Market Roundup
• Fed leaves rates unchanged; "solid" growth keeps December hike in view.
• US Oct Markit Mfg PMI final, 54.6, 54.5 previous.
• US Oct ISM Manufacturing PMI, 58.7, 59.5 forecast, 60.8 previous.
• US Oct ADP National Employment, 235k, 200k forecast, 135k previous 110k revised.
• US Sept Construction spending, 0.3%, 0.0% forecast, 0.5% previous 0.1% revised.
• CA Oct Markit Mfg PMI SA, 54.3, 55.0 previous.
• Bank of England expected to raise rates; Last UK rate rise dates back to July 2007.
• Japan PM Abe says he trusts BOJ Kuroda's ability, no decision on next governor.
• BOJ gov candidate Ito flags risk of ending stimulus too early.
• UK factories report stronger activity in October - IHS Markit.
• End of ECB's asset buys will be a "minor issue": Hansson.
Looking Ahead - Economic Data (GMT)
• 22:30 Australia Oct AIG Services index, 52.1 previous
• 00:30 Australia Sept Building Approvals, -1.0% forecast, 0.4% previous
• 00:30 Australia Sept Trade balance (A$), 1200 mln forecast, 989 mln previous
• 00:30 Australia Sept Imports, 0.0% previous
• 00:30 Australia Sept Exports, 1.0% previous
• 05:00 Japan Oct Consumer Confidence index, 43.9 previous
Looking Ahead - Events, Other Releases (GMT)
• 12:00 Bank of England announces rate decision
• 12:30 Fed Governor Jerome Powell speaks in New York
• 16:15 New York Fed President William Dudley speaks in New York
• 22:15 Atlanta Fed President Raphael Bostic speaks in Chicago
Currency Summaries
EUR/USD is likely to find support at 1.1572 levels and currently trading at 1.1620 levels. The pair has made session high at 1.1642 and hit lows at 1.1600 levels. The euro edged lower against the U.S. dollar on Wednesday as investor optimism about the greenback rose ahead of major announcements on U.S. fiscal and monetary policy after strong economic data. The Federal Reserve kept U.S. overnight interest rates unchanged and highlighted "solid" economic growth at the conclusion of its two-day policy meeting. Analysts said the Fed's statement indicated that a rate hike next month is overwhelmingly likely. The Fed's decision followed strong data releases on the U.S. economy. The ADP National Employment survey showed private employers added 235,000 jobs in October, surpassing estimates for 200,000 and setting up expectations for a strong U.S. nonfarm payrolls report on Friday. The ADP number was the latest in a string of strong data releases on the U.S. economy that have backed the Federal Reserve's stance that weakness in reports earlier this year was transitory. The market also is focused on President Donald Trump's tax reform plans, which are expected to be revealed soon, and his pick for Fed chair, slated for Thursday. The dollar index rose 0.26 percent, with the euro down 0.25 percent to $1.1625.
GBP/USD is supported in the range of 1.3222 levels and currently trading at 1.3249 levels. It reached session high at 1.3303 and dropped to session low at 1.3241 levels. Sterling initially gained against the dollar on Wednesday following UK factory data that bolstered expectations of an imminent Bank of England interest rate rise, but declined in the late US session after the Federal Reserve kept interest rates unchanged. Traders widely expect the U.S. central bank to keep rates unchanged, with a hike coming in December. Nevertheless, the policy statement could provide valuable hints over the future path of monetary policy following mixed economic data. Traders are also waiting for the nomination of the next Fed chair, who will replace Janet Yellen after her term ends in February 2018.President Donald Trump, who has interviewed Yellen, Fed Governor Jerome Powell and three others for the job, is likely to announce the nomination on Thursday. Powell, a soft-spoken centrist who has supported Yellen's gradual approach to raising rates, is seen as having a lock on the position. The pound initially climbed against the dollar, hitting a two-week high of $1.3321, up from $1.3283. But slipped down by 1930 GMT to trade at 0.2 percent lower on the day.
USD/CAD is supported at 1.2808 levels and is trading at 1.2874 levels. It has made session high at 1.2900 and lows at 1.2865 levels. The Canadian dollar lost ground against its U.S. counterpart on Wednesday as Canadian dollar was weighed down by lower oil prices and stronger dollar. The loonie has fallen 6.5 percent since early September, pressured by a more dovish tone from the Bank of Canada after it hiked rates in July and September for the first time in seven years. On Tuesday, data showed a surprise contraction in the Canadian economy in August and Bank of Canada Governor Stephen Poloz said Canada is at a "crucial" spot in the economic cycle with significant uncertainties clouding the way forward. The central bank's caution has overshadowed a nearly 10-month high for the price of oil, one of Canada's major exports. Oil prices dipped in see-saw trade on Wednesday, hitting their highest in more than two years and then retreating after weekly U.S. government inventory data showed the latest crude stock draw was not as big as an industry trade group had reported. The Canadian dollar was trading at C$1.2867 to the greenback, down 0.1 percent. The currency traded in a range of C$1.2865 to C$1.2908. On Friday, it touched its weakest in more than three months at C$1.2916.
USD/JPY is supported around 113.57 levels and currently trading at 114.20 levels. It peaked to hit session high at 114.23 and made session lows at 113.72 levels. The U.S. dollar strengthened against the Japanese yen on Wednesday after the Federal Reserve held interest rates steady. The Fed kept interest rates unchanged, as expected, and pointed to solid U.S. economic growth and a strengthening labor market while playing down the impact of recent hurricanes. Data on Wednesday showed the U.S. economy remained on solid footing ahead of Friday's payrolls report. Although a measure of factory activity lost ground as hurricane-related supply disruptions faded, another report showed private-sector hiring surged. Investors shifted focus to the government's jobs report for October due on Friday. Republicans in the U.S. House of Representatives are due to release long-awaited tax legislation on Thursday, after delaying its introduction by one day. U.S. President Donald Trump is also expected to announce his choice for new Fed chair on Thursday, with news reports indicating that Federal Reserve Governor Jerome Powell would likely to get the nomination. The dollar rose 0.5 percent against the yen, hovering below its highest since mid-July.
Equities Recap
European stocks hit a two-year peak on Wednesday, lifted by resilient company earnings and record highs in world stocks, though a slump in Standard Chartered shares kept the banking sector under a cloud.
UK's benchmark FTSE 100 closed down by 0.03 percent, the pan-European FTSEurofirst 300 ended the day up by 0.50 percent, Germany's Dax ended up by 1.89 percent, France’s CAC finished the day up by 0.30 percent.
Wall Street held onto modest gains on Wednesday after the Federal Reserve kept interest rates unchanged, as major equity indexes hovered around record-high levels.
Dow Jones closed down by 0.25 percent, S&P 500 ended down by 0.15 percent, Nasdaq finished the day down by 0.18 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday and the yield curve was its flattest since 2007 after the Treasury Department said it would keep auction sizes steady in the coming months, despite the Federal Reserve's plan to reduce its bond holdings.
Benchmark 10-year note yields fell to 2.37 percent, from 2.40 percent before the announcement.
The yield curve between five-year notes and 30-year bonds flattened to as low as 82.7 basis points, a level last seen in late 2007.
Commodities Recap
Gold advanced on Wednesday as traders repositioned themselves after the Federal Reserve said it will keep target interest rates unchanged for the time being.
Spot gold was 0.4 percent higher at $1,276.37 an ounce by 3:26 p.m. EDT (1926 GMT), having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.
U.S. gold futures for December delivery settled up $6.80, or 0.5 percent, at $1,277.30 per ounce.
Oil prices dipped in see-saw trade on Wednesday, hitting their highest in more than two years and then retreating after weekly U.S. government inventory data showed the latest crude stock draw was not as big as an industry trade group had reported.
Brent futures settled down 45 cents, or 0.74 percent, at $60.49 a barrel, while U.S. West Texas Intermediate crude was down 8 cents, or 0.15 percent at $54.30 a barrel.
