Americas Roundup: Sterling Slides After Polls Show “out” Camp Moving Ahead, Gold Gains Ground But Still Set for Biggest Decline

Market Roudup

•    US Apr cons spending posts biggest gain (+1% m/m, +0.6% inflation adjusted) in more than six years, inflation rising.

•    US Apr Personal Income increases 0.4%, savings fall to USD 751.1 billion.

•    US May consumer confidence index 92.6 vs April revised 94.7 – Conference Board.

•    US May Cons Present Sit Index 112.9 Vs Apr 117.1 revised (Previous 116.4), Cons expectations lowest since Feb ’14.

•    Chicago PMI 49.3 vs 50.4 last, 50.5 expected.

•    US Case-Shiller HM prices up more than expected in March, composite Index of 20 metropolitan areas rose 5.4% in Mar y/y.

•    UK voters shift towards “Leave” as EU vote approaches, ICM poll (online 47% leave/44% remain; phone 45% leave/42% remain).

•    OPEC oil output decline may be limited by higher production in Saudi Arabia, Iran, Kuwait & UAE.

•    Copper on track for largest monthly fall since November, Oversupply and sluggish demand growth reinforced.

Looking Ahead – Economic Data (GMT)

•    22:45 New Zealand Terms of Trade QQ Q1 forecast -0.2%, -2%-previous

•    22:45 New Zealand Terms of Trade – Exp Vol Q1 forecast -1.30%, -2.4%- previous

•    22:45 New Zealand Terms of Trade – Imports Q1 forecast -2.50%, -3.7%- previous

•    22:45 New Zealand Terms of Trade – Exports Q1 forecast -1.50%, -5.7%- previous

•    23:30 Australia AIG Manufacturing Index May 53.4- previous

•    23:50 Japan Business Capex (MOF) YY Q1 8.5%- previous

•    01:00 China NBS Non-Mfg PMI* May 53.5- previous

•    01:00 China NBS Manufacturing PMI* May forecast 50, 50.1- previous

•    01:45 China Caixin  Mfg PMI Final May forecast 49.3, 49.4- previous

•    02:00 Japan Nikkei Mfg PMI May 47.6- previous

•    01:30 Australia GDP QQ* Q1 forecast 0.80%, 0.6%- previous

•    01:30 Australia GDP YY* Q1 forecast 2.80%, 3%- previous

Looking Ahead – Events, Other Releases (GMT)

•    No Significant Events

Currency Summaries

EUR/USD is likely to find support at 1.1100 levels and currently trading at 1.1131 levels. The pair has made session high at 1.1173 and hit lows at 1.1123 levels. Euro declined against US Dollar on Tuesday as the data showed U.S. consumer spending recorded its biggest increase in more than six years in April as households stepped up purchases of automobiles, suggesting acceleration in economic growth that could persuade the Federal Reserve to raise interest rates soon. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.0 percent last month as households bought a range of goods and services. Investors will monitor May U.S. private-sector ISM manufacturing data, due on Wednesday, and nonfarm payrolls on Friday. Solid readings could heighten expectations for a move as early as the Fed's June 14-15 policy meeting. The dollar index, which tracks the greenback against a basket of six major currencies, rose 0.3 percent to 95.842, below a two-month high of 95.968 set on Monday. It was on track for a 2.7 percent gain for the month, its best performance in six months.

GBP/USD is supported in the range of 1.4400 levels and currently trading at 1.4477 levels. It reached session high at 1.4653 and hit low at 1.4463 levels. Sterling fell to a one-week low on Tuesday, hurt by month-end selling and polls showing support for those who want Britain to leave the European Union is rising, adding to growing uncertainty about the June 23 membership referendum. A telephone poll conducted by polling firm ICM showed 45 percent of respondents favoured leaving the EU compared with 42 percent who said they would vote to stay in the bloc. Sterling fell sharply after the polls were released, to $1.4460, from $1.4654 beforehand and down 0.7 percent on the day. The euro rose to a one-week high, trading at 76.72 pence, up 0.8 percent on the day, with volumes picking up after a UK public holiday on Monday.

AUD/USD is supported around 0.7180 levels and currently trading at 0.7231 levels. It hit session high at 0.7261 and made session lows at 0.7214 levels. The Australian dollar edged higher against US dollar on Tuesday following encouraging Australian economic data and on growing doubts about Federal Reserve’s raising rates in the coming days. The Australian dollar bounced sharply to hit high at $0.7266, pulling away from $0.7145 touched last week. Aussie dollar strength also helped the New Zealand dollar firm to $0.6726, having survived a test of a support level at $0.6700 earlier. The pairs move up came after first quarter balance of payments data showed net exports could add a larger than expected 1.1 percentage points to gross domestic product (GDP), which will be released on Wednesday. The Reserve Bank of Australia (RBA) holds its monthly policy review on June 7 and the market is giving a 6 percent chance of a move to a record low of 1.5 percent.

USD/CAD is supported at 1.3027 levels and is trading at 1.3088 levels. It has made session high at 1.3134 and lows at 1.3027 levels. The Canadian dollar declined against US dollar on Tuesday after data showed Canada's economy accelerated less than forecast. Canada's economic growth accelerated at a weaker pace than expected in the first three months of the year and lost momentum at the end of the quarter, boding poorly for a second quarter that is expected to be further impacted by Alberta's wildfires. Gross domestic product grew at a 2.4 percent annualized rate in the first quarter, Statistics Canada said on Tuesday. That was shy of analysts' expectations for 2.9 percent, and the Canadian dollar weakened slightly against the greenback immediately following the report. 

Equities Recap

European equities ended lower on Tuesday, pouring cold water on a five-day winning streak as investors took a cautious approach ahead of several potentially market-moving meetings due to be held by the European Central Bank (ECB) and Organisation of Petroleum Exporting Countries (OPEC).

UK's benchmark FTSE 100 closed down 0.61 percent, the pan-European FTSEurofirst 300 ended the day down by 0.87 percent, Germany's Dax ended down 0.68%, France’s CAC finished the day down by 0. 53 percent.

US stocks ended mixed on Tuesday as energy companies fell with the prices of oil, overcoming gains in utilities and phone companies.

Dow Jones closed down by 0.50 percent, S&P 500 ended down by 0.10 percent, Nasdaq finished the day up by 0.26 percent.

Treasuries Recap

U.S. Treasury debt yields rose across the board on Tuesday, with that of short-dated notes rising to their highest in more than two months, after upbeat consumer spending data reinforced expectations of interest rate hikes in the next few months.

The benchmark 10-year Treasury notes were down 12/32 in price for a yield of 1.879 percent, from 1.854 percent last Friday. U.S. 10-year yields rose as high as 1.89 percent, their highest since late April.

Two-year notes were down 2/32 in price, with a yield of 0.922 percent, compared with 0.915 percent late on Friday. U.S. five-year notes, meanwhile, fell 7/32, yielding 1.405 percent, up from 1.391 percent on Friday.

Commodities Recap

Gold rose 1 percent on Tuesday, rebounding from the prior session's three-and-a-half-month low, but remained on track for its biggest monthly decline since November on dollar strength and growing expectations of an imminent U.S. interest rate hike.

Spot gold was up 1 percent at $1,216.80 an ounce at 2:38 p.m. EDT (1838 GMT), after Monday's fall to its lowest since Feb. 17 at $1,199.60. It was on track to close May down 5.9 percent.

U.S. gold futures for August delivery settled up 80 cents at $1,217.50 an ounce.

Oil prices dipped on Tuesday as a stronger dollar and slide in equity prices sparked profit-taking, but crude futures posted a fourth straight monthly gain as investors bet that the global glut was slowly easing.

Brent crude futures for July settled down 7 cents at $49.69 a barrel before expiring as the spot contract.

August Brent , the market's spot contract from Wednesday, finished down 47 cents, or nearly 1 percent, at $49.89.

U.S. crude's West Texas Intermediate (WTI) futures for July settled at $49.10, down 23 cents, or 0.5 percent.

The material has been provided by InstaForex Company – www.instaforex.com