Market Roundup
• U.S. crude stocks drop by nearly 11 mln bbls –EIA
• European business growth weaker than expected
• Mnuchin says he will travel to China for trade talks
•Treasury to sell $41 billion in five-year notes
• US July Manufacturing PMI 50.0,51.0 forecast, 50.6 previous
• US Markit Composite PMI 51.6, 51.5 previous
• US July Services PMI 52.2, 51.7 forecast, 51.5 previous
• US June New Home Sales 646k,660k forecast, 604k previous
• US Jun New Home Sales (MoM) 7.0%, 6.0% forecast, 8.2% previous
• Brazil Foreign Exchange Flows -2.925B, -1.227B forecast
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Corporate Services Price Index (YoY) 0.8% forecast, 0.8% previous
• 23:50 Japan Foreign Bonds Buying, 950.0B previous
• 23:50 Japan Foreign Investments in Japanese Stocks -93.1B previous
• Looking Ahead - Events, Other Releases (GMT)
• 03:05 Reserve Bank of Australia (RBA) Governor Philip Lowe (September 2016 - ) is to speak. As a key adviser to RBA board members, who decide short term interest rates. His comments may determine a short-term positive or negative trend.
• 12:30 ECB Press Conference. The press conference examines the factors which affected the ECB's interest rate decision and deals with the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy.
Currency Summaries
EUR/USD: The euro slipped lower against the U.S. dollar on Wednesday, as euro was weighed down by weak economic data that bolstered expectations that the European Central Bank could undertake aggressive monetary policy easing as soon as this week. n the euro zone, money markets are pricing in a 54% chance of a 10-basis-point cut at Thursday’s ECB meeting.The probability rose after the eurozone purchasing managers’ index unexpectedly fell to a three-month low of 51.5 in July from 52.2 in June. In late U.S. trading, the euro was little changed at $1.1212. An index that tracks the greenback against a basket of currencies .DXY was fractionally higher at 97.241.Immediate resistance can be seen at 1.1197 (5 DMA), an upside break can trigger rise towards 1.1124 (11 DMA).On the downside, immediate support is seen at 1.1111 (Lower Bollinger Band), a break below could take the pair towards 1.1100 (Psychological level).
GBP/USD: British pound firmed against the dollar on Wednesday, after Boris Johnson took office as prime minister vowed to implement the result of the 2016 Brexit referendum and lead Britain out of the European Union on Oct. 31 . That could pitch the country into a showdown with the EU and trigger a constitutional crisis at home, as many lawmakers have pledged to bring down any government that tries to force a no-deal Brexit. Sterling stands less than half a percent off the 27-month low it hit recently against the dollar. It jumped 0.5% at $1.2495. Against the euro, it also rose 0.5% as the single currency weakened to three-week low. Immediate resistance can be seen at 1.2540 (21 DMA), an upside break can trigger rise towards 1.2619 (50 DMA).On the downside, immediate support is seen at 1.2482 (July 23rd low), a break below could take the pair towards 1.2400 (Psychological level).
USD/CAD: The Canadian dollar edged lower on Wednesday, against its U.S. counterpart, as investors awaited interest rate decisions from major central banks over the coming week. The Bank of Canada has made clear that it has no intention of cutting interest rates. But recent strengthening of the Canadian dollar could ruin the central bank's plan to sit out rate cuts by global peers. The price of oil, one of Canada's major exports, rose on Wednesday after an industry group reported a much bigger than expected drop in U.S. inventories. At (2004 GMT), the Canadian dollar was trading 0.13% lower at 1.3149 to the greenback . Immediate resistance can be seen at 1.3171 (Higher Bollinger Band), an upside break can trigger rise towards 1.3231 (June 21st high).On the downside, immediate support is seen at 1.3085 (21 DMA), a break below could take the pair towards 1.3000 (Psychological level).
USD/JPY: The U.S. dollar strengthened against the yen on Wednesday, as traders awaited decisions by the U.S. Federal Reserve on how fast the central bank may reduce interest rates.U.S. rates futures implied traders positioned for a 23% chance the U.S. central bank may lower its rate range by a bold half point at its July 30-31 policy meeting, compared with 24% late on Friday, according to CME Group’s FedWatch tool. At (2012 GMT) ,the dollar was 0.01 higher versus the Japanese yen at 108.22
Strong resistance can be seen at 108.47 (50 DMA), an upside break can trigger rise towards 109.00 (Psychological level).On the downside, immediate support is seen at 107.92 (9 DMA), a break below could take the pair towards 107.00 (Psychological level).
Equities Recap
European shares closed mixed on Wednesday, as a slide in commodity stocks offset gains for chip and car makers ahead of a hotly-anticipated European Central Bank meeting.
UK's benchmark FTSE 100 closed down by -0.73 percent, Germany's Dax ended up by 0.26 percent, France’s CAC finished the day down by 0.22 percent.
U.S. stock market fell on Wednesday, after bleak earnings from bellwethers Caterpillar and Boeing added to the concerns over a slowing economy that have weighed heavily on sentiment this year..
Dow Jones closed down by 0.29 percent, S&P 500 ended up by 0.57 percent, Nasdaq finished the up by 0.85 percent.
Treasuries Recap
U.S. Treasuries yields fell on Wednesday in line with yield declines in European government debt, after weak economic data in the region added to expectations that the European Central Bank will ease monetarypolicy.
Benchmark 10-year Treasury yields gained 6/32 in price to yield 2.053%, down from 2.074% on Tuesday.
Commodities Recap
Gold gained on Wednesday en route to snap a three-session losing streak on expectations the U.S. Federal Reserve and other major central banks would adopt a dovish approach to monetary policy, while silver soared to a more than one-year high.
Spot gold was up about 0.5% at $1,423.30 an ounce as of 1:41 p.m. EDT (1741 GMT), below last week’s peak of $1,452.60. U.S. gold futures settled 0.1% higher at $1,423.60.
Oil prices fell 1% on Wednesday, failing to draw lasting support from a large decrease in U.S. crude stockpiles as investors worried about global oil demand.
Brent crude futures dropped 65 cents, or 1%, to settle at $63.18 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 89 cents, or 1.6%, to settle at $55.88 a barrel.
