Market Roundup
- U.S. trade deficit up as exports fall to 3-yr low, fueling global growth worries.
- IMF cuts global growth forecasts 2nd time this year; cites China, weak commodities.
- Canada trade gap widens to $2.53 billion in August on lower exports.
- Brazil investment grade hinges on economy stabilizing in 2016- Moody’s.
- South Africa central bank gov: Soft global demand diminishes benefit of weak rand.
- Mexico September auto production rises, exports fall. Brazil Congress puts off until Wednesday vote on fiscal vetoes.
- Business leaders warn UK’s Cameron: Hold early EU vote or risk accidental Brexit.
- ECB should avoid hasty QE action, stay patient – Liikanen.
Looking Ahead – Economic Data (GMT)
- 22:30 Australia Sep AIG Performance of Construction Index
- 05:00 Japan Aug Coincident Index 112.2 v 113.1 previous
- 05:00 Japan Aug Leading Index 103.4 v 105.0 previous
Looking Ahead – Events, Other Releases (GMT)
- 03:00 Japan- BOJ Policy Meeting – No change expected
Currency SummariesEUR/USD is likely to find support at 1.1240 levels and currently trading at 1.1270 levels. The pair has made session high at 1.1274 and hit lows at 1.1254 levels. . Euro gained against dollar on Tuesday as the dollar eased in the wake of disappointing U.S. economic data that raised doubts over a Federal Reserve rate rise this year. Markets believe signs of sluggishness in the U.S. economy, along with weakness in China and volatility in financial markets, could prompt the Fed to hold rates. After Friday’s soft jobs report, data on Monday showed the pace of growth in the U.S. services sector decelerated in September as new orders and business activity slowed. However, some analysts said a U.S. rate hike in December could not be ruled out entirely. On the data front, U.S. exports took a hit from an ailing global economy in August and imports from China surged, fueling the largest expansion of America’s trade deficit in five months. The data released on Tuesday by the Commerce Department illustrates the U.S. economy’s vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve’s plans to hike interest rates. The euro was last up 0.51 percent against the dollar at $1.12470. To the upside, immediate resistance can be seen at 1.1287. To the downside, immediate support level is located at 1.1250 levels.GBP/USD is supported in the range of 1.5200 levels and currently trading at 1.5228 levels. It reached session high at 1.5234 and dropped to session low at 1.5219 levels. Sterling rose 0.4 percent against a struggling dollar on Tuesday, as investors fretted about when the U.S. Federal Reserve will raise interest rates amid growing doubts over a global recovery. The Fed has cited the slowdown in China as one of the reasons for keeping interest rates unchanged in September. A weak jobs report last week saw investors push back the chances of a lift-off to early 2016, having priced in a robust chance of a hike in December, putting the dollar under pressure. Sterling rose to $1.5210, recovering from a five-month low of $1.5107 struck last Thursday. It, however, underperformed the euro, weighed down by soft economic data that have pushed back market expectations of monetary tightening by the Bank of England towards the end of next year. A much weaker-than-expected reading of the services sector purchasing managers’ index (PMI) on Monday saw analysts cut forecasts for UK growth for the third quarter. And data released on Tuesday showed UK house prices fall in September, highlighting subdued consumer demand. To the upside, immediate resistance can be seen at 1.5247. To the downside, immediate support level is located at 1.5247 levels. USD/JPY is supported around 120.00 levels and currently trading at 120.25 levels. It made session high at 120.50 and made session lows at 120.20 levels. The U.S. dollar slipped against a basket of major currencies on Tuesday on continued expectations that the Federal Reserve will not hike interest rates this year, while uncertainty over the outcome of a Bank of Japan meeting capped the yen’s gains. The Bank of Japan began its two-day policy meeting on Tuesday. Uncertainty as to whether the central bank would hold monetary policy steady or hint at expanding its stimulus program limited the yen’s gains against the dollar. The dollar was last down 0.17 percent against the yen at 120.25 yen after hitting a more than one-week high of 120.57 yen early in the U.S. trading session. On the data front, U.S. exports took a hit from an ailing global economy in August and imports from China surged, fueling the largest expansion of America’s trade deficit in five months.The data released on Tuesday by the Commerce Department illustrates the U.S. economy’s vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve’s plans to hike interest rates. To the upside, immediate resistance can be seen at 120.40. To the downside, immediate support level is located at 120.15 levels. USD/CAD is supported at 1.3000 levels and is trading at 1.3045 levels. It has made session high at 1.3115 and lows at 1.3028 levels. The Canadian dollar extended its four-day advance against the greenback on Tuesday, as a rally in crude prices offset earlier losses due to data that showed Canada’s trade deficit widened in August as exports slumped. Exports fell by 3.6 percent, the largest decline since January 2012, as exports of energy products sank 14.7 percent. The slump, which comes following two months of robust growth, pushed the country’s trade deficit to C$2.53 billion, far off the C$1.2 billion economists had forecast. The loonie began recouping initial losses as market participants digested the details before edging higher. Economists and analysts noted that the longer term trends, particularly in terms of volume – a key measure for the Bank of Canada, remained constructive.The currency, which was weaker than most of its counterparts, has traded between C$1.3027 and C$1.3134 so far in the session. To the upside, immediate resistance can be seen at 1.3175. To the downside, immediate support level is located at 1.3060levels.Equities RecapEuropean shares closed higher on Tuesday, led by auto and oil sector stocks and helped by expectations central banks in Europe and the United States will maintain an equity-friendly monetary policy.The pan-European FTSEurofirst 300 index ended up 0.75 percent, UK’s benchmark FTSE 100 closed up by 0.55 percent, Germany’s Dax ended up by 1.09 percent, France’s CAC finished the day up by 1.16 percent.U.S. stocks fell on Tuesday ,ending a five day winning streak, as investors focused on upcoming quarterly reports that are expected to reflect a dip in corporate earnings.Dow Jones ended up by 0.08 percent, S&P 500 ended down 0.36 percent, Nasdaq finished the day down 0.69 percent.Treasuries RecapU.S. Treasury debt prices were little changed on Tuesday as Wall Street’s first slump in six sessions and renewed worries about a weakening global economy supported safe-haven demand for government debt.The benchmark 10-year treasuries were up 6/32 in prices to yield 2.035 percent, down 2basis points from late monday
The 30 year old bond was up 14/32 in prices to yield2.876 percent, down 2 basis points from monday
Commodities RecapGold rose to its highest in nearly two weeks on Tuesday as the dollar fell in the wake of disappointing U.S. economic data that raised doubts over a Federal Reserve interest rate rise this year, while platinum rallied 3 percent.Spot gold rose 1.4 percent to $1,151.20 an ounce, the highest since Sept. 24, and was up 1 percent at $1,147.01 an ounce by 2:44 p.m. EDT (1844 GMT). U.S. gold futures for December delivery settled up 0.8 percent at $1,146.40 an ounce.Oil prices jumped more than $2 a barrel on Tuesday, breaking out of a month-long trading range on a mix of technical buying and industry talk as well as U.S. government data suggesting the global supply glut could be ebbing.Brent settled up $2.67, or 5.4 percent, at $51.92 a barrel, breaking out of the $47 to $50 band it had traded since early September. Its session peak, a penny shy of $52, was the highest since Sept. 3, and took three-day gains to more than 7 percent.West Texas Intermediate (WTI), the U.S. crude benchmark, settled up $2.27, or 4.9 percent, at $48.53.
The material has been provided by InstaForex Company – www.instaforex.com