Market Roundup
• EU's Barnier says Brexit deal may be "within reach" next week, demands Irish checks.
• Sterling rallies after EU's Barnier says UK Brexit deal 80-85 pct agreed.
• DUP could vote against UK budget if Brexit red lines are breached –reports.
• Fed's Evans sees a pause after lifting rates to around 3 pct.
• US Sep PPI Final Demand y/y, 2.6%, 2.8% forecast,, 2.8% previous.
• US Sep PPI exFood/Energy m/m, 0.2%, 0.2% forecast, -0.1% forecast.
• US Aug Wholesale Invt(y), R m/m, 1.0%, 0.8% forecast, 0.8% forecast.
• US Aug Wholesale Sales m/m, 0.8%, 0.2% forecast, 0.0% previous, 0.2% revised.
• US Oct 5 w/e Mortgage Market Index, 346.7, 352.6 previous.
• US Oct 5 w/e MBA 30-Yr Mortgage Rate, 5.05%, 4.96% previous.
• CA Aug Building Permits m/m, 0.4%, 0.5% forecast, -0.1% previous, -1.5% revised.
• World's top traders divided on oil outlook as Iran sanctions loom.
Looking Ahead - Economic Data (GMT)
• 10 Oct 21:45 New Zealand Sep Food Price Index, -0.5% previous
• 10 Oct 23:50 Japan Sep Bank Lending y/y, 2.2% previous
• 10 Oct 23:50 Japan Sep Corp Goods Price m/m, 0.2% forcast, 0.0% previous
• 10 Oct 23:50 Japan Sep Corp Goods Price y/y, 2.9% previous, 3.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Riksbank's Cecilia Skingsley reports on the economic situation at Profit & Loss Scandinavian conference in Brunkebergstorg, Sweden
• 10:45 BoE's Gertjan Vlieghe speaks at the National Bank of Belgium
Currency Summaries
EUR/USD is likely to find support at 1.1428 levels and currently trading at 1.1525 levels. The pair has made session high at 1.1544 and hit lows at 1.1486 levels. The euro rose on Wednesday, underpinned by optimism for a Brexit deal, while the dollar lost ground against a basket of currencies even as U.S. bond yields hovered at multiyear peaks. U.S. yields have increased on rising government debt supply and worries about higher inflation, which may push the Federal Reserve to raise short-term rates more quickly. The common currency's gains were limited by worries about the sustainability of Italy's public finances, though Italian Economy Minister Giovanni Tria reiterated on Wednesday that the government would do everything in its power to regain the confidence of financial markets. This week, Brexit negotiators have hinted at progress toward terms for Britain to leave the economic bloc in March, which gave investors hope for an orderly departure. Still, caution persists due to scant details. On Wednesday, EU's Brexit negotiator, Michel Barnier, said the two parties have agreed on much of the withdrawal agreement ahead of a summit of all the bloc's 28 national leaders next week. The dollar fell 0.17 percent, with the euro up 0.25 percent to $1.1518. The Japanese yen strengthened 0.53 percent versus the greenback at 112.25.
GBP/USD is supported in the range of 1.3133 levels and currently trading at 1.3196 levels. It reached session high at 1.3214 and dropped to session low at 1.3158 levels. Britain's pound rose against the dollar on Wednesday after European Union Brexit negotiator Michel Barnier signalled progress on a deal with Britain over its withdrawal from the bloc, as well as on the crucial Irish border question. Hopes are building that a Brexit deal can be reached before an EU summit on Oct. 18 and sterling is benefiting as some investors unwind short bets on the currency. Barnier said 80-85 percent of the withdrawal deal was agreed. He also said the European Union wanted to carry out Irish border checks after Brexit "in the least intrusive way possible". The Irish border has been a key sticking point in Brexit talks. British Prime Minister Theresa May will discuss Brexit with her cabinet of senior ministers at their regular Tuesday meeting next week before she heads to Brussels for the EU summit. Some senior British ministers will also meet to be updated on the progress of Brexit negotiations on Thursday, the BBC's political editor said, adding that not all the cabinet would be involved. The pound rose to $1.3210, a fresh 3-1/2 month high and strengthened 0.2 percent versus the euro to trade at 87.31 pence.
USD/CAD is supported at 1.2947 levels and is trading at 1.3047 levels. It has made session high at 1.3051 and lows at 1.2956 levels. The Canadian dollar weakened to 10-day low against its U.S. counterpart on Wednesday, as the price of oil, one of Canada's major exports, slumped. U.S. crude oil futures settled 2.4 percent lower as U.S. equity markets broadly fell, even though energy traders worried about shrinking supply from Iran due to U.S. sanctions and also kept an eye on Hurricane Michael, which closed nearly 40 percent of U.S. Gulf of Mexico oil output. Stocks tumbled as investors worried that rising U.S. Treasury yields and the escalating U.S.-China trade policy dispute would hurt global growth. The loonie has retreated 2 percent since notching its strongest in more than four months last week at 1.2783 as a deal to revamp the North American Free Trade Agreement reduced uncertainty for Canada's economy. On the data front, the Canadian dollar was trading 0.7 percent lower at 1.3043 to the greenback, or 76.67 U.S. cents, the biggest decline among a group of heavily traded foreign exchange rates known as the G10 currencies. The Canadian dollar was trading 0.7 percent lower at 1.3060 to the greenback, or 76.67 U.S. cents, the biggest decline among a group of heavily traded foreign exchange rates known as the G10 currencies.
USD/JPY is supported around 112.00 levels and currently trading at 112.26 levels. It peaked to hit session high at 113.24 and made session lows at 112.31 levels. The dollar declined against the Japanese yen on Wednesday as long-dated U.S. Treasury yields retreated from multi-year highs, pressuring the dollar. Rising Treasury yields and concern about the sustainability of Italy's public finances after the ruling parties proposed a budget criticised by the European Union and have fuelled another rally in the dollar in recent sessions, sending the greenback to a 1 1/2-month high on Tuesday. That rally paused on Wednesday, although analysts said it was likely to prove a temporary reprieve for Japanese yen. Investors are betting that rising inflation pressures will keep the Federal Reserve, which unlike the European Central Bank is hiking rates, firmly focused on tighter policy, even as U.S. President Donald Trump took aim at policy makers' hawkish inclinations. On the data front, U.S. producer prices increased 0.2 percent in September, in line with expectations, while a revision to wholesale inventory estimates for August showed the biggest jump in nearly five years, beating forecasts.
Equities Recap
European shares had their worst day on Wednesday since June as concerns around rising debt yields gripped equity markets worldwide, while tech stocks sank on signs of slowing demand in the semiconductor industry.
UK's benchmark FTSE 100 closed up by 0.8 percent, the pan-European FTSEurofirst 300 ended the day down by 1.43 percent, Germany's Dax ended down by 2 percent, France’s CAC finished the down up by 2 percent.
U.S. stocks tumbled on Wednesday, with the S&P 500 and the Dow marking their biggest daily declines since Feb. 8, and technology stocks were at the center of the carnage as rising U.S. Treasury yields sent investors fleeing from risky assets.
Dow Jones closed up by 3.06 percent, S&P 500 ended down by 3.26 percent, Nasdaq finished the day down by 4.02 percent.
Treasuries Recap
U.S. Treasury yields fell late on Wednesday in a flight to quality as investors snapped up government bonds in the midst of a sharp sell-off in U.S. stocks.
U.S. 10-year note yields were last at 3.170 percent, down from 3.208 percent late on Tuesday.
U.S. 30-year bond yields also fell to 3.355 percent, versus Tuesday's 3.369 percent.
Commodities Recap
Gold prices edged higher on Wednesday as some investors sought refuge in the precious metal after the global stocks tumbled and the U.S. dollar weakened.
Spot gold rose 0.4 percent to $1,194.12 per ounce by 4:52 p.m. EDT (2052 GMT). U.S. gold futures settled up $1.9, or 0.16 percent, at $1,193.4.
Oil prices dropped 2 percent on Wednesday as U.S. equity markets broadly fell, even though energy traders worried about shrinking Iranian supply from U.S. sanctions and kept an eye on Hurricane Michael, which closed some U.S. Gulf of Mexico oil output.
Brent crude futures fell $1.91, or 2.3 percent, to settle at $83.09 a barrel. The global benchmark posted a 1.3 percent gain on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures fell $1.79 to settle at $73.17 a barrel, a 2.4 percent loss.
