• Germany WPI (MoM) (Jun) -0.7%, 0.5% forecast, -0.6% previous
•Swiss PPI (MoM) (Jun) -0.3%, -0.5% forecast, -0.4% previous
•Swiss PPI (YoY) (Jun) -2.1%, -1.8% previous
•US NFIB Small Business Optimism (Jun) 97.4, 95.8 forecast, 95.3 previous
•US ADP Employment Change Weekly 19.80K, 21.00K previous
•US CPI (MoM) (Jun) -0.4%, -0.1% forecast, 0.5% previous
•US Core CPI (MoM) (Jun) 0.0%, 0.2% forecast, 0.2% previous
•US CPI (YoY) (Jun) 3.5%, 3.8% forecast, 4.2% previous
•US Core CPI (YoY) (Jun) 2.6%, 2.8% forecast, 2.9% previous
•US CPI Index, n.s.a. (Jun) 333.95, 334.70 forecast, 335.12 previous
•US CPI, n.s.a (MoM) (Jun) -0.35%, 0.63% previous
•US Core CPI Index (Jun) 336.07, 336.12 previous
•US CPI Index, s.a (Jun) 332.57, 333.98 previous
•US Real Earnings (MoM) (Jun) 0.8%, -0.2% previous
•US Redbook (YoY) 8.2%, 11.5% previous
Looking Ahead Economic Data (GMT)
• 21:00 US TIC Net Long-Term Transactions (May) 128.5B forecast, 103.1B previous
• 21:00 US TIC Net Long-Term Transactions including Swaps (May)103.10B previous
•21:00 US Foreign Buying, T-bonds (May) 50.50B previous
•21:00 US Overall Net Capital Flow (May) 26.10B previous
•21:30 US API Weekly Crude Oil Stock -2.700M forecast, -0.399M previous
Looking Ahead Events And Other Releases (GMT)
• 17:40 US Fed Vice Chair for Supervision Barr Speaks
•18:00 US Fed Goolsbee Speaks
•18:30 US Fed Governor Cook Speaks
•19:55 US FOMC Member Bowman Speaks
•21:00 UK BoE Gov Bailey Speaks
Currency Forecast
EUR/USD : The euro rose higher against dollar on Tuesday after U.S. consumer inflation slowed more than expected in June, ruling out an interest rate increase from the Federal Reserve this year. The data showed that the consumer price index rose 3.5% in June from a year earlier, below Reuters-polled economists' forecast of 3.8%.Following the report, traders sharply pared back expectations for near-term policy tightening, with a 15% chance of a quarter-point rate increase at the Fed's upcoming meeting, down from 35% before the data. . Fed Chairman Kevin Warsh is scheduled to begintwo days of testimony in Congress later Tuesday. He will tell lawmakers on the U.S. House of Representatives Financial Services Committee in his first hearing that the central bank has "no tolerance" for persistently elevated inflation, according to his prepared remarks. Immediate resistance can be seen at 1.1475(SMA 20), an upside break can trigger rise towards 1.1495(50%fib).On the downside, immediate support is seen at 1.1368(38.2%fib), a break below could take the pair towards 1.1291(Lower BB).
GBP/USD: The pound rose higher against the U.S. dollar on Tuesday after softer-than-expected U.S. inflation data strengthened expectations that the Federal Reserve could adopt a less hawkish stance on interest rates.The Consumer Price Index increased by a still-high 3.5% in the 12 months through June after surging 4.2% in May, the report from the U.S. Bureau of Labor Statistics showed.Excluding food and energy, the so-called core CPI increased 2.6% on a year-on-year basis in June after rising 2.9% in May. Compared to the prior month, the core CPI, which analysts see as a guide to underlying inflation pressures, was unchanged.The benign readings may help assuage worries at the Fed that high oil prices from months of conflict in the Middle East are accelerating inflation in a more persistent manner, requiring a response from the U.S. central bank.Immediate resistance can be seen at 1.3444(Daily high), an upside break can trigger rise towards 1.3485(50%fib).On the downside, immediate support is seen at 1.3343(38.2%fib), a break below could take the pair towards1.3296(SMA 20).
AUD/USD: The Australian dollar strengthened on Tuesday after softer-than-expected U.S. inflation data fueled expectations that the Federal Reserve may adopt a less hawkish policy stance.U.S. consumer inflation eased more than expected in June, with the annual Consumer Price Index (CPI) slowing to 3.5% from 4.2% in May. Monthly headline CPI fell 0.4%, while core CPI was unchanged after rising 0.2% in May. Following the data, traders scaled back expectations of a Federal Reserve rate hike at the July 28-29 meeting.Markets are now focused on Federal Reserve Chair Kevin Warsh's semi-annual monetary policy testimony before Congress later on Tuesday for further guidance on the interest rate outlook.Investors will also closely watch U.S. Producer Price Index (PPI) data due on Wednesday for additional clues on inflation and the Fed's policy path. Immediate resistance can be seen at 0.6952 (SMA 20), an upside break can trigger rise towards 0.7000(Psychological level).On the downside, immediate support is seen at 0.6875(23.6%fib), a break below could take the pair towards 0.6811(Lower BB).
USD/JPY: The U.S. dollar dipped against the yen on Tuesday after softer-than-expected inflation data fueled bets that the Federal Reserve could take a less hawkish stance on interest rates.The Labor Department data showed that the consumer price index rose 3.5% in June from a year earlier, below Reuters-polled economists' forecast of 3.8%. On a monthly basis, CPI fell 0.4%, compared with expectations for a 0.1% decline.Following the report, traders sharply pared back expectations for near-term policy tightening. They see about a 15% chance of a quarter-point rate increase at the Fed's upcoming meeting, down from 35% before the data.Fed Chair Kevin Warsh is scheduled to deliver the central bank's semi-annual monetary policy report to Congress at 10 a.m. ET.. Immediate resistance can be seen at 162.73(23.6%fib) an upside break can trigger rise towards 163.00(Psychological level) .On the downside, immediate support is seen at 160.81(38.2%fib) a break below could take the pair towards 159.58(50%fib).
Equities Recap
European shares hovered near one-week lows on Tuesday as escalating U.S.-Iran tensions weighed on investor sentiment, while markets assessed earnings from companies including BP and Ericsson for signs of the conflict's impact on corporate performance.
UK's benchmark FTSE 100 was up by 0.23 percent, Germany's Dax was up by 0.21 percent, France’s CAC was up by 0.07percent.
Commodities Recap
Gold gained more than 2% on Tuesday after softer-than-expected U.S. inflation data boosted expectations that the Federal Reserve could adopt a less hawkish stance on interest rate.
Spot gold rose 2.1% to $4,083.99 per ounce by 8:49 a.m. EDT (1249 GMT), after falling to its lowest level since July 1 earlier in the session.U.S. gold futures gained 2.2% to $4,091.80.
Oil prices rose to a four-week high on Tuesday after the U.S. reinstated its naval blockade on Iran, with renewed attacks between Washington and Tehran heightening concerns over energy supplies through the Strait of Hormuz.
Brent crude futures were up $2.89, or 3.47%, at $86.19 per barrel at 1158 GMT, while U.S. West Texas Intermediate crude rose $1.53, or 1.96%, to $79.67 a barrel.
