• The dollar carved out small gains against the euro and yen on Tuesday as investors looked to policy clues from the U.S. Federal Reserve, which is widely expected to hike rates this week, and as the Sino-U.S. trade dispute kept markets cautious.
The dollar index, which measures the greenback against a basket of six major currencies, was 0.15 percent higher at 94.323.
The Fed begins its two-day policy meeting later on Tuesday at which it is expected to raise interest rates for the eighth time since late 2015. Markets are also betting on another rate hike before year-end, though the outlook for 2019 is less clear.
• Against the Japanese yen, the dollar gave up some of its gains after the release of minutes from the July policy meeting by the Japanese central bank.
The minutes showed a few of the Bank of Japan’s board members said the central bank must consider more seriously the potential dangers of ultra-easy policy, such as the negative impact on the country’s banking system.
• The greenback edged 0.05 percent higher to 112.86 yen, after briefly reaching as high as 112.96 yen, its highest level since touching 113.18 yen on July 19, in early trade.
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• EUR/USD Technical Analysis: Rejected again at 1.1800 but bias still points to the upside
The euro was again rejected from above 1.1800 and pulled back, erasing most of the day’s gains. The short-term trend still points to the upside but as long as it continues to fail around 1.1800, it is likely to remain limited.
A break below 1.1690/00 (short-term uptrend line) could remove the current bullish tone signaling a potential consolidation between 1.1650 (20-day moving average) and 1.1700.
Technical indicators still favor the bullish bias and a consolidation above 1.1800, targets 1.1850.
Support Levels
S1: 1.1750
S2: 1.1720
S3: 1.1675
Resistance Levels
R1: 1.1690
R2: 1.1725
R3: 1.1750
• Japan and the United States will begin a second round of trade talks in New York on Tuesday, Japan’s top government spokesman said, amid concerns in Tokyo that Japan will face greater pressure to reduce its large trade surplus.
U.S. Trade Representative Robert Lighthizer and Economy Minister Toshimitsu Motegi had been scheduled to meet on Monday evening, ahead of a Wednesday summit between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe on the sidelines of a U.N. General Assembly meeting.
• President Donald Trump and U.S. Deputy Attorney General Rod Rosenstein, who oversees the special counsel investigation into Russia’s role in the 2016 presidential election, will meet on Thursday to discuss whether Rosenstein will stay in his job.
Rosenstein had spent the weekend contemplating whether he should resign after a New York Times report last week said he had suggested secretly recording Trump in 2017, a source told Reuters.
• Germany’s BDI industry association on Tuesday lowered its 2018 growth forecast for Europe’s largest economy, citing weaker demand for German goods due to increased business uncertainty caused by U.S. President Donald Trump’s trade policy and Brexit.
The German economy is now expected to grow by 2.0 percent this year, down from a previous estimate of 2.25 percent, BDI President Dieter Kempf said. Exports will rise by 3.5percent in real terms, below the BDI’s initial forecast of 5 percent.
• Britain’s main opposition Labour Party is set to vote down any deal Prime Minister Theresa May clinches with the European Union and is open to a second referendum with the option of staying in the bloc, its Brexit spokesman Keir Starmer said on Tuesday.
With just over six months until Britain leaves the European Union, May has yet to reach a deal with Brussels on the terms of the divorce, and her plan for future trade ties has been rebuffed by both the EU and many lawmakers in her own party.
Labour has listed six tests it would apply to any Brexit deal, including whether it ensured a strong future relationship with the EU and delivered the same benefits Britain has as a current member of the bloc’s single market and customs union.
• The Philippine central bank is widely expected to raise its key interest rate by another 50 basis points on Thursday, in a strong follow-through move to curb inflation and shore up the shaky peso currency, a Reuters’ poll showed.
• China is being forced to retaliate against the United States in their trade dispute, and U.S. exporters including suppliers of liquefied natural gas would “certainly” be hurt, said Chinese vice commerce minister Wang Shouwen.
But Beijing’s retaliation would provide opportunities to other LNG-exporting countries, Wang said at a press conference on Tuesday, adding that Australia is an important source of the fuel for China.
A senior Chinese official said on Tuesday that it is difficult to proceed with trade talks with the United States while Washington is putting “a knife to China’s neck”, a day after both sides heaped fresh tariffs on each other’s goods.
When the talks can restart would depend on the “will” of the United States, Vice Commerce Minister Wang Shouwen said at a news conference.
• Confrontation between China and the United States means both sides lose, and talks with Washington cannot take place under threats and pressure, the Chinese government’s top diplomat State Councillor Wang Yi told U.S. business leaders.
• The U.S. State Department has approved the sale to Taiwan of spare parts for F-16 fighter planes and other military aircraft worth up to $330 million (£252 million), the Pentagon said on Monday.
China on Tuesday expressed dissatisfaction and said it had lodged stern representations with the United States after the State Department approved the sale to Taiwan of spare parts for military aircraft worth up to $330 million.
U.S. military sales to self-ruled Taiwan, which China claims as its territory, are an irritant in ties between the world’s two largest economies. Taiwan would still need to finalise sale details with U.S. companies.
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• Crude Oil WTI Technical Analysis: Bullish advance can be capped at 73.00 a barrel
Oil bulls want to resume the main bull trend.
Crude oil is trading above its 50, 100 and 200-period simple moving average but the 100 and 200 SMA are rather flat suggesting lack of strong bullish momentum in the market. The RSI indicator is pointing down after a leaving the overbought region while the Stochastics is turning down in the overbought zone.
A failure to break above 73.00 a barrel should see a rotation down towards 70.00.
Main Trend: Bullish
Resistance 1: 72.00 figure
Resistance 2: 73.00 figure
Resistance 3: 75.00 figure
Support 1: 71.41-63 zone, Sept.4 high-July 13 high
Support 2: 70.53 May 24 low
Support 3: 70.00 figure
• Brent crude oil prices hit a fresh four-year high on Tuesday amid looming U.S. sanctions against Iran and an apparent reluctance by OPEC and Russia to raise output to offset the expected to hit to supply.
Brent crude futures LCOc1 rose to $81.69 a barrel shortly after 0600 GMT, a level not seen since November 2014. They were still at $81.50 at 0655 GMT, up 30 cents, or 0.4 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $72.28 a barrel, up 20 cents, or 0.3 percent from their last settlement.
Reference: Reuters, CNBC
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