Market Roundup
• US pending home sales surge to 10-month high +5.5% vs 2.4% forecast, -2.8% previous.
• PM May triggers formal Brexit divorce, says no turning back, Two years of talks loom; exit planned in 2019.
• UK PM May If Britain leaves the EU w/o and agreement default position would be to trade on WTO terms.
• EU lawmakers say Brexit can be revoked - draft position.
• Fed’s Rosengren: sees 3 further rate hikes this year, thinks there should be increase at every other meeting.
• Fed’s Evans: Fed can afford to build small inflation buffer, 2 rate hike this yr very safe, 3 could happen, 4 would need better fundamentals.
• Fed’s Williams: 2-3 more rate hikes this year, upside risks more prominent, Fed could trim balance sheet after ’17 rate hikes, main focus should remain on Fed rate tool.
• Spooked by yield rise, ECB wary of changing message again –sources.
• Greece, EU/IMF lenders agree on key labour reforms, pension cuts –sources.
• Euro, bond yields and bank stocks fall on ECB wariness.
• China's Q1 GDP growth seen at 6.8 pct - government think tank.
• Oil rises again on view that supplies should tighten, OPEC cuts to be extended to H2 ’17, Weekly U.S. crude stocks rise smaller than expected –EIA.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e 149.4b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -580.4b- previous
• 00:00 Australia HIA New Home Sales m/m Feb -2.20%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0720 levels and currently trading at 1.0769 levels. The pair has made session high at 1.0772 and hit lows at 1.0739 levels. The euro declined against the dollar on Wednesday for the second consecutive day after a report indicated that European Central Bank policymakers were wary of changing their policy message after tweaks this month upset investors and raised chances of a surge in borrowing costs. The United States has higher interest rates than the euro zone, which means traders lose money by holding positions that are long euro and short dollar. The Fed recently raised its overnight interest rate to a range of 0.75 to 1.00 percent while the ECB holds negative rates on some deposits. The euro fell to $1.0741 following the report, its lowest since March 21. That boosted the dollar index, which tracks the greenback against six rival currencies, to 100.130, its highest since March 21.The dollar also got a boost from Chicago Fed President Charles Evans, who said he was in line with most of his colleagues in supporting further rate hikes this year. Evans is known as one of the Fed's most consistent supporters of low-interest rates.
GBP/USD is supported in the range of 1.2367 levels and currently trading at 1.2440 levels. It reached session high at 1.2443 and dropped to session low at 1.2396 levels. Sterling declined against the dollar on Wednesday as sterling was weighted down after Britain formally triggered its exit process from the European Union. Prime Minister Theresa May began Britain's divorce procedure from the EU, declaring there was no turning back and ushering in a tortuous process that will test the bloc's cohesion and pitch her country into the unknown. Sterling had hit an eight-week high at the start of this week as investors unwound record-high short positions against the currency, and brought forward their expectations for when the Bank of England might begin to tighten monetary policy amid rapidly accelerating inflation in Britain. The pound had touched daily low of $1.2374 in the early European session, before bouncing back to trade as high as $1.2436 after the confirmation that the EU's Article 50 which kick starts two years of negotiations between Britain and the bloc had been triggered. Against a weaker euro, the pound rose 0.3 percent to 86.60 pence, having earlier hit a 12-day low of 87.35 pence.
USD/CAD is supported at 1.3274 levels and is trading at 1.3326 levels. It has made session high at 1.3389 and lows at 1.3320 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday, with the risk-sensitive commodity-linked currency outpacing broader gains for the greenback as oil rose for the second straight day. Despite an increase in U.S. crude inventories, oil added to gains, benefiting from Libyan supply disruptions and expectations that an output cut led by the Organization of Petroleum Exporting Countries would be extended. The loonie traded in a range of C$1.3356 to C$1.3401. On Tuesday, it touched C$1.3415, its weakest point in nearly two weeks. The loonie traded in a range of C$1.3320 to C$1.3389. On Wednesday, it touched C$1.3415, its weakest point in nearly two weeks. The Canadian dollar was last trading at C$1.3330 to the greenback, or 74.74 U.S. cents, stronger than Tuesday's close of C$1.3383, or 74.72 U.S. cents.
AUD/USD is supported around 0.7590 levels and currently trading at 0.7673 levels. It hit session high at 0.7675 and made session lows at 0.7641 levels. The Australian dollar strengthened against the dollar on Monday after oil prices surged and renewed optimism about the health of the global economy gave a boost to risk appetite. The Australian dollar rose to $0.7675, away from a trough of $0.7587 touched on Tuesday when markets doubted U.S. President Donald Trump could quickly implement his pro-growth plans. The Aussie remained within sight of a four-month peak of $0.7750 touched last week. Resistance was found around $0.7685 with support at around $0.7590.Helping the Aussie was solid U.S. data backing expectations for more interest rate hikes this year and a bounce in oil prices. Oil prices rose more than 2 percent as U.S. crude inventories grew less than expected, supply disruptions continued in Libya and the OPEC-led output cut by producing countries looked likely to be extended.
Equities Recap
European shares rose on Wednesday with little reaction to the well-flagged formal announcement of Britain's intention to leave the European Union and start an uncertain two-year process of negotiation.
UK's benchmark FTSE 100 closed up by 0.4 percent, the pan-European FTSEurofirst 300 ended the day up by 0.35 percent, Germany's Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.4 percent.
The benchmark S&P 500 eked out a gain on Wednesday as strength in the energy and consumer sectors offset declines in financial shares and investors began looking ahead to first-quarter earnings season.
Dow Jones closed down by 0.21 percent, S&P 500 ended up by 0.11 percent, Nasdaq finished the day up by 0.39 percent.
Treasuries Recap
U.S. Treasury debt yields slid on Wednesday in generally light trading, pressured by lingering uncertainty surrounding the Trump administration's economic policy.
In late trading, benchmark 10-year notes were up 7/32 in price to yield 2.383 percent, down from 2.409 percent on Tuesday.
U.S. 30-year bond prices rose 14/32, yielding 2.989 percent, down from Tuesday's 3.013 percent.
On the front end of the curve, U.S. two-year yields were at 1.273 percent, compared with 1.298 percent late on Tuesday.
Commodities Recap
Gold edged up on Wednesday, hovering below Monday's one-month high as uncertainty about Brexit talks, French elections and U.S. President Donald Trump's economic policies boosted safe-haven buying and offset a firmer dollar.
Spot gold was up 0.05 percent at $1,252.2 an ounce by 2:27 p.m. EDT (1827 GMT). U.S. gold futures settled down 0.2 percent at $1,253.70.
Oil prices rose more than 2 percent on Wednesday as U.S. crude inventories grew less than expected, supply disruptions continued in Libya and the OPEC-led output cut by producing countries looked likely to be extended.
Brent crude futures settled $1.09, or 2.1 percent, higher at $52.42 a barrel after hitting a session high of $52.46, the highest since March 16.
U.S. crude West Texas Intermediate (WTI) futures ended up $1.14 cents, or 2.4 percent, at $49.51 a barrel after peaking on the data at $49.54, also the highest since March 16.
