Market Roundup
US consumer spending 0.2% v 0.3% forecast 0.5% previous.
US Jan PCE price index y/y 1.9% v 1.6% previous, m/m 0.4% v 0.2% previous.
US Feb ISM Mfg PMI surges to 2.5-yrr high in Feb; 57.7 v 56 forecast, 56 previous;
Employment dips, prices paid steady.
Fed’s Kaplan: We should begin process of gradual rate hikes, economy solid not spectacular - DJ.
Atlanta Fed’s GDPNow: US iconology growing at 1.8% in Q1 vs 2.5% on Feb 27.
Wall St hits new highs as Trump speech reignites rally.
Weaker euro helps propel EZ factory growth to six-year high, Growth in new export orders highest since April 2011.
Welcome or not, ECB buying crushes German 2-yr bond yields, ECB seen buying more bonds sub -0.40% for QE.
U.S. crude oil stocks rise, production up again; early NorAm oil gains reversed -EIA.
US 2-yr yield hits highest since 2009 on rate hike bets, fed funds futures show 65% chance of hike in March.
Mexico’s Carstens: Bank has never thought to request swap line w/Fed, lifts MXN of session high.
Looking Ahead - Economic Data (GMT)
23:50 Japan Foreign Bond Investment w/e 48.2b-previous
23:50 Japan Foreign Invest JP Stock w/e -127.9b-previous
00:30 Australia Building Approvals* Jan forecast 0%, -1.20%-previous
00:30 Australia Private House Approvals* Jan -1.60%-previous
00:30 AustraliaTrade Balance G&S (A$)* Jan forecast 3800m, 3511m-previous
00:30 Australia Goods/Services Imports* Jan 1.00%-previous
00:30 Australia Goods/Services Exports* Jan 5.00%-previous
Looking Ahead - Events, Other Releases (GMT)
No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0500 levels and currently trading at 1.0547 levels. The pair has made session high at 1.0572 and hit lows at 1.0519 levels. Euro declined against the dollar on Wednesday as the greenback strengthened after hawkish comments from two Federal Reserve officials late on Tuesday increased expectations that the U.S. central bank is closer to raising interest rates. New York Fed President William Dudley, a permanent voter on the U.S. central bank's open market committee, said the case for tightening monetary policy has become a lot more compelling. The Fed officials' comments sent the U.S. dollar jumped 0.8 percent against a basket of six major currencies, its highest since Jan. 11. Rate expectations overshadowed a speech by U.S. President Donald Trump late on Tuesday, which outlined broad tax cuts and a $1 trillion public-private initiative to rebuild degraded roads and bridges but failed to give specific details on the plans. On the data front, U.S. consumer price inflation jumped in January by 0.4 percent, the largest increase since February 2013, while consumer spending increased 0.2 percent in the month. The greenback climbed half a percent against the euro to trade at $1.0545.
GBP/USD is supported in the range of 1.2265 levels and currently trading at 1.2288 levels. It reached session high at 1.2328 and dropped to session low at 1.2280 levels. Sterling declined to hit 12 day low against the dollar on Wednesday as sterling came under selling pressure after weaker-than-expected batch of economic data added to political nerves that have begun to weigh on the currency again after last year's Brexit vote. A regular survey of manufacturing purchasing managers on Wednesday showed the factory sector holding on to much of its post-Brexit vote momentum while growing more slowly in February than expected. The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) also showed a slight easing in inflation pressures, which had been rising at a record pace after the tumble in the value of the pound triggered by the decision to leave the European Union. The overall manufacturing PMI slipped to 54.6 from 55.7 in January, below the median forecast of 55.6.The pound has been struggling in the face of figures in the past fortnight suggesting the UK economy was finally beginning to suffer from the uncertainty around Britain's planned exit from the European Union over the next two years. The pound was down half a percent on the day against the dollar at $1.2316 a. It was the fourth day running it had fallen against the dollar, its longest losing streak since mid-December.
USD/CAD is supported at 1.3276 levels and is trading at 1.3345 levels. It has made session high at 1.3357 and lows at 1.3297 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as oil dipped and expectations for further U.S. Federal Reserve interest rate hikes kept the greenback firmer against its major peers. Canada's central bank held rates steady as it stayed focused on the significant uncertainties facing the economy. The bank said it was continuing to monitor the risks contained in its January Monetary Policy Report, which included a protectionist tilt in U.S. trade policy. Chances of a Federal Reserve rate hike in March have surged after hawkish comments from two Fed officials, while data showing U.S. factory activity surged to a 2-1/2-year high in February added to support for the U.S. dollar. Canada's current account deficit in the fourth quarter narrowed sharply to C$10.73 billion ($8.07 billion), its lowest in more than five years, thanks largely to rising exports, Statistics Canada said on Wednesday. Analysts had expected a C$9.75 billion deficit. The shortfall was the lowest since C$10.17 billion recorded in the third quarter of 2011. The Canadian dollar was last trading at C$1.3340 to the greenback, or 74.93 U.S. cents, weaker than Tuesday's close of C$1.3281, or 75.30 U.S. cents.
AUD/USD is supported around 0.7635 levels and currently trading at 0.7681 levels. It hit session high at 0.7685 and made session lows at 0.7640 levels. Australian dollar inched higher against US dollar on Wednesday as Aussie was supported by upbeat GDP data. Australia's economy rebounded sharply last quarter as commodity exports boomed while consumers and the government lifted spending, extending the resource-rich nation's 25-year streak of uninterrupted expansion. Data showed gross domestic product (GDP) climbed 1.1 percent in the fourth quarter. That handily topped forecasts of a 0.7 percent gain and came as a huge relief after the third quarter's shock 0.5 percent decline. The recovery saved the political blushes of the conservative government of Malcolm Turnbull, which is riding low in the polls and might have come unglued at news of an actual recession. Also helping the Aussie was data showing China's factory activity expanded faster than expected in February. China is Australia's No.1 trading partner. The Australian dollar rose 0.24 percent to $0.7673, coming back up from a two-week low of $0.7646 on Tuesday. The Aussie is among the best performing major currencies so far this year, up 6.5 percent already, but it has stayed muted most of February on a strengthening greenback.
Equities Recap
European shares climbed to 15-month highs on Wednesday, with banks and construction stocks leading the rally on renewed optimism over a huge economic stimulus in the United States.
UK's benchmark FTSE 100 closed up by 1.6 percent, FTSEurofirst 300 ended the day up by 1.47percent, Germany's Dax ended up by 1.9 percent, France’s CAC finished the day up by 2 percent.
The Dow on Wednesday blasted through the 21,000 mark for the first time after U.S. President Donald Trump's measured tone in his first speech to Congress lifted optimism and investors viewed a looming interest rate hike as a glass half full.
Dow Jones closed up by 1.44 percent, S&P 500 ended up 1.36 percent, Nasdaq finished the day up by 1.33 percent.
Treasuries Recap
U.S. Treasury yields rose broadly on Wednesday, with the 2-year's hitting a more than seven-year high, on increased expectations that the Federal Reserve will raise U.S. overnight interest rates at its March meeting.
The yield on 10-year notes rose to 2.471 percent, the highest since Feb. 16. Prices on 30-year bonds fell by more than 2 points, pushing yields to 3.074 percent, the highest since Feb. 16.
Commodities Recap
Oil prices ended slightly lower on Wednesday as record-high U.S. crude supplies tempered expectations that the market will rebalance as evidence emerges that OPEC producers are complying with an agreement to cut production.
U.S. West Texas Intermediate (WTI) futures for April delivery settled at $53.83 a barrel, down 18 cents or 0.3 percent. May Brent crude futures dropped 15 cents, or 0.3 percent, to $56.36 a barrel.
Gold gave back most of its losses on Wednesday as the dollar pared gains and bullion shrugged off earlier pressure from U.S. Federal Reserve officials' comments that raised expectations of an interest rate hike in March.
Spot gold was down 0.1 percent at $1,246.83 an ounce by 2:12 p.m. EST (1912 GMT), heading for a third straight day of losses. The metal hit its highest since Nov. 11 at $1,263.80 on Feb. 27.U.S. gold futures settled down 0.3 percent at $1,250.
