Market Roundup
• Eying China, Pentagon submits new report on rare earth minerals
• UK PM candidate Johnson to face court over Brexit claims
• Bank of Canada holds rates, says economic slowdown likely temporary
• Rehn says ECB ready to react if slowdown persists
• Negative ECB rates are a boon for euro zone banks, says de Guindos
• Mueller says he could not charge Trump as Congress weighs impeachment
• US 24 May, w/e MBA Mortgage Applications, -3.3%, 2.4% previous
• US 24 May, w/e Mortgage Market Index, 411.5, 425.6 previous
• US 24 May, w/e MBA Purchase Index, 259.4, 263.0 previous
• US 24 May, w/e Mortgage Refinance Index, 1,255.4, 1,334.9 previous
Looking Ahead - Economic Data (GMT)
• 01:30 Australia Apr Building Approvals, 0.0% forecast, -15.5% previous
• 01:30 Australia Q1 Capital Expenditure, 0.5% forecast,, 2.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 01:30 BoJ’s Makoto Sakurai speaks to business leaders in Shizuoka, eastern Japan and hold a news conference, Shizuoka, Japan
• 07:30 BoE's Dave Ramsden speaks at a chamber of commerce in Inverness, Scotland
• 16:00 Fed's Richard Clarida speaks at the Economic Club of New York
• 18:30 BOC’s Carolyn Wilkins will hold speech at Calgary Chamber of Commerce
Currency Summaries
EUR/USD: The euro slipped lower against the U.S. dollar on Wednesday, as risk appetite rose as investors focused on trade tension between China and the United States. Investor jitters intensified after the People's Daily newspaper, owned by China's ruling Communist Party, said Beijing was ready to use rare earths for leverage in its trade dispute with the United States. In late U.S. trading, an index that tracks the greenback against the euro, yen, sterling and three other currencies was 0.23% higher at 98.173, holding below a two-year high of 97.908 reached last week.The euro was down 0.27 percent at $1.1306. Immediate resistance can be seen at 1.1167 (9 DMA), an upside break can trigger rise towards 1.1244 (Higher Bollinger Band).On the downside, immediate support is seen at 1.1122 (Lower Bollinger Band), a break below could take the pair towards 1.1100 (Psychological level).
GBP/USD: The sterling declined against the dollar on Wednesday, as growing worries no-deal Brexit and stronger greenback weighed on sterling. A gauge of the difference between expected swings in sterling over the next three and the next six months rose to its highest level in more than three years, with implied vol gauges signalling rising anxiety linked to Britain's Oct. 31 deadline to exit the European Union.May is to step down as Conservative Party leader on June 7 and most candidates to succeed her, including front-runner Boris Johnson, have signalled they are prepared for a no-deal departure if Brussels does not reopen Brexit negotiations. Sterling slipped 0.2% against the dollar to around $1.2621, just off four-month lows of $1.2605 hit last week. Immediate resistance can be seen at 1.2621 (5 DMA), an upside break can trigger rise towards 1.2710 (38.2% retracement level).On the downside, immediate support is seen at 1.2600 (23.6% retracement level), a break below could take the pair towards 1.2567 (Feb 2nd Low).
USD/CAD: The Canadian dollar weakened to a near five-month low against the greenback on Wednesday before paring its decline, as the Bank of Canada was less hawkish than some investors had expected and as global trade tensions weighed on financial markets. The central bank left its overnight rate at 1.75% but said there was increasing evidence that the economic slowdown was temporary and that growth accelerated in the second quarter. At (1956 GMT), the Canadian dollar was trading 0.2% lower at 1.3513 to the greenback, or 73.97 U.S. cents. The currency touched its weakest intraday level since Jan. 3 at 1.3547.Immediate resistance can be seen at 1.3548 (Session High), an upside break can trigger rise towards 1.3600 (Psychological level).On the downside, immediate support is seen at 1.3475 (5 DMA), a break below could take the pair towards 1.3411(50 DMA).
USD/JPY: The dollar gained against the Japanese yen on Wednesday, as fears of a further escalation in the Sino-U.S. trade dispute kept the dollar steady against safe-haven assets, including Japanese yen.The People's Daily newspaper, owned by China's ruling Communist Party, warned that Beijing was ready to use rare earths for leverage in its trade war with the United States, saying in an extremely strongly worded commentary "don't say we didn't warn you. It came after U.S. President Donald Trump on Monday said Washington was not ready to make a deal with China while also pressing Japanese Prime Minister Shinzo Abe to reduce Japan's trade imbalance with the United States.The dollar was last trading 0.01 present higher versus the Japanese yen at 109.59. Strong resistance can be seen at 109.82 (5 DMA), an upside break can trigger rise towards 110.12 (21 DMA).On the downside, immediate support is seen at 109.00(Psychological level), a break below could take the pair towards 108.42 (Lower Bollinger Band).
Equities Recap
European shares slid on Wednesday as Chinese newspapers warned it could squeeze its supply of rare earth elements to hit the United States, sending jitters through the markets and prompting investors to flee for safer ground.
UK's benchmark FTSE 100 closed down by 1.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.03 percent, Germany's Dax ended down by 1.5 percent, France’s CAC finished the day down by 1.8 percent.
U.S. stocks fell on Wednesday, with the S&P 500 and Nasdaq closing just above key support levels, as worries that a lengthy U.S.-China trade war would crimp global growth pushed investors into the safety of government bonds.
Dow Jones closed down by 0.87 percent, S&P 500 ended down by 0.69 percent, Nasdaq finished the down up by 0.77 percent.
Treasuries Recap
Benchmark U.S. Treasury yields dropped to 20-month lows on Wednesday as Chinese newspapers warned of retaliation against the United States in a trade war that investors are increasingly concerned will drag down global economic growth..
Benchmark U.S. 10-year note yields fell to 2.21%, the lowest since September 2017, before rising back to 2.24%. The yields have fallen from 2.61% on April 17 and from 2.77% on March 4.
Commodities Recap
Gold prices rose alongside other safe-haven assets on Wednesday as the trade rift between the United States and China showed no sign of cooling, with investors fearing a global economic slowdown.
Spot gold rose 0.2% to $1,281.30 per ounce by 1:54 p.m. EDT (1754 GMT) and U.S. gold futures settled up 0.3% at $1,281.
Oil prices fell in volatile trade on Wednesday, weighed down by equity markets as China signaled readiness to escalate the trade war with the United States, stoking concerns that an ongoing stand-off could hurt demand.
Brent crude futures, the international benchmark for oil prices, ended the session at $69.45 a barrel, down 66 cents, or 0.9%, having hit a session low of $68.08.
U.S. West Texas Intermediate (WTI) crude futures fell 33 cents, or 0.6%, to settle at $58.81 per barrel, after hitting a low of $56.88, the lowest since March 12.
