Market Roundup
• All eyes on ECB meeting; euro zone fiscal stimulus prospect
• Yen weakens towards 108 per dollar on rising risk appetite
• US Aug Core PPI (MoM) 0.3%,0.2% forecast, -0.1% previous
• US Aug Core PPI (YoY) 2.3%,2.2% forecast, 2.1% previous
• US Aug PPI (MoM) 0.1%,0.1% forecast, 0.2% previous
• US Aug PPI (YoY) 1.8%,1.7% forecast,1.7% previous
• Canada Capacity Utilization Rate (Q2) 83.3%,81.8% forecast, 81.1% previous
• Russia Jul Trade Balance 11.22B, 11.00B forecast, 12.51B previous
• US Wholesale Inventories (MoM) 0.2%,0.2% forecast, 0.0% previous
• Brazil Foreign Exchange Flows -1.591B, -4.317B previous
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Aug FPI (MoM) 1.1%
• 23:00 Japan Sep Reuters Tankan Index -4
• 23:50 Jul Japan Core Machinery Orders (MoM) -9.0%, 13.9% previous
• 23:50 Jul Japan Core Machinery Orders (YoY) -4.5%, 12.5% previous
• 23:50 Japan Foreign Investments in Japanese Stocks -89.5B
• 23:50 Aug Japan PPI (MoM) -0.2%,0.0 previous
• 23:50 Aug Japan PPI (YoY) -0.8%,-0.6 previous
• 01:00 Australia MI Inflation Expectations 3.5% previous
• Tentative China Trade Balance (USD) 45.06B previous
• 11:45 ECB Interest Rate Decision (Sep)
Looking Ahead - Events, Other Releases (GMT)
• 11:45 ECB Monetary Policy Statement
• 12:30 ECB Press Conference
Currency Summaries
EUR/USD: The euro fell to a one-week low against the greenback on Wednesday, a day before the European Central Bank is expected to add further stimulus in a bid to boost the region’s economy. ECB policymakers are leaning toward a package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said last week.Many also favor restarting asset buys, but opposition from some northern European countries is complicating this issue. The euro was down 0.43 percent at $1.0996. An index that tracks the dollar versus a basket of six major currencies was down 0.30 at 98.30. Immediate resistance can be seen at 1.1058 (21 DMA), an upside break can trigger rise towards 1.1086 (Sep 5th high).On the downside, immediate support is seen at 1.0964 (lower BB),a break below could take the pair towards 1.0900 (Psychological level).
GBP/USD: Sterling strengthened against dollar on Wednesday, as investors assessed the chances Prime Minister Boris Johnson can strike a Brexit deal with the European Union before Oct. 31.The probability of a no-deal Brexit was still very much a concern for traders, given that Johnson stood firm on taking Britain out of the EU by the end of next month.But the British parliament approved legislation which forces Johnson to request a deadline extension from Brussels if he cannot agree on a deal with the EU by mid-October. Investors, calculating that the risk of no-deal Brexit is receding after the law passed, have pushed sterling from under $1.20, the three-year low it reached early last week, to as high as $1.2385 on Monday. Immediate resistance can be seen at 1.2394 (Higher BB), an upside break can trigger rise towards 1.2400 (Psychological level).On the downside, immediate support is seen at 1.2278 (50 DMA), a break below could take the pair towards 1.2224 (11 DMA).
USD/CAD: The Canadian dollar was little changed against its U.S. counterpart on Wednesday, holding near a six-week high it notched the day before, as oil prices rose and domestic data showed higher than expected industrial capacity usage. Canadian industries ran at 83.3% of capacity in the second quarter of 2019, up from an upwardly revised 81.1% in the first quarter, Statistics Canada said. Economists had forecast a rate of 81.8%. The Canadian dollar was trading 0.1% higher at 1.3162 to the greenback, or 75.98 U.S. cents. The currency, which on Monday notched its strongest since July 31 at 1.3140, traded in a range of 1.3161 to 1.3191.Immediate resistance can be seen at 1.3234 (9 DMA), an upside break can trigger rise towards 1.3246 (11 DMA).On the downside, immediate support is seen at 1.3130 (lower BB), a break below could take the pair towards 1.3100 (Psychological level).
USD/JPY: The U.S. dollar strengthened against the yen on Wednesday, as demand for safe-haven assets continued to diminish on the back of rising risk appetite. The yen had rocketed towards a 2019 high as investors in August fretted about the prospect of a global recession and selloff. Forex traders often buy the yen in times of uncertainty because of Japan’s vast current account surplus and because they believe Japanese investors will bring their money home when international markets tumble. But with broader stock markets recovering on hopes of easing U.S.-China tensions and diminishing risks of a no-deal Brexit before several key central bank meetings, the yen is now weakening. Strong resistance can be seen at 107.88 (Daily high), an upside break can trigger rise towards 108.00 (Psychological level).On the downside, immediate support is seen at 107.16 (50 DMA), a break below could take the pair towards 106 .70 (11 DMA).
Equities Recap
European shares hit six-week highs on Wednesday, supported by easing U.S.-China trade tensions and hopes of fresh stimulus from the European Central Bank, while news from individual companies played into the upbeat mood.
The UK's benchmark FTSE 100 closed up by 0.96 percent, Germany's Dax ended up by 0.74 percent, and France’s CAC finished the day up by 0.44 percent.
U.S. stocks rose slightly on Wednesday as China’s move to ease trade tensions with the United States soothed investor nerves, while shares of Apple gained a day after the launch of its latest iPhones.
Dow Jones closed up by 0.85 percent, S&P 500 ended up 0.71 percent, Nasdaq finished the day down by 1.06 percent.
Treasuries Recap
U.S. Treasury yields extended their rise on Wednesday after data showed core U.S. producer prices data rebounded in August after falling the previous month, suggesting some pick-up in inflation.
U.S. benchmark 10-year note yields rose to 1.729% from 1.702% late on Tuesday. Early in the session, 10-year yields hit a four-week high of 1.744%.
Commodities Recap
Gold rose on Wednesday on expectations of monetary policy easing by top central banks while global growth risks continue to linger, although improved appetite for riskier assets capped bullion’s gains and kept it near a four-week low.
Spot gold was up 0.6% to $1,494.90 per ounce at 1:39 p.m. EDT (1739 GMT). Prices fell to their lowest since Aug. 13 at $1,483.90 in the previous session in four-day losing streak.U.S. gold futures settled 0.3% higher at $1,503.20 an ounce.
Oil prices tumbled on Wednesday after a report that U.S. President Donald Trump weighed easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about global energy demand.
Brent crude fell $1.31, or 2.1%, to $61.07 a barrel by 11:55 a.m. ET (1555 GMT), while U.S. West Texas Intermediate declined $1.26, or 2.2%, to $56.14 a barrel.
