Market Roundup
• US GDP 2nd Estimate Q2, 3.0%, 2.7% forecast, 2.6% previous.
• US ADP National Employment Aug, 237k, 183k forecast, 178k previous.
• US Core PCE Prices Prelim Q2, 0.9%, 0.9% forecast, 0.9% previous.
• US GDP Deflator Prelim Q2, 1.0%, 1.0% forecast, 1.0% previous.
• US MBA Mortgage Application w/e, -2.3%, -0.5% previous.
• US MBA 30-Yr Mortgage Rate w/e, 4.11%, 4.12% previous.
• Trump says ideally would like to bring the business tax rate down to 15%.
• S&P warns of dire impact on U.S. economy from any shutdown, default.
• CA Current Account C$ Q2, -16.32B, -17.40B forecast, -14.05B previous.
• Strong German, Spanish inflation firms up case of ECB hawks.
• UK looking to replicate EU's external trade deals after Brexit -PM May.
• WTO gives Brazil 90 days to withdraw industrial subsidies.
• Trump says 'talking not the answer' on N.Korea, Mattis disagrees.
Looking Ahead - Economic Data (GMT)
• 23:01 Great Britain GFK consumer confidence Aug, -13 forecast, -12 previous
• 23:50 Japan Industrial Output Prelim MM Jul, -0.5% forecast, 2.2% previous
• 01:00 China NBS Manufacturing PMI Aug, 51.3 forecast, 51.4 previous
• 01:30 Australia Capital Expenditure Q2, 0.3% forecast, 0.3% previous
• 01:30 Australia Building Capex Q2, 0.7% previous
• 01:30 Australia Plant/Machinery Capex Q2, -0.1% previous
• 01:30 Australia Private Sector Credit Jul, 0.6% previous
• 01:30 Australia Housing Credit Jul, 0.5% previous
• 05:00 Japan Housing Starts YY Jul, -0.3% forecast, 1.7% previous
Looking Ahead - Events, Other Releases (GMT)
• 15:30 Fed’s Kaplan participates in Q&A session in Texas
• 01:30 BOJ’s Takako Masai to give a speech and hold a news conference
Currency Summaries
EUR/USD is likely to find support at 1.1831 levels and currently trading at 1.1891 levels. The pair has made session high at 1.1937 and hit lows at 1.1882 levels. The euro slipped against the U.S. dollar on Wednesday as the dollar rose broadly on speculation the European Central Bank could step in to weaken the euro and after strong U.S. economic data boosted expectations for a solid U.S. jobs report on Friday. Investors were starting to suspect that ECB President Mario Draghi could be growing more concerned about the euro's rise, despite making no mention of the currency's strength at a central bank gathering in Jackson Hole, Wyoming last Friday.Draghi's omission of commentary on the euro that Friday had contributed to the currency breaking past the critical $1.20 level Tuesday. The euro is up more than 13 percent against the dollar this year.The euro was on track for its biggest daily percentage drop against the dollar in nearly four weeks, of about 0.7 percent, putting it back below $1.20 after touching a more than 2-1/2-year high of $1.2069 Tuesday.It last traded at $1.1890.
GBP/USD is supported in the range of 1.2867 levels and currently trading at 1.2920 levels. It reached session high at 1.2936 and dropped to session low at 1.2895 levels. Sterling was little changed against dollar on Wednesday as investors remained sidelined with little interest in trading the currency amid ongoing Brexit negotiations. Investors focused on the third round of Brexit negotiations which started on Monday, with the European Union's chief negotiator saying he was concerned at the slow progress of the talks.The British government has laid out a series of position papers that have outlined compromises over some of the issues likely to block progress in talks this year, but EU officials say Britain needs to settle its divorce bill with the bloc before a trade agreement can be discussed. Having hit an 11-month high against the dollar on Aug 2nd, Sterling has since lost around 2 percent. It was trading flat on Wednesday at $1.2918, close to the previous day's low of $1.2911.
USD/CAD is supported at 1.2561 levels and is trading at 1.2614 levels. It has made session high at 1.2638 and lows at 1.2563 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as oil prices fell as U.S. refinery shutdowns weighed on oil prices and the greenback climbed against a basket of major currencies. The U.S. dollar was broadly higher after U.S. data indicated solid economic momentum, keeping the prospect of a December interest rate increase alive. Prices of oil, one of Canada's major exports, slid as flooding and damage from Tropical Storm Harvey shut over a fifth of U.S. refineries, curbing demand for crude.On the data front, Canada's current account deficit widened to C$16.32 billion in the second quarter from a revised C$12.92 billion deficit in the first quarter as imports of goods saw the largest quarterly growth in nine years, Statistics Canada said. The Canadian dollar was trading at C$1.2520 to the greenback, down 0.75 percent. The currency's strongest level of the session was C$1.2501, while it touched its weakest since Aug. 23 at C$1.2575.
USD/JPY is supported around 109.81 levels and currently trading at 110.29 levels. It peaked to hit session high at 110.42 and made session lows at 110.04 levels. The U.S. dollar strengthened against the Japanese yen on Wednesday as the greenback strengthened after upbeat economic data and investors shifted focus away from government tension in Washington. The ADP National Employment Report showed U.S. private-sector employers hired 237,000 workers in August for the biggest monthly increase in five months, also boosting the greenback and driving expectations for a solid U.S. August non-farm payrolls figure.The dollar touched a two-week high against the yen of 110.43 yen after the U.S. data, rising further off a 4-1/2-month low of 108.25 struck Tuesday following North Korea's launch of a ballistic missile over Japan. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.7 percent at 92.879 after temporarily hitting a more than 2-1/2-year low of 91.621 Tuesday.
Equities Recap
Investors piled back into European stocks on Wednesday, boosting indexes higher in a rally a day after geopolitical concern caused a drop across equity markets.
UK's benchmark FTSE 100 closed up n by 0.45 percent, the pan-European FTSEurofirst 300 ended the day up by 0.77 percent, Germany's Dax ended up by 0.55 percent, France’s CAC finished the day up by 0.58 percent.
U.S. stocks rose on Wednesday after stronger-than-expected U.S. economic growth outweighed concerns about escalating tensions between the United States and North Korea and the aftermath of Hurricane Harvey.
Dow Jones closed up by 0.11 percent, S&P 500 ended up 0.45 percent, Nasdaq finished the day up by 1.04 percent.
Treasuries Recap
U.S. Treasury yields held near nine-month lows on Wednesday as concerns about rising tensions with North Korea kept a bid for the bonds, and offset data that showed solid economic momentum.
The 10-year notes were last down 3/32 in price to yield 2.145 percent, up from 2.136 percent on Tuesday.
Commodities Recap
Gold steadied on Wednesday, as a stronger dollar pushed the metal off Tuesday's 9-1/2-month high, but the precious metal remained above $1,300 on renewed tensions between Washington and North Korea.
Spot gold slipped by 0.1 percent to $1,307.51 an ounce by 2:08 p.m. EDT (1808 GMT). On Tuesday, the price jumped to $1,325.94, the highest since Trump was elected U.S. president. It was on track to close August up by around 3 percent, its second straight monthly gain. COMEX gold futures settled down 0.4 percent at $1,314.10.
Gasoline futures surged on Wednesday to another two-year high and crude oil was down, as flooding and damage from Tropical Storm Harvey shut nearly a quarter of U.S. refinery capacity, curbing demand for crude while raising the risk of fuel shortages.
U.S. gasoline futures were up 5.5 percent at $1.8810 a gallon, having hit $1.9140, the highest since July 2015. Diesel futures advanced slightly to $1.6657 a gallon, having touched the highest since January at $1.7161 earlier in the session.
Brent oil, the international crude benchmark, was down $1.07, or 2 percent, at $50.93 a barrel at 1:45 p.m. EDT (1745 GMT). U.S. crude was down 44 cents, or 0.95 percent, to $46.00.
