Market Roundup
• US Building Permits: Number Jun 1.254m, 1.200m forecast, 1.168m previous.
• US Build Permits: Change MM Jun 7.4%, -4.9% previous.
• US Housing Starts Number MM Jun 1.215m, 1.155m forecast, 1.122m previous.
• US House Starts MM: Change Jun 8.3%, -2.8% previous.
• US MBA Mortgage Applications w/e 6.3%, -7.4 previous.
• US Mortgage Market Index w/e 416.7, 391.9 previous.
• US MBA Purchase Index w/e 245.5, 242.8 previous.
• US Mortgage Refinance Index w/e 1367.8, 1210.5 previous.
• US Republicans could target Obamacare tax in wider tax overhaul: Brady.
• Trump chides US Senate Republicans on healthcare, says it is time for action.
• ECB's Villeroy: Accommodative monetary policy still needed.
• Britain may need fewer than 10 new regulators post-Brexit - government source.
• South Africa's economic plan unlikely to boost growth – Fitch.
• Qatar central bank gov puts reserves at $340 bln, but portion usable to defend currency may be much smaller.
Looking Ahead - Economic Data (GMT)
• Japan BOJ Rate Decision -0.10% forecast, -0.10% previous
• 23:50 Japan Exports YY Jun 9.5% forecast, 14.9% previous
• 23:50 Japan Imports YY Jun 14.6% forecast, 17.8% previous
• 23:50 Japan Trade Balance Total Yen Jun 484.7b forecast, -203.4b previous
• 01:30 Australia Employment Jun 15.0k forecast, 42.0k previous
• 01:30 Australia Unemployment Rate Jun 5.6% forecast, 5.5% previous
Looking Ahead - Events, Other Releases (GMT)
• 13:30 - ECB President Mario Draghi holds a press conference following the Governing Council meeting and the interest rate meeting - Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.1365 levels and currently trading at 1.1517 levels. The pair has made session high at 1.1538 and hit lows at 1.1506 levels. Euro dipped against dollar on Wednesday as traders awaited meetings of the European Central Bank and the Bank of Japan. The ECB meets on Thursday and is expected to adjust its language as it gets closer to normalizing policy. That may include dropping a reference to its readiness to extend or expand its bond-buying program. However, the central bank is likely to delay significant details on its plans to taper its asset-purchase program until September. Market watchers will be looking to see if the recent strength of the euro will influence policy outlooks from the European central bank. The euro was last trading at $1.1517, near the session low of $1.1511 and down about0.3 percent. But it was still near Tuesday's more than one-year high against the greenback of $1.1583. The dollar index remained near Tuesday's lows after Republicans failed late on Monday to pass a healthcare bill, raising doubts about President Donald Trump's agenda, and as markets have begun to doubt the Federal Reserve's ability to hike interest rates again this year given weak U.S. economic readings.
GBP/USD is supported in the range of 1.2964 levels and currently trading at 1.3019 levels. It reached session high at 1.3051 and dropped to session low at 1.3011 levels. Sterling fell from a 10-month high against the dollar on Wednesday as previous day weak inflation data poured cold water on expectations that the Bank of England will hike rates this year. The pound had risen above $1.31 to ten-month highs earlier in the week as the dollar fell across the board, and as investors bet that the 25-basis-point cut in British interest rates after last year's vote for Brexit could be reversed in the coming months. But BoE policymakers have made it clear that any monetary tightening will be data-dependent, and Tuesday's below-forecast consumer price numbers, therefore, fed doubt that rates could be tightened in the coming months. The market is watching developments in Brussels closely, where Brexit secretary David Davis's team is in negotiations with the team of the EU's Michel Barnier to get a deal for Britain to leave the bloc. Any signs that Britain could lose preferential access to Europe's single market are likely to weigh on the currency. Sterling was 0.1 percent lower on Wednesday at $1.3026, still not far from a high of $1.3126 touched the previous day.
USD/CAD is supported at 1.2564 levels and is trading at 1.2594 levels. It has made session high at 1.2649 and lows at 1.2574 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil rose, while domestic data showed a larger-than-expected increase in manufacturing sale.Canadian factory sales grew by 1.1 percent in May from April, hitting a record level on higher sales of motor vehicles and parts, data from Statistics Canada showed. Analysts had forecast an increase of 0.8 percent. Oil prices jumped after a U.S. report showed a bigger weekly draw than forecast in crude and gasoline stocks along with a surprise drop in distillate inventories. The Energy Information Administration (EIA) said U.S. crude stocks fell 4.7 million barrels during the week ended July 14, exceeding estimates for a 3.2 million draw in a poll. The loonie has gained roughly 7 percent since the Bank of Canada turned hawkish in June. The Canadian dollar was trading at C$1.2590 to the greenback, or 79.46 U.S. cents, up 0.3 percent. The currency traded in a range of C$1.2575 to C$1.2607. On Tuesday, it had touched its strongest since early May 2016 at C$1.2575.
AUD/USD is supported around 0.7900 levels and currently trading at 0.7949 levels. It hit session high at 0.7954 and made session lows at 0.7918 levels. The Australian dollar strengthened against US dollar on Wednesday as oil prices rose and the greenback remained on the back foot on worries about the prospects for the Trump administration's economic agenda. The U.S. currency was reeling from the collapse of the Republicans' push to overhaul healthcare, raising questions over President Donald Trump's ability to pass promised tax cuts and infrastructure spending. The Australian dollar was last trading at $0.7956, within a whisker of the psychological mark of $0.8000, a level not seen since May 2015. The Aussie also got a boost from an upbeat view of the economy by the country's central bank, leading investors to narrow the odds on a hike in interest rates. Oil prices jumped, extending gains after a U.S. government report showed a bigger weekly draw than forecast in crude and gasoline stocks along with a surprise drop in distillate inventories.
Equities Recap
A slew of upbeat updates from European firms helped the region's benchmark index rise on Wednesday and recoup the previous session's sharp losses, with tech stocks enjoying their best day in 10 months and all sectors making gains.
The UK's benchmark FTSE 100 closed up by 0.4 percent, FTSEurofirst 300 ended the day up by 0.65 percent, Germany's Dax ended up 0.1, and France’s CAC finished the day up 0.7.
The Nasdaq Composite and the S&P 500 hit record highs on Wednesday, powered by technology stocks and a more than 20 percent jump in Vertex Pharmaceuticals, while gains on the Dow were capped by a sharp drop in IBM shares.
Dow Jones closed up by 0.28 percent, S&P 500 ended up 0.51 percent, Nasdaq finished the day up by 0.62 percent.
Treasuries Recap
U.S. Treasury yields were little changed on Wednesday on light trading volume with benchmark yields hitting their lowest levels in nearly three weeks in advance of a meeting of European Central Bank policymakers on Thursday.
The Benchmark 10-year Treasury yield was 2.266 percent, up marginally from Tuesday's close, after touching 2.255 percent earlier on Wednesday, which was the lowest since June 29.
Commodities Recap
Gold slipped back towards $1,240 an ounce on Wednesday, after three straight day's of gains, as the U.S. dollar's recovered slightly from a 10-month low.
Spot gold was down 0.05 percent at $1,241.35 an ounce by 2:56 p.m. EDT (1856 GMT), while U.S. gold futures for August delivery closed little changed, up 0.01 percent at $1,242.
Oil prices jumped almost 2 percent to a six-week high on Wednesday after a U.S. report showed a bigger weekly draw than forecast in crude and gasoline stocks along with a surprise drop in distillate inventories.
Brent futures for September delivery settled up 86 cents, or 1.8 percent, at $49.70, while U.S. West Texas Intermediate crude for August settled up 72 cents, or 1.6 percent, at $47.12 on its second to last day as the front month.
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