Market Roundup
• Trump, Juncker voice desire to reduce tariffs, trade tensions.
• Trump says China is 'vicious,' using U.S. farmers as trade pawns.
• WTO chief sees trade war ending in political talks.
• US Jun New Home Sales-Units, 0.631 mln, 0.670 mln forecast, 0.689 mln prev, 0.666 mln revised.
• US Jun New Home Sales Chg MM, -5.3%, -2.8% forecast, 6.7% previous, 3.9% revised.
• US Jun Build Permits R Number, 1.292 mln, 1.273 mln previous.
• US Jun Build Permits R Chg MM, -0.7%, -2.2% previous.
• US w/e MBA Purchase Index, 245.5, 247.9 previous.
• US w/e Mortgage Market Index, 362.4, 363.3 previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.77%, 4.77% previous.
• US w/e MBA Mortgage Applications, -0.2%, -2.5% previous.
• China warns trade frictions with U.S. spell uncertainty for jobs.
• Mexico and Canada insist on three-way NAFTA deal.
Looking Ahead - Economic Data (GMT)
• 25 Jul 23:50 Japan w/e Foreign Bond Investment (JPY), -5.6 bln previous
• 25 Jul 23:50 Japan w/e Foreign Invest JP Stock (JPY), 601.4 bln previous
• 26 Jul 01:30 Australia Q2 PPI YY, 1.7% previous
• 26 Jul 01:30 Australia Q2 PPI QQ, 0.5% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A ECB Governing Council meeting, followed by interest rate announcement - Frankfurt
• 12:30 ECB's Mario Draghi holds press conference – Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1644 levels and currently trading at 1.1729 levels. The pair has made session high at 1.1711 and hit lows at 1.1660 levels. The euro strengthened against US dollar on Wednesday as greenback weakened after President Donald Trump secured concessions from the European Union to avoid a trade war. Trump and the European Commission's chief, Jean Claude-Juncker, agreed to work to lower industrial tariffs on both sides and to increase European imports of liquefied natural gas and soybeans from the United States, among other measures, the U.S. president said in a news conference. It was unclear whether Trump had backed off the proposed auto tariffs, or agreed to reverse earlier tariffs on steel and aluminum. The EU had demanded the metals tariffs be reversed before it agreed to talks on other trade issues. Focus also shifted to the U.S. Trade Representative's public hearings in Washington over proposed additional tariffs on Chinese products. Risk appetite improved slightly on strong U.S. corporate earnings and hopes that China would boost fiscal support for its economy, but the nascent U.S-China trade war still dampened market sentiment. The dollar index, which measures the greenback against a basket of six currencies, fell 0.4 percent, further scaling down from its July 19 peak for 2018, when Trump suggested the greenback had grown too strong. The single currency was up 0.41 percent at $1.1729.
GBP/USD is supported in the range of 1.3099 levels and currently trading at 1.3193 levels. It reached session high at 1.3180 and dropped to session low at 1.3130 levels. Sterling rose against the dollar on Wednesday to its highest in a week as traders bet that Prime Minister Theresa May's decision to take control of Brexit negotiations would make it easier to agree a divorce deal with Brussels. With less than nine months before Britain is due to leave the European Union and May's own Conservative Party still divided about what sort of trading relationship with Brussels to seek, Brexit talks remain a headwind for the pound.May said on Tuesday that her office would now lead Brexit negotiations rather than the dedicated Brexit ministry, giving the currency a boost. Rising expectations of a Bank of England interest rate rise - the market is currently pricing in an 86 percent chance of a 25 basis point increase at next week's monetary policy meeting have also helped the currency off 10-month lows hit last week. The pound rose to as high as $1.3198 against a broadly weaker dollar, its strongest level since July 17.Sterling, which has been much less volatile against the euro, was slightly higher versus the single currency at 88.901 pence. British finance minister Philip Hammond said on Wednesday that the UK was "well positioned" to get a good deal in Brexit talks, and that he did not believe there was a legal basis to delay Britain leaving the EU.
USD/CAD is supported at 1.3000 levels and is trading at 1.3042 levels. It has made session high at 1.3133 and lows at 1.3030 levels. The Canadian dollar strengthened to a nearly six-week high against its U.S. counterpart on Wednesday as the greenback broadly fell and policymakers said they were optimistic about prospects for the North American Free Trade Agreement. Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo said they remained optimistic about the progress of the negotiations to revamp the 24-year-old NAFTA trade pact. Negotiations began in August but stalled in the run-up to the Mexican presidential election. That was due, at least in part, to U.S. demands for sweeping changes in the auto sector and a for sunset clause, which would put the deal forming one of the world's largest trading blocs up for renewal every five years. U.S. President Donald Trump has repeatedly threatened to withdraw from the pact if he cannot renegotiate it to better serve his country's interests. Freeland and Guajardo struck an upbeat tone at a joint press conference, with Guajardo saying that about two-thirds of the agreement has been ironed out. Canada runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows. The price of oil, one of Canada's major exports, rose for a second day after data showed U.S. crude inventories fell more than expected. U.S. crude oil futures settled 1.1 percent higher at $69.30 a barrel. The Canadian dollar was last trading 0.86 percent higher at C$1.3042 to the greenback.
USD/JPY is supported around 110.17 levels and currently trading at 110.96 levels. It peaked to hit session high at 111.20 and made session lows at 110.67 levels. The Japanese yen edged higher against the dollar on Wednesday as greenback came under pressure after U.S. President Donald Trump said after a meeting with European Commission President Jean-Claude Juncker that they had agreed to work on lowering trade barriers. Trump said that the United States and the European Union had agreed to work toward eliminating tariffs on industrial goods and increasing U.S. exports of liquified natural gas and soybeans to Europe. The talks come after the United States imposed tariffs on European Union steel and aluminum, and Trump threatened to extend those measures to EU-made cars. Trump reinforced his criticism last week of the Federal Reserve's policy on raising interest rates, saying it could hurt the U.S. economy. He also accused the EU and China of manipulating their currencies. The dollar traded down 0.4 percent versus a basket of major currencies at 94.21. Against the yen, the dollar was 0.20 percent weaker at 110.96 yen per dollar. The second-quarter U.S. economic growth data is due on Friday. Market watchers largely expect growth to top current forecasts of 4.1 percent. A now-robust U.S. economy will soon lose momentum on rising interest rates and escalating trade disputes, according to economists polled who nonetheless gave just a one-in-three chance of a recession over the next two years.
Equities Recap
Warnings from carmakers Fiat Chrysler and General Motors weighed on European shares on Wednesday as investors braced for a high-level trade meeting in Washington.
UK's benchmark FTSE 100 closed down by 0.65 percent, the pan-European FTSEurofirst 300 ended the day down by 0.40 percent, Germany's Dax ended down by 1 percent, France’s CAC finished the day down by 0.25 percent.
Wall Street's major indexes rose on Wednesday as U.S. President Donald Trump secured concessions from the European Union on trade.
Dow Jones closed up by 0.69 percent, S&P 500 ended up by 0.90 percent, Nasdaq finished the day down by 1.16 percent.
Treasuries Recap
U.S. Treasury yields hits session highs across maturities on Wednesday afternoon after President Donald Trump and European Commission President Jean-Claude Juncker announced they had agreed to work on lowering trade barriers at a meeting in Washington.
The benchmark 10-year Treasury yield rose to a session high of 2.97 percent, up 2 basis points from Tuesday's close. The two-year Treasury note yield was up 4 basis points to a session high of 2.68 percent.
Commodities Recap
Gold ticked higher on Wednesday, but was still hovering near one-year lows as the dollar slipped, while a lack of clarity over where a trade dispute between the United States and Europe is heading kept markets mostly range bound.
Spot gold rose 0.6 percent to $1,231.56 per ounce by 1:36 p.m. EDT (1736 GMT). U.S. gold futures for August delivery settled up $6.30, or 0.5 percent, at $1,231.80 per ounce.
