Market Roundup
• US MBA Mortgage Application w/e -7.4%, 1.4% previous.
• US Mortgage Market Index w/e 391.9, 423.3 previous.
• US MBA Purchase Index w/e 242.8, 249.1 previous.
• US MBA 30-Yr Mortgage Rate w/e 4.22%, 4.20% previous.
• Fed’s Beige book: Economic activity expanded across all 12 districts in June.
• Fed: Consumer spending 'appears to be rising' in majority of districts.
• Fed's Yellen: rate and portfolio plans on track, caution on inflation.
• Yellen: Balance sheet could shrink to normal levels by 2022.
• Yellen: Wage growth seems somewhat low given fed 2% inflation objective.
• Kansas City Fed President George wants to start balance sheet trim in near future.
• Trump says his son is 'innocent' over emails about Russian campaign help.
• Jumble of jobs data underlines Bank of England's rates dilemma.
• BoE: Credit market a bigger systemic risk than during 2008 crisis.
• S&P warns more sovereign downgrades likely this year.
• German Fin Min Schaeuble: Monetary policy development problematic.
• Ex-Brazil President Lula sentenced to nearly 10 years for corruption.
• Confident Bank of Canada hikes rates for the first time since 2010.
• EU: Greece public finances back in order, closer to market return.
Looking Ahead - Economic Data (GMT)
• China Trade Balance USD Jun 42.44b forecast, 40.81b previous
• 22:45 New Zealand Food Price Index MM Jun, 2.4% previous
• 23:50 Japan Foreign Bond Investment w/e, -772.8b previous
• 23:50 Japan Foreign Invest JP Stock w/e, -14.0b previous
Looking Ahead - Events, Other Releases (GMT)
• 14:00 Fed’s Yellen delivers semiannual monetary policy, Washington
• 17:00 Fed’s Brainard speaks at the NBER Summer Institute in Cambridge
• 15:30 Chicago Fed’s Evans speaks at Annual Rocky Mountain Economic Summit, Idaho
Currency Summaries
EUR/USD is likely to find support at 1.1372 levels and currently trading at 1.1416 levels. The pair has made session high at 1.1478 and hit lows at 1.1390 levels. Euro declined against the dollar on Wednesday after bond yields in the euro area fell weighing on euro after Federal Reserve Chair Janet Yellen dampened growing expectations of more than one interest rate hike later this year. In remarks to the House Committee on Financial Services, Yellen said the U.S. economy is strong enough to absorb further gradual rate increases and the slow wind-down of the Fed's massive bond portfolio. The testimony depicted an economy that is growing, albeit slowly and continues to add jobs as it benefits from steady household consumption and a recent jump in business investment. The dollar, which fell against the euro soon after the release of Yellen's prepared remarks, reversed course and was trading near session highs against the common currency, as government bond yields in the euro area fell. The dollar index rose 0.11 percent, with the euro down 0.42 percent to $1.1417.
GBP/USD is supported in the range of 1.2800 levels and currently trading at 1.2890 levels. It reached session high at 1.2904 and dropped to session low at 1.2853 levels. Sterling rose against the dollar on Wednesday as slightly better than expected wages and jobs data saved Britain's pound from another round of fall, offsetting a series of political and economic warning signs as talks on leaving the European Union get going in earnest. Economic indicators have suggested the British economy is already struggling to gain momentum after a sluggish start to the year, while consumer and business sentiment has soured. Amid the resulting falls in the pound, several of the Bank of England's monetary policy panel members have stepped in to warn that they may raise rates soon, temporarily lifting the currency before it slipped back. BoE Deputy Governor Ben Broadbent said in a newspaper interview published on Wednesday he was "not ready" to raise rates yet, driving sterling to a two-week low against the dollar and 8-month low against the euro in early trade before the labour market report improved the mood. By 1430 GMT, the pound was trading 0.4 percent stronger on the day at $1.2880, having earlier weakened to $1.2812. It jumped as high as $1.2910 briefly after U.S. Federal Reserve Chair Janet Yellen dampened expectations of more than one interest rate hike for the rest of the year, before easing back.
USD/CAD is supported at 1.2675 levels and is trading at 1.2720 levels. It has made session high at 1.2936 and lows at 1.2676 levels. The Canadian dollar rose sharply against its U.S. counterpart on Wednesday after the Bank of Canada raised interest rates saying the economy no longer needed as much stimulus and sending the Canadian dollar to a near 11-month high on expectations of more rate hikes to come. The widely expected rate increase makes Canada the first major central bank to follow the Federal Reserve in removing some of the monetary stimulus poured into the global economy after the 2007-2009 financial crisis. The Bank of Canada raised its official interest rate by 25 basis points to 0.75 percent. The central bank cited a need to look through soft inflation as it hiked rates for the first time since September 2010 but said it will wait for more economic data before committing to its next move.The loonie has soared 5 percent since the Bank of Canada turned hawkish in June, while the 2-year yield has jumped more than 40 basis points over the same period. The Canadian dollar was last trading at C$1.2732 to the greenback, up 1.38 percent. The currency hit its highest since June 16, 2016 at C$1.2673.
AUD/USD is supported around 0.7640 levels and currently trading at 0.7680 levels. It hit session high at 0.7681 and made session lows at 0.7651 levels. The Australian dollar pushed ahead against U.S. currency on Wednesday, as slightly softer dollar and higher commodities prices supported Australian dollar across the board. The Aussie was last trading at $0.7678, away from a $0.7587 low touched at the start of the week. The U.S. currency was dogged by political uncertainty as emails released by President Donald Trump's eldest son suggested he welcomed Russian help in last year's election campaign. The Aussie was underpinned by a rally in iron ore, Australia's single biggest export earner, which hit its highest in more than two months amid rising prices for steel in China. A recent run of upbeat domestic data has also bolstered sentiment, though it had yet to show up in polls of Australian consumers. A Westpac survey found the mood still cautious even as businesses reported the best times since early 2008. Oil futures pared gains despite a bigger-than-expected decline in U.S. crude stocks as the drawdown was not as big as reported by the American Petroleum Institute on Tuesday.U.S. crude inventories fell 7.6 million barrels last week, the U.S. Energy Information Administration (EIA) said, much more than the 2.9 million-barrel crude draw forecast but slightly less than the 8.1 million-barrel decline reported by the API.
Equities Recap
A run higher for energy shares and miners, as well as strong updates from Norwegian lender DNB, and a more dovish tone from U.S. Federal Reserve Chief Yellen, helped drive European shares up on Wednesday, though renewed pain for publisher Pearson weighed on the media sector.
UK's benchmark FTSE 100 closed up by 1.2 percent, the pan-European FTSEurofirst 300 ended the day up by 1.66 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 1.7 percent.
U.S. stocks rose on Wednesday afternoon after Federal Reserve Chair Janet Yellen said interest rates hikes would be gradual and rates will not have to rise much further to reach a neutral level.
Dow Jones closed up by 0.59 percent, S&P 500 ended up 0.74 percent, Nasdaq finished the day up by 1.10 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday after Federal Reserve Chair Janet Yellen dampened expectations for an interest rate hike this year and in 2018, as she remained cautious about inflation.
In late trading, the benchmark 10-year Treasury yield fell to 2.302 percent, its lowest in two weeks, from 2.362 percent late on Tuesday. It was last at 2.319 percent.
At the front-end of the curve, the two-year yield dropped as low as 1.331 percent, a three-week trough, from 1.379 percent late on Tuesday, and last traded at 1.347 percent.
Commodities Recap
Gold prices rose on Wednesday, edging further from this week's near four-month low after comments from Federal Reserve Chair Janet Yellen curbed speculation that U.S. interest rates would rise more than once this year.
Spot gold was 0.24 percent at $1,220.26 per ounce by 3:02 p.m. EDT (1902 GMT).The most-active U.S. gold futures for August delivery settled up $4.40 or 0.36 percent, at $1,219.1 per ounce. Prices had rallied as much as 1.8 percent from Monday's near four-month low of $1,204.
Oil futures rose, maintaining some gains from earlier in the day, as a report showing hefty drawdowns in U.S. crude inventories was offset by data pointing to lackluster gasoline demand.
Brent crude futures rose 22 cents, or 0.5 percent, to settle at $47.74 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 45 cents, or 1 percent, to settle at $45.49.
FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest
