Market Roundup
•EU ZEW Economic Sentiment (Sep) 9.3, 16.3 forecast, 17.9 previous
• German ZEW Current Conditions (Sep) -84.5,-77.3 previous
•German ZEW Economic Sentiment (Sep) 3.6, 17.1 forecast, 19.2 previous
Looking Ahead Economic Data(GMT)
•12:30 US Core Retail Sales (MoM) (Aug) 0.2% forecast, 0.4% previous
•12:30 US Retail Control (MoM) (Aug) 0.3% previous
•12:30 US Retail Sales (YoY) (Aug) 2.66% previous
•12:30 US Retail Sales (MoM) (Aug) -0.2% forecast ,1.0% previous
•12:30 US Retail Sales Ex Gas/Autos (MoM) (Aug) 0.3% forecast, 0.4% previous
•12:30 Canada Common CPI (YoY) (Aug) 2.2% forecast,2.2% previous
•12:30 Canada Core CPI (MoM) (Aug 0.3% previous
•12:30 Canada Core CPI (YoY) (Aug) 1.7% previous
•12:30 Canada CPI (YoY) (Aug) 2.5% previous
•12:30 Canada CPI (MoM) (Aug) 0.0% forecast ,0.4% previous
•12:30 Canada Median CPI (YoY) (Aug) 2.2% forecast, 2.4% previous
•12:30 Canada Trimmed CPI (YoY) (Aug) 2.5% forecast ,2.7% previous
•12:55 US Redbook (YoY) 6.5% previous
•13:15 USD Capacity Utilization Rate (Aug) 77.9% forecast, 77.8% previous
•13:15 USD Industrial Production (MoM) (Aug) 0.2% forecast, -0.6% previous
•13:15 USD Industrial Production (YoY) (Aug) , -0.18% previous
•13:15 USD Manufacturing Production (MoM) (Aug) -0.3% previous
•14:00 USD Business Inventories (MoM) (Jul) 0.3% forecast, 0.3% previous
•14:00 USD NAHB Housing Market Index (Sep) 41 forecast ,39 previous
Looking Ahead Events And Other Releases(GMT)
•13:00 EU ECB's Elderson Speaks
•14:00 USD Fed Logan Speaks
Currency Forecast
EUR/USD: The euro was little changed against the dollar on Tuesday as focus shifted to U.S. Federal Reserve, which is widely expected to kick off its policy easing cycle this week. All eyes will be on the U.S. central bank's interest rate decision on Wednesday, with money markets pencilling in a 61% chance of a 50-basis-point rate cut, and a total easing of 120 bps in 2024. On the data front,German investor morale darkened more than expected in September, the ZEW economic research institute said on Tuesday, as the assessment of the economic situation continued its downward trend.The economic sentiment index fell to 3.6 points from 19.2 points in August. Analysts polled had pointed to a reading of 17.0. Immediate resistance is noted at 1.1142 (23.6%fib), with a breakout potentially pushing the pair towards 1.1191 (Higher BB). On the downside, immediate support is at 1.1075 (Sep 16th low), a drop below this level could lead the pair towards 1.1000 (Psychological level).
GBP/USD: The British pound gained against the dollar on Tuesday as attention turned to this week's UK inflation data and the central bank meeting. All attention will turn towards the U.S. Federal Reserve this week where they are expected to announce at least a 25-basis-point cut to interest rates at the conclusion of its September policy meeting on Wednesday. Markets are currently pricing in an 62% probability of a 50-bp easing at the conclusion of the two-day meeting, against 43% on Friday. The odds have narrowed sharply after media reports revived the prospect of a more aggressive easing.UK Inflation data, due for release on Wednesday, will be crucial ahead of the BoE's policy decision. Immediate resistance can be seen at 1.3220(23.6%fib), an upside break can trigger rise towards 1.3256(Higher BB).On the downside, immediate support is seen at 1.3121(38.2%fib), a break below could take the pair towards 1.3033(61.8%fib).
AUD/USD: The Australian dollar hovered around on Tuesday as investors were cautious ahead of start of the Federal Reserve's easing cycle that could see policymakers deliver an outsized rate cut. Weaker dollar, stronger commodities prices has lifted Australian currency recently as Australia is a net exporter of major commodities. Looking ahead, Australia will release its August jobs data on Thursday where analysts forecast a moderate rise of 25,500 and a steady unemployment rate of 4.2%.Any increase in the jobless rate would narrow the odds on a November rate cut. Immediate resistance can be seen at 0.6766(23.6%fib), an upside break can trigger rise towards 0.6823(Aug 29th high).On the downside, immediate support is seen at 0.6697(38.2%fib), a break below could take the pair towards 0.6639(50%fib).
NZD/USD: The New Zealand dollar eased slightly against the U.S. dollar on Tuesday as the kiwi was pressured by recent signs of economic weakness in China, New Zealand's largest trading partner. Data due on Thursday are expected to show a 0.4% contraction in the economy for the second quarter, highlighting the need for additional policy easing. Markets are fully priced for a quarter-point cut in October, with a 25% chance of a 50-basis-point reduction. Swaps imply 87 basis points of easing over the next two meetings. The kiwi dollar held steady at $0.6190, following a 0.7% rally in the previous session. Immediate resistance can be seen at 0.6203(38.2%fib), an upside break can trigger rise towards 0.6277(23.6%fib).On the downside, immediate support is seen at 0.6144(50%fib), a break below could take the pair towards 0.6121(Lower BB).
USD/JPY: The dollar showed slight recovery against the yen on Tuesday, but gains were limited as investors remained cautious ahead of the upcoming Fed rate decision. Extended holidays in China and South Korea resulted in thin trading conditions, with attention focused on Wednesday's Fed decision. Odds have increased over the past week in favor of a 50-basis-point rate cut, keeping the dollar near its lowest level in over a year against the yen at 140.70. Futures indicate a 67% chance that the Fed could cut rates by half a percentage point at its monetary policy meeting on Wednesday. Top of FormBottom of FormStrong resistance can be seen at 141.67(38.2%fib), an upside break can trigger rise towards 142.50(Sep 11th high). On the downside, immediate support is seen at 140.00 (Psychological level), a break below could take the pair towards 139.66(Lower BB).
Equities Recap
European stocks hit a two-week high on Tuesday, buoyed by financials, as markets anticipated the start of the U.S. Federal Reserve's monetary easing cycle, which could include a significant interest rate reduction
UK's benchmark FTSE 100 was up by 0.77 percent, Germany's Dax was up by 0.80 percent, France’s CAC finished the was up by 0.74 percent.
Commodities Recap
Oil held steady on Tuesday, following a more than $1 rise in the previous session, as traders weighed concerns about U.S. production post-Hurricane Francine and the potential for lower U.S. crude stockpiles.
Brent crude futures for November held their ground at $72.77 a barrel, as of 0815 GMT. U.S. crude futures for October inched 12 cents higher, or 0.17%, to $70.21 a barrel.
Gold prices hovered near a record high on Tuesday, ahead of the anticipated start of the U.S. interest rate reduction cycle, which could see policymakers deliver an outsized cut.
Spot gold was steady at $2,584.77 per ounce, as of 0722 GMT. Bullion rose to a record high of $2,589.59 on Monday.
