Market Roundup
• US job openings rise to 5.788 million in Apr from 5.67m in Mar.
• US MBA mortgage applications +9.3% vs -4.1% previous week.
• ECB’s Coeure: ECB prepared to act on Brexit risks, especially by providing liquidity if necessary.
• ECB's Stournaras: Failure to maintain strong growth, lack of cohesion, Brexit threat undermines Eurozone.
• USD at 5-wk low lifts commodities & stocks; Oil prices rally for a 3rd session, hit ‘16 high.
• Bund yields hit record low (.035%); Brexit jitters, ECB bond-buying scheme drive demand.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e -549.4b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -175.3b- previous
• 23:50 Japan Machinery Orders MM Apr forecast -3.8%, 5.5%- previous
• 23:50 Japan Machinery Orders YY* Apr forecast -2.3%, b3.2%- previous
• 01:30 China PPI YY* May forecast -3.3%, -3.4%- previous
• 01:30 China CPI YY* May forecast 2.3%, 2.3%- previous
• 01:30 China CPI MM* May forecast -0.2%, -0.2%- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan- BoJ Deputy Governor Hiroshi Nakaso speaks to business leaders in Akita.
Currency Summaries
EUR/USD is likely to find support at 1.1325 levels and currently trading at 1.1394 levels. The pair has made session high at 1.1409 and hit lows at 1.1360 levels. Euro rose against the dollar on Wednesday as traders reduced bets of an imminent U.S. interest rate increase following a poor jobs report and perceived dovish comments from the Federal Reserve chief. The euro reached a near four-week peak against the greenback even with German Bund yields posting record lows as the European Central Bank began buying corporate debt for its bond purchase program in a bid to boost the euro zone economy. The dollar index, which tracks the greenback against six currencies, shed 0.24 percent at 93.601. It touched 93.425 earlier on Wednesday, the lowest since May 6.The euro strengthened to $1.1397, up 0.4 percent on the day. Its gain was limited by persistent worries that the single currency is likely to struggle if Britain votes on June 23 to leave the European Union.
GBP/USD is supported in the range of 1.4493 levels and currently trading at 1.4504 levels. It reached session high at 1.4580 and hit low at 1.4500 levels. Sterling jumped against the dollar on Wednesday, as selling pressure increased on dollar after upbeat UK industrial output and on expectations that the Federal Reserve will not raise interest rate in the near future. The Office for National Statistics said, Industrial output rose 2.0 percent in April after a 0.3 percent rise in March, the biggest month-on-month increase since July 2012. Manufacturing output also rose at its fastest pace since July 2012, up 2.3 percent on the month after a 0.1 percent increase in March.Sterling rallied to $1.4580, up 0.2 percent on the day, and rising from $1.4530 before the data was released. Sterling, which hit a three-week low against a basket of currencies on Monday, has been hostage to opinion polls before a British referendum on whether the country stays in the European Union or not. The vote is due on June 23 and polls suggest it is a close race between "Remain" and "Leave".
AUD/USD is supported around 0.7418 levels and currently trading at 0.7469 levels. It hit session high at 0.7480 and made session lows at 0.7461 levels. The Australian dollar rose against US dollar on Wednesday as Australian dollar was buoyed by monetary policy expectations and higher commodity prices such as crude oil and iron ore. The Australian dollar in the late US session rose to $0.7500. It soared 1.2 percent in the last session after the Reserve Bank of Australia (RBA) wrong-footed Aussie bears with the omission of a clear easing bias in its monthly policy review statement. The central bank on Tuesday kept rates at a record low of 1.75 percent, taking a pause after last month's cut and recent data showing reasonable strength in the economy. The Aussie has jumped 6 percent this month largely due to changes in monetary policy expectations in the United States and Australia.
USD/CAD is supported at 1.2657 levels and is trading at 1.2698 levels. It has made session high at 1.2721 and lows at 1.2665 levels. The Canadian dollar firmed against its U.S. counterpart to hit five weeks high on Wednesday as the Canadian dollar was supported by a further rise in oil prices and waning expectations that the Federal Reserve will unlikely to move to hike interest rates soon. A weaker U.S. dollar added to gains for the loonie as the U.S. currency hit a five-week trough against a basket of major currencies. Last week's poor U.S. jobs report and recent comments from Fed Chair Janet Yellen have reduced bets of an imminent Fed hike. On the data front, Canadian housing starts dipped last month as groundbreaking slowed in British Columbia, data released on Wednesday showed, which could ease concern that the western province's property market is overheating. Canadian employment data for May will be released at the end of the week. The report will come after a massive wildfire last month cut production in Alberta's oil sands region.
Equities Recap
European shares ended mixed on Wednesday after two straight days of gains, as a drop in Italian bank UniCredit and Austrian bank Erste knocked financial stocks.
UK's benchmark FTSE 100 closed up 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.59 percent, Germany's Dax ended down 0.8 percent, France’s CAC finished the day up by 0.7 percent.
U.S. stocks rose for a third straight session on Wednesday as the decline in the dollar lifted some commodity-related shares and boosted the outlook for multinationals.
Dow Jones closed up by 0.37 percent, S&P 500 ended up by 0.33 percent, Nasdaq finished the day up by 0.25 percent.
Treasuries Recap
U.S. 10-year Treasury yields fell on Wednesday after the government sold $20 billion in 10-year notes to strong demand, the second tranche of a total $56 billion in coupon-bearing supply this week.
Benchmark U.S. 10-year notes ended up 2/32 in price to yield 1.707 percent, after falling to 1.697 percent immediately after the auction, matching a two-month low that was reached on Friday after the weak jobs report.
Commodities Recap
Crude futures rose on Wednesday, hitting 2016 highs above $50 a barrel and settling up for a third straight day on worries about sabotage of oil facilities in Nigeria, although a build in U.S. gasoline stocks amid peak summer demand could pressure prices.
Brent crude settled up $1.07 at $52.51 a barrel. It extended gains in post-settlement trade, reaching $52.60 a barrel by 3:55 p.m. EDT (1955 GMT), the highest since October.
U.S. crude futures rose 87 cents, or 1.7 percent, to settle at $51.23 a barrel. The session high was $51.34, a peak since July.
Gold rose more than 1 percent to a three-week high on Wednesday, bolstered by a weaker dollar on declining expectations that the U.S. Federal Reserve will raise interest rates anytime soon.
Spot gold rose by as much as 1.6 percent to $1,263.81 an ounce, its strongest since May 20, and was up 1.4 percent at $1,260.57 by 2:48 p.m. EDT (1848 GMT).U.S. gold settled up 1.2 percent at $1,262.30 an ounce.
