Market Roundup
• US Import prices MM 0.5% v 0.2% forecast, 0.1% -previous.
• US Export prices MM 0.2% v 0.1% forecast, 0.1% - previous.
• Morgan Stanley pares U.S. recession view to 25% from 30%.
• Republican Senator Corker: "very best route" for Trump is to pick FBI director with bipartisan support in congress.
• Fed’s Rosengren: Fed should shrink balance sheet 'relatively soon' -DJN.
• Fed's Rosengren: supports 3 more rate hikes this year alongside portfolio reduction.
• Germany’s Schaeuble: so far we managed to hold together the EU after Brexit decision, but "the pendulum is swinging back".
• ECB'S Draghi: we will naturally exit stimulus together with the improvement in the economy and rebound in inflation.
• US Treasury official: Mnuchin at G7 meeting will discuss Trump admin’s tax reform, regulatory reduction efforts.
• Trump in meeting with Lavrov focused on improving relations between the US and Russia-White House.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Current account NSA JPY 2643.2 bln forecast, 2813.6 bln - previous
• 23:50 Japan Bank lending YY 3.0% - previous
• 23:50 Japan Foreign bond investment -1283 bln – previous
• 21:00 New Zealand central bank interest rate 1.75% forecast, 1.75% - previous
• 05:00 Japan Economy watchers poll SA 47.4 – previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- New Zealand RBNZ announces monetary policy statement and official cash rate (No change expected)
Currency Summaries
EUR/USD is likely to find support at 1.0850 levels and currently trading at 1.0864 levels. The pair has made session high at 1.0882 and hit lows at 1.0850 levels. The euro dipped against the U.S. dollar on Wednesday as euro was weighed down on expectations that U.S. central bank will raise interest rates in June. The dollar had temporarily paused its rally after U.S. President Trump's fired FBI chief James Comey but steadied on expectations of further US interest rate increases. Boston Fed President Eric Rosengren, an influential U.S. central bank official, said on Wednesday that Federal Reserve should hike interest rates three more times this year, mapping out a somewhat hawkish option for the U.S. central bank. The Fed has raised rates twice since December and they now stand in a range of 0.75 to 1 percent. While officials largely predict to begin letting some of the Fed's $4.5 trillion in bonds run off later this year, there is internal debate over whether to temporarily pause rate hikes at that time. The dollar was flat against a basket of major currencies after slipping on the view that political uncertainty could derail Trump's tax reform plans.
GBP/USD is supported in the range of 1.2889 levels and currently trading at 1.2940 levels. It reached session high at 1.2954 and dropped to session low at 1.2925 levels. Sterling struggled for direction against the dollar on Wednesday, as investors awaited for Bank of England inflation report and policy meeting on Thursday. Investors will be watching the BoE's "Super Thursday" for any signs of change in the Bank's stance of keeping UK interest rates at record lows. Faced with Brexit unknowns, a national election and mixed economic data, economists say Governor Mark Carney and his colleagues will likely say they want more clarity before laying the ground for the first interest rate hike in nearly a decade. But after one BoE policymaker voted for a rate rise in March, any signs of change in the Bank’s stance of keeping UK rates at record lows are liable to provoke a bounce for the pound. Sterling rose as much as 0.4 percent to $1.2988 in European trade on Wednesday before falling back to trade at $1.2934 in the late US session.
USD/CAD is supported at 1.3600 levels and is trading at 1.3661 levels. It has made session high at 1.3713 and lows at 1.3647 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rose and dollar rally paused after U.S. President Donald Trump abruptly fired FBI Director James Comey in a move that shocked Washington. The loonie had hit a 14-month low on Friday at C$1.3793. It has been pressured recently by lower commodity prices, concerns about a possible North American Free Trade Agreement renegotiation and investor wariness about how troubles at alternative lender Home Capital Group Inc could affect Canada's real estate market. Oil prices rebounded on Wednesday after the largest one-week drop in U.S. crude inventories this year, helping fuel a modest rise on Wall Street, while European stocks closed near their highest in nearly two years. The Canadian dollar was last trading at C$1.3655 to the greenback, or 73.07 U.S. cents, up 0.2 percent. The currency traded in a range of C$1.3655 to C$1.3732.
AUD/USD is supported around 0.7325 levels and currently trading at 0.7361 levels. It hit session high at 0.7393 and made session lows at 0.7359 levels. The Australian dollars stood near multi-month lows on Wednesday as investors remained jittery after t U.S. President Donald Trump fired FBI Director James Comey in a move that shocked Washington and dampened some of this week's strong risk appetite. The president said Comey, who had been leading an investigation into the Trump presidential campaign's alleged collusion with Russia to influence the election outcome, was let go because of his mishandling of an email scandal involving 2016 Democratic presidential nominee Hillary Clinton. Trump's firing of Comey ignited a political firestorm, raising suspicions the White House was trying to blunt the FBI probe involving Russia. It also fueled doubts about the government's ability to implement its economic agenda. The Australian dollar initially edged up to $0.7395 in the early US session early but reversed course to trade at $0.7365. The Aussie is down 1.7 percent so far this month, largely due to retreating iron ore prices, Australia's top export earner.
Equities Recap
Greek stocks rose for a 12th straight day on Wednesday, the longest run of gains since 1991, outperforming broadly flat European markets as Athens looked set to clinch vital bailout loans.
UK's benchmark FTSE 100 closed up 0.6 percent, FTSEurofirst 300 ended the day up by 0.14 percent, Germany's Dax ended up by 0.06 percent, and France’s CAC finished the day up by 0.05 percent.
U.S. stocks were mixed on Wednesday as investors digested President Donald Trump's abrupt dismissal of his FBI chief as well as corporate earnings from Walt Disney and Nvidia.
Dow Jones closed down by 0.16 percent, S&P 500 ended up 0.11 percent, Nasdaq finished the day up by 0.13 percent.
Treasuries Recap
U.S. Treasury yields were little changed on Wednesday as a weak 10-year note auction offset concerns about a political storm over U.S. President Donald Trump's ouster of the FBI chief that could hinder his plans for tax cuts and infrastructure spending.
The benchmark 10-year Treasury yield touched 2.416 percent, a five-week high already struck on Tuesday. It was last at 2.412 percent, up half a basis point on the day.
The 30-year bond yield was flat at 3.040 percent, holding below 3.047 percent set on Tuesday, which was its highest level since March 31.
Commodities Recap
Oil prices rose more than 3 percent on Wednesday, bolstered by the biggest one-week drop in U.S. inventories so far this year, and after Iraq and Algeria joined Saudi Arabia in supporting an extension to OPEC supply cuts.
Global benchmark Brent crude settled up $1.49 a barrel, or 3 percent, to $50.22 a barrel. U.S. light crude oil ended up $1.45 higher at $47.33 a barrel.
Gold turned lower but held above the previous day's eight-week low on Wednesday as U.S. President Trump's abrupt firing of FBI chief James Comey weighed on U.S. stocks, though gains were capped by expectations of further interest rate increases.
Spot gold was down 0.2 percent at $1,218.95 an ounce by 1:47 p.m. EDT (1747 GMT), holding above Tuesday's two-month low at $1,213.81.U.S. gold futures for June delivery settled up 0.2 percent at $1,218.90.
