Market Roundup
• U.S Fed cuts rates, but gives uncertain outlook
• Oil stabilise as Saudi says has restored supply
• Dollar holds near 7-week high vs yen after Fed decision
• U.S Aug Building Permits (MoM) 7.7%,8.4% previous
• U.S Aug Building Permits1.419M, 1.310M forecast, 1.317M previous
• Canada Common CPI (YoY) 1.8% , 1.9% forecast 1.9% previous
• Canada Aug Core CPI (YoY) 1.9%,2.2% forecast, 2.0% previous
• Canada Aug Core CPI (MoM) -0.1%.0.3% previous
• Canada Aug CPI (MoM) -0.1%,-0.2% forecast,0.5% previous
• Russian Aug Real Wage Growth (YoY) 3.0%, 3.0% forecast, 3.0% previous
• Russian Aug Retail Sales (YoY) 0.8%, 0.8% forecast, 1.1% previous
• Russian Aug Unemployment Rate 4.3%, 4.4% forecast, 4.5% previous
• U.S Fed Interest Rate Decision 2.00%, 2.00% forecast, 2.25% previous
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand GDP (QoQ) (Q2) 0.4% forecast,0.6% previous
• 22:45 New Zealand GDP (YoY) (Q2) 2.0% forecast, 2.5% previous
• 01:30 Australia Aug Employment Change 10.0K forecast, 41.1K previous
• 01:30 Australia Aug Full Employment Change 34.5K previous
• 01:30 Australia Aug Participation Rate 66.1% forecast, 66.1% previous
• 01:30 Australia Aug Unemployment Rate 5.3% forecast, 5.2% previous
• 03:00 Japan BoJ Interest Rate Decision -0.10% forecast,-0.10% previous
Looking Ahead - Events, Other Releases (GMT)
• TBC Japan BoJ Monetary Policy Statement
Currency Summaries
EUR/USD: The euro dipped against the greenback on Wednesday, as the Federal Reserve cut interest rates by a quarter of a percentage point, as expected, but gave an uncertain outlook on future easing . In cutting interest rates by 25 basis points for the second time this year, the Fed gave a nod to ongoing global risks and "weakened" business investment and exports. But new projections showed policymakers at the median expected rates to stay within the new range through 2020. However, in a sign of ongoing divisions within the Fed, seven of 17 policymakers projected one more quarter-point rate cut in 2019.The euro was down 0.01percent at $1.1028. An index that tracks the dollar versus a basket of six major currencies was down 0.38 at 98.58. Immediate resistance can be seen at 1.1072 (Daily High), an upside break can trigger rise towards 1.1130 (Higher Bollinger Band).On the downside, immediate support is seen at 1.000 (Psychological level),a break below could take the pair towards 1.095 (lower BB).
GBP/USD: Sterling edged lower against dollar on Wednesday, after British prices in August grew at their slowest pace since late 2016, while concerns about whether a last-minute Brexit deal was achievable also weighed on the currency. Prices of goods and services paid by consumers rose at an annual rate of 1.7% in August after a 2.1% increase in July, official data showed. The lower-than-forecast rate will be a welcome boost for British consumers and comes ahead of the Bank of England's monetary policy meeting on Thursday. The BoE targets a 2% inflation rate. The pound, which hit as low as $1.2439 after the inflation data, was last down 0.1% at $1.2475. Immediate resistance can be seen at 1.2556 (Higher BB), an upside break can trigger rise towards 1.2600 (Psychological level).On the downside, immediate support is seen at 1.2439 (5 DMA), a break below could take the pair towards 1.2393 (9 DMA).
USD/CAD: The Canadian dollar was little changed against its U.S. counterpart on Wednesday, as data showing a slight slowdown in domestic inflation failed to move the needle on Bank of Canada interest rate expectations. Canada’s annual inflation rate dipped to 1.9% in August from 2.0% in July on lower gasoline prices, while the average of the Bank of Canada's three preferred measures of core inflation was little changed at 2.0%, data from Statistics Canada showed. The price of oil, one of Canada's major exports, extended the previous day's decline after Saudi Arabia said it would quickly restore full production following last weekend's attacks on its facilities. Immediate resistance can be seen at 1.3252 (21 DMA), an upside break can trigger rise towards 1.3300 (Psychological level).On the downside, immediate support is seen at 1.3257 (5 DMA), a break below could take the pair towards 1.3219 (11 DMA).
USD/JPY: The U.S. dollar rose to hit seven-week high against the yen on Wednesday, after Fed delivered a widely expected interest rate cut aimed at sustaining a record-long economic expansion, but gave few hints of whether or when it could reduce borrowing costs further. The U.S. economic outlook is “favorable,” with labor markets strong and inflation likely to return to the Fed’s 2% inflation goal, Fed Chair Jerome Powell said in a news conference after the decision was announced. In a hint that the Fed may soon take bigger steps, Powell acknowledged that strains in funding markets had been bigger than expected, and he said the central bank may need to resume increases to the Fed’s balance sheet “earlier” than previously thought. Strong resistance can be seen at 108.54 (Higher BB), an upside break can trigger rise towards 109.00 (Psychological level).On the downside, immediate support is seen at 107.80 (9 DMA), a break below could take the pair towards 106 .82 (21 DMA).
Equities Recap
European shares ended flat on Wednesday, as gains for the defensive real estate and utilities sectors were countered by losses in luxury good makers, with caution prevailing ahead of the U.S. Federal Reserve’s interest rate decision.
The UK's benchmark FTSE 100 closed down by 0.09 percent, Germany's Dax ended up by 0.14 percent, and France’s CAC finished the up by 0.09 percent.
Wall Street sank on Wednesday when Federal Reserve policy makers gave mixed signals about their next move after cutting interest rates by a quarter of a percentage point in a widely expected move.
Dow Jones closed up by 0.13 percent, S&P 500 ended up 0.03 percent, Nasdaq finished the day down by 0.11 percent.
Treasuries Recap
The U.S. Treasury yield curve flattened as Powell spoke, with the 2-year gaining ground against the benchmark 10-year.
Benchmark 10-year notes last rose 6/32 in price to yield 1.7944%, from 1.814% late on Tuesday. The 30-year bond last rose 27/32 in price to yield 2.2413%, from 2.28% late on Tuesday.
Commodities Recap
Gold prices fell over 1% to a one-week low on Wednesday, pulled down by a lack of clarity on future monetary policy decisions after a widely anticipated interest rate cut by the U.S. Federal Reserve.
Spot gold dropped to $1,487.35 per ounce at 02:50 p.m. EDT (1850 GMT). U.S. gold futures settled up over $2, or 0.2%, at $1,515.80.
Oil prices retreated about 2% on Wednesday, extending the previous day’s declines after Saudi Arabia said it would quickly restore full production following last weekend’s attacks on its facilities and as U.S. crude stockpiles rose unexpectedly.
Brent crude oil futures ended the session down 95 cents, or 1.5%, at $63.60 a barrel while U.S. West Texas Intermediate (WTI) crude CLc1 futures settled $1.23, or 2.1% lower, at $58.11.
