Market Roundup
• U.S. PPI (MoM) (Jun) -0.3% vs 0.0% forecast; 0.6% previous.
• Canada Wholesale Sales (MoM) (May) 0.0% vs -0.7% forecast; 1.4% previous.
• U.S. Core PPI (MoM) (Jun) 0.2% vs 0.3% forecast; 0.1% previous.
• U.S. NY Empire State Manufacturing Index (Jul) 15.60 vs 9.30 forecast; 5.70 previous.
• Canada Manufacturing Sales (MoM) (May) 1.3% vs 1.1% forecast; 3.9% previous.
• Canada New Motor Vehicle Sales (May) 190.6K; 183.9K previous.
• Canada Capacity Utilization Rate (May) 82.5%; 80.4% previous.
• U.S. Core PPI (YoY) (Jun) 4.7% vs 5.2% forecast; 4.6% previous.
• U.S. PPI (YoY) (Jun) 5.5% vs 6.2% forecast; 6.0% previous.
• U.S. PPI ex. Food/Energy/Transport (MoM) (Jun) 0.1%; 0.8% previous.
• U.S. PPI ex. Food/Energy/Transport (YoY) (Jun) 5.1%; 5.1% previous.
Looking Ahead Economic Data (GMT)
•02:00 Australia MI Inflation Expectations (Jul) 5.5% previous.
•02:30 Australia Reserve Assets Total (Jun) 1,15,830.0B previous
Looking Ahead Events And Other Releases (GMT)
• No data ahead
Currency Forecast
EUR/USD : The euro edged higher against the U.S. dollar on Wednesday after softer-than-expected U.S. inflation data dampened expectations of a near-term Federal Reserve rate hike, though elevated oil prices continued to pose upside inflation risks.U.S. consumer inflation slowed to 3.5% year-on-year in June, while the headline Consumer Price Index fell 0.4% from the previous month, marking its first monthly decline since April 2020 as energy prices eased. Following the data, traders sharply reduced expectations of a July Fed rate hike, with CME Fed funds futures implying just a 16% probability, roughly half the odds seen before the inflation reports. Immediate resistance can be seen at 1.1475(SMA 20), an upside break can trigger rise towards 1.1495(50%fib).On the downside, immediate support is seen at 1.1368(38.2%fib), a break below could take the pair towards 1.1291(Lower BB).
GBP/USD: The British pound rose against the dollar as sterling was supported by expectations for higher interest rates. Other factors supporting the currency include an easing of domestic political uncertainty, resilient growth and record inbound takeover activity for British companies. Investors also remain optimistic that Britain can forge closer ties with the European Union, ahead of a summit next week. The latest escalation of hostilities in the Middle East has prompted investors to add to bets for rate hikes from the Bank of England this year, given the expected impact on inflation from higher oil prices. Money market traders are fully pricing in a hike by the November policy meeting, with a second rate hike priced in by March 2027. Immediate resistance can be seen at 1.3546(38.2%fib), an upside break can trigger rise towards 1.3612(Higher BB).On the downside, immediate support is seen at 1.3427(50%fib), a break below could take the pair towards1.3334(61.8%fib).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday as investors digested Bank of Canada rate decision and U.S. producer prices data.The U.S. dollar fell against a basket of major currencies after softer-than-expected U.S. producer prices bolstered the view that the Federal Reserve can remain patient on interest rates even as investors weighed renewed strikes on Iran.The BoC left its benchmark interest rate unchanged at 2.25% for the sixth consecutive policy meeting as expected and said growth would strengthen in the second half of the year as inflation pressures eased.The price of oil, one of Canada's major exports, was trading 0.5% lower at $78.95 a barrel, giving back some of this week's sharp gains. Immediate resistance can be seen at 1.4115(38.2%fib), an upside break can trigger rise towards 1.4173(SMA20).On the downside, immediate support is seen at 1.4005(50%fib), a break below could take the pair towards 1.3894(61.8%fib).
USD/JPY: The U.S. dollar weakened against the yen on Wednesday as softer-than-expected U.S. inflation data reinforced expectations that the Federal Reserve will keep interest rates unchanged in July, weighing on the greenback. U.S. annual inflation slowed to 3.5% in June, while the CPI fell 0.4% from the previous month, its first monthly decline since April 2020, largely due to lower energy prices. Following the inflation reports, markets cut the probability of a July Fed rate hike to just 16%, according to CME FedWatch data. Despite the gains, the yen remained near 40-year lows as investors continued to await concrete measures from Japanese authorities to support the currency. Immediate resistance can be seen at 162.73(23.6%fib) an upside break can trigger rise towards 163.00(Psychological level) .On the downside, immediate support is seen at 160.81(38.2%fib) a break below could take the pair towards 159.58(50%fib).
Equities Recap
European shares closed slightly higher on Wednesday as a rebound in luxury stocks offset losses in telecom and technology shares, though escalating Middle East tensions continued to cap investor sentiment.
UK's benchmark FTSE 100 closed down by 0.13 percent, Germany's Dax ended down by 0.59 percent, France’s CAC finished the day up by 0.19 percent.
Wall Street stocks advanced on Wednesday as softer-than-expected inflation data and a strong start to the second-quarter earnings season boosted investor sentiment.
Dow Jones closed up by 0.29% percent, S&P 500 closed up by 0.38% percent, Nasdaq settled upby 0.62% percent.
Commodities Recap
Gold pared losses on Wednesday after weaker-than-expected U.S. producer prices reinforced easing inflation trends, though escalating Middle East tensions kept concerns over inflation and higher interest rates alive.
Spot gold was broadly steady at $4,057.34 per ounce by 1:40 p.m. EDT (1740 GMT) after falling nearly 1% earlier in the session. U.S gold futures settled 0.4% lower at $4,051.80.
Oil prices edged higher on Wednesday, supported by a larger-than-expected draw in inventories, as markets largely shrugged off fresh U.S. strikes on Iranian military sites aimed at curbing Tehran's ability to threaten shipping through the Strait of Hormuz.
Brent futures settled at $84.95 a barrel, up 22 cents, or 0.26%. West Texas Intermediate futures finished at $79.60 a barrel, up 26 cents, or 0.33%.
