Market Roundup
• Siding with Democrats, Trump agrees to 3-month debt-limit rise.
• Fed Vice Chair Fischer announces resignation 10 months early.
• US International Trade MM Jul, -43.7B, -44.6B forecast, -43.6B previous.
• US Goods Trade Balance R Jul, -63.9B, -65.1B previous.
• US Markit Comp Final PMI Aug, 55.3, 56.0 previous.
• US Markit Svcs PMI Final Aug, 56.0, 56.9 previous.
• US ISM N-Mfg PMI Aug, 55.3, 55.4 forecast, 53.9 previous.
• US MBA Mortgage Application w/e, 3.3%, -2.3% previous.
• US Mortgage Index w/e, 420.5, 407.2 previous.
• US MBA 30-Yr Mortgage Rate w/e, 4.06%, 4.11% previous.
• US Redbook w/e, 0.3% MM, 4.4% YY; 2.0%, 4.3% previous.
• CA Trade Balance C$ Jul, -3.04B, -3.10B forecast, -3.60B previous.
• CA Labor Productivity Rate Q2, -0.1%, 1.4% previous.
• Bank of Canada surprises with second rate hike, eyes future moves.
• Trump says U.S. not 'putting up with' North Korea's actions.
• U.S. House approves $8 bln in initial Hurricane Harvey relief.
• Hurricane Irma lashes Caribbean, Florida braces for hit.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Construction Index Aug, 60.5 previous
• 01:30 Australia Retail Sales MM Jul, 0.3% forecast, 0.3% previous
• 01:30 Australia Trade Balance G&S Jul, 875M forecast, 856M previous
Looking Ahead - Events, Other Releases (GMT)
• 00:15 Fed’s Esther George speaks in Omaha, Nebraska
• 16:15 Fed’s Loretta Mester speaks before the Economic Club of Pittsburgh, Pennsylvania
• 11:45 ECB Governing Council meeting, followed by press conf. and rate announcement
• 12:30 ECB’s Draghi holds a press conf., after the interest rate meeting
Currency Summaries
EUR/USD is likely to find support at 1.1886 levels and currently trading at 1.1919 levels. The pair has made session high at 1.1948 and hit lows at 1.1907 levels. The euro was little changed against the greenback in the US session on Wednesday in the wake of a Bloomberg report, citing euro-area officials familiar with the matter, that the European Central Bank was unlikely to reach a decision on reducing its bond purchase before October. European Central Bank meeting on Thursday kept investors largely in a holding pattern. The euro was trading flat against the greenback at $1.1915.While remaining below a more than 2-1/2-year peak of $1.2069 touched last week. Investors will be looking out for signs that ECB President Mario Draghi has become concerned about the exchange rate, and that the currency's strength could delay any policy tightening plans. The euro’s decline was limited by jitters about further nuclear weapon tests by North Korea and concerns about Hurricane Irma, a powerful storm heading toward the southern United States.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3045 levels. It reached session high at 1.3081 and dropped to session low at 1.3035 levels. Sterling hit in nearly two months high against the dollar on Wednesday, as investors trimmed some bearish bets before parliament discusses the European Union repeal bill. Helped by a weaker tone to both the dollar and euro globally, the pound hit as high as $1.3081 before retreating to trade at $1.3039 in the late US session. It also gained 0.1 percent to 91.30 pence per euro, its strongest in more than two weeks. Investors have doubled net speculative bets against the pound and in favour of the dollar in the past three weeks, bringing them to their highest since early May. Analysts also wonder whether sterling's slide against the euro, with some banks predicting parity within a year, will provoke more efforts by the Bank of England to talk the currency up. The BOE's Michael Saunders reiterated last week that there was no particular level of the pound that worried the central bank, but further weakness would put more pressure on inflation already running above the bank's 2 percent target. The BoE is scheduled to meet next week and interest rate markets are expecting less than one rate increase before the end of 2018.
USD/CAD is supported at 1.2100 levels and is trading at 1.2219 levels. It has made session high at 1.2412 and lows at 1.2135 levels. The Canadian dollar surged to its strongest level in two years against its U.S. counterpart on Wednesday after the Bank of Canada surprised many by raising interest rates. The Bank of Canada raised interest rates, surprising many, and left the door open to more rate hikes in 2017 even as it pledged to pay attention to how higher borrowing costs would hit Canada's indebted households. The 25-basis-point increase to 1 percent followed a hike in July and puts Canada ahead of the curve in returning borrowing costs to more normal levels after they were slashed due to the 2007-2009 financial crisis. While the U.S. Federal Reserve has begun tightening, its pace has been slower. The Bank of Canada said the hike was warranted given unexpectedly strong economic growth in the second quarter but said future moves are not predetermined and would be guided by data and market developments. The Canadian dollar surged more than 2 percent after the Bank of Canada's move, which followed a rate increase in July, as the central bank left the door open to more rate hikes in 2017.
AUD/USD is supported around 0.7961 levels and currently trading at 0.7992 levels. It hit session high at 0.8015 and made session lows at 0.7961 levels. The Australian dollar retreated against US dollar on Wednesday after finding stiff chart resistance around 80 U.S. cents after a report on domestic economic growth was not as exuberant as bulls had wagered on. Australia's economy rebounded last quarter as consumers and government spent freely after a weather-beaten start to the year, while a long downturn in mining investment finally loosened its deadening grip on growth. Wednesday's GDP report showed the economy expanded 0.8 percent in the second quarter, up from 0.3 percent in the first quarter and outpacing even the much-vaunted U.S. recovery.Yet all this growth has shown no sign of rekindling inflation and, with plenty of spare capacity in the labour market, the Reserve Bank of Australia (RBA) seems content to leave interest rates at record lows for months to come. The Australian dollar hit session low at down to $0.7992, after touching a six-week peak of $0.8028 late on Tuesday.
Equities Recap
A rally in auto stocks lifted German shares to 10-day highs on Wednesday as upbeat broker notes reawakened investor interest into a cheaply valued sector that could benefit from plans to cut emissions.
UK's benchmark FTSE 100 closed down by 0.24 percent, the pan-European FTSEurofirst 300 ended the day up by 0.14 percent, Germany's Dax ended up by 0.76 percent, France’s CAC finished the day up by 0.31 percent.
Wall Street climbed on Wednesday, fueled by energy and financial shares and helped by news of an agreement to extend the debt limit, as stocks bounced back modestly from a day-earlier selloff.
Dow Jones closed up by 0. 28 percent, S&P 500 ended up 0.32 percent, Nasdaq finished the day up by 0.28 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday as a congressional fiscal plan that includes a three-month suspension of the debt ceiling gained support from President Donald Trump, reducing safe-haven demand among investors worried about a short-term default.
The 10-year Treasury yield fell to 2.054 percent earlier Wednesday, the lowest since Nov. 10, before rising to 2.103 percent in late trading.
Commodities Recap
Gold rose on Wednesday towards the one-year high hit earlier this week, boosted by tensions on the Korean peninsula and a lower dollar due to growing expectations the Federal Reserve will delay rate rises.
Spot gold rose 0.1 percent to $1,339.58 an ounce at 1334 GMT, a gain of around 8 percent so far this quarter and more than 16 percent so far this year. It touched $1,344.21 an ounce on Tuesday, it's highest since Sept. 8.U.S. gold futures slipped 0.1 percent to $1,344.5.
Oil prices rose on Wednesday as strong global refining margins and the reopening of U.S. Gulf Coast refineries provided a more bullish outlook after sharp drops due to Hurricane Harvey.
U.S. crude futures settled at $49.16 per barrel, up 50 cents or 1.03 percent. Brent was last at $54.16, up 1.46 percent on the day.
