Market Roundup
• Fed's gradual rate hikes balance against risks –Powell.
• Fed’s Powell says rates "just below" neutral policy rate.
• Fed's Powell says financial risks "moderate" despite vulnerabilities.
• BoE’s Carney says UK not fully prepared for a cliff-edge Brexit.
• Bank of England sees 8 pct slump in GDP in worst-case Brexit.
• BoE sees value of sterling tumbling 25% in "disorderly" Brexit scenario.
• Trump makes wall funding top issue as spending deadline looms.
• US Q3 GDP 2nd Estimate, 3.5%, 3.5% forecast, 3.5% previous.
• US Q3 GDP Cons Spending Prelim, 3.6%, 4.0% previous.
• US Q3 Core PCE Prices Prelim, 1.5%, 1.6% forecast, 1.6% previous.
• US Q3 PCE Prices Prelim, 1.5%, 1.6% forecast,, 1.6% previous.
• US Oct New Home Sales-Units, 0.544 mln, 0.575 mln forecast,, 0.553 mln, 0.597 mln revised.
• US Oct Build Permits R Chg MM, -0.4%, -0.6% previous.
• US Nov Rich Fed Comp. Index, 14, 15 previous.
• US 23 Nov, w/e MBA Mortgage Applications, 5.5%, -0.1% previous.
• US 23 Nov, w/e Mortgage Market Index, 333.7, 316.4 previous.
• US Q3 Corporate Profits Prelim, 3.3%, 2.0% forecast,, 2.1% previous.
• US Oct Adv Goods Trade Balance, -77.25 bln, -76.25 bln.
• US Oct Wholesale Inventories Adv, 0.7%, 0.4% previous.
• US Oct Retail Inventories Ex-Auto Adv, 0.7%, -0.1% previous.
Looking Ahead - Economic Data (GMT)
• 28 Nov 23:50 Japan Oct Retail Sales YY, 2.6% forecast,, 2.1% previous
• 29 Nov 00:00 Australia Oct HIA New Home Sales MM SA, -6.1% previous
• 29 Nov 00:00 New Zealand Nov NBNZ Business Outlook, -37.1% previous
• 29 Nov 00:30 Australia Q3 Capital Expenditure, 1.0% forecast,, -2.5% previous
• 29 Nov 00:30 Australia Q3 Building Capex, -3.9% previous
• 29 Nov 00:30 Australia Q3 Plant/Machinery Capex, -0.9% previous
Looking Ahead - Events, Other Releases (GMT)
• 29 Nov N/A Bundesbank President Jens Weidmann speaks to members of Germany's Bundestag in Berlin
• 29 Nov 07:00 Bank of Portugal Governor Carlos Silva da Costa to open "Forum Banca 2018" in Lisbon
• 29 Nov 07:00 Vice President of the European Commission Valdis Dombrovskis speaks before the European Parliament's committee for economic affairs Brussels
• 29 Nov 08:00 ECB Vice President Luis de Guindos speaks in Frankfurt
• 29 Nov 01:30 BoJ board member Takako Masai delivers speech to business leaders in Fukuoka, southern Japan
• 29 Nov 13:15 ECB member of the supervisory board Ignazio Angeloni participates in a panel session in Milan
• 29 Nov 13:30 Fed Chairman Jerome Powell greets student teams at the Federal Reserve Board 15th Annual National College Fed Challenge Finals in Washington
• 29 Nov 15:00 Bank of Canada Senior Deputy Governor Carolyn A. Wilkins speaks at Bank of Canada Museum, Ottawa
• 29 Nov 19:00 Bank of Spain Governor Pablo Hernandez de Cos speaks at the Moody's Investors Service event in Madrid
• 29 Nov 19:00 U.S. Federal Reserve's
Federal Open Market Committee will release the minutes from its November 7-8 policy meeting in Washington D.C.
• 29 Nov 19:30 Fed Cleveland President Loretta Mester, Fed Chicago President Charles Evans, Fed Philadelphia President Patrick Harker, Fed Minneapolis President Neel Kashkari, Fed Boston President Eric Rosengren and Fed Dallas President Robert Kaplan participate in 'Collaboration for Inclusive Economic Development' forum in Boston
Currency Summaries
EUR/USD is likely to find support at 1.1262 levels and currently trading at 1.1366 levels. The pair has made session high at 1.1387 and hit lows at 1.1268 levels. The euro rose against the U.S. dollar on Wednesday after Federal Reserve Chairman Jerome Powell said that interest rates are just below neutral, raising expectations that the U.S. central bank is closer to the end of its rate hike cycle.Powell said the policy rate, at 2-2.25 percent, is now "just below" the broad range of estimates of neutral, which in September was 2.5-3.5 percent. That contrasts with comments on Oct. 3 when Powell said the Fed might raise rates past neutral, adding that they are probably "a long way" from that point. The dollar has been under pressure in recent weeks on signs that the Fed might reduce the pace of rate increases amid slowing global growth, peak corporate earnings and the escalating trade tensions. U.S. President Donald Trump has also expressed frustration with Fed rate hikes. Trump said in a Washington Post interview on Tuesday that he was "not even a little bit happy" with the Fed chairman and that the central bank's policies are hurting the economy.
GBP/USD is supported in the range of 1.2721 levels and currently trading at 1.2825 levels. It reached session high at 1.2843 and dropped to session low at 1.2735 levels. The British pound strengthened against the greenback on Wednesday after the Bank of England warned about the economic risks from exiting the European Union without a deal. The Bank of England said, Britain risks suffering an even bigger hit to its economy than during the global financial crisis 10 years ago if it leaves the European Union in a worst-case Brexit scenario in four months' time. Hours after the government issued its own stark warning about a no-deal Brexit, the BoE said the economy could shrink by as much as 8 percent in about a year. The two reports could add to pressure on lawmakers to drop their opposition to the Brexit agreement that Prime Minister Theresa May struck with other EU leaders on Sunday, which is far from certain to be approved in parliament on Dec. 11. The BoE said the disorderly scenario involving severe delays at UK borders and financial markets' loss of confidence in British institutions was not its base case.But if it happened, there would be a 25 percent tumble in the value of sterling taking it close to parity against the dollar a spike in inflation to 6.5 percent from around 2.4 percent now, and a jump in interest rates.
USD/CAD is supported at 1.13214 levels and is trading at 1.3274 levels. It has made session high at 1.3360 and lows at 1.3239 levels. The Canadian dollar rallied against its broadly weaker U.S. counterpart on Wednesday, rebounding from an earlier five-month low after comments from Federal Reserve Chairman Jerome Powell that were seen as dovish by some investors. Powell appeared to signal the U.S. central bank was nearing an end to its interest-rate hikes, saying the Fed's policy rate was now "just below" a level that neither brakes nor boosts a healthy economy. Gains for the loonie came despite a 13-month low for the price of oil, one of Canada's exports.U.S. crude oil futures settled 2.5 percent lower at $50.29 a barrel after U.S. crude inventories rose for the 10th straight week amid concerns about excess global supply. Recent weakening in oil prices, including the price of Canadian heavy crude, have weighed on the outlook for Canada's economy, reducing expectations for another Bank of Canada interest rate hike in January, Alt said. The Canadian dollar was last trading 0.3 percent higher at 1.3274 to the greenback. The currency's strongest level of the session was 1.3239, while it touched its weakest since June 27 at 1.3360.
USD/JPY is supported around 113.13 levels and currently trading at 113.64 levels. It peaked to hit session high at 114.03 and made session lows at 113.43 levels. The U.S. dollar tumbled against the Japanese yen on Wednesday after Federal Reserve Chairman Jerome Powell indicated that interest rates were near normal, soothing investor worries over the pace of rate hikes. The dollar index, which measures the greenback against a basket of currencies, was down 0.6 percent after Powell said that while there was "a great deal to like" about U.S. prospects, the Fed's gradual interest-rate hikes are meant to balance economic risks. He added that interest rates were 'just below' neutral estimates. The U.S. central bank in 2018 has hiked rates each quarter, and is expected to tighten policy again next month. But signs of a slowdown overseas and nearly two months of market volatility including a sharp sell-off in equities last week - have clouded an otherwise rosy picture of the U.S. economy. Investors will watch for the minutes from the Fed's Nov. 7-8 meeting, due on Thursday, for clues to policy in 2019.
Equities Recap
European shares steadied on Wednesday as trade war fears which had pushed indexes into the red during the previous session eased on the prospect of a meeting between the U.S. and Chinese presidents at a G20 meeting.
UK's benchmark FTSE 100 closed down by 0.13 percent, the pan-European FTSEurofirst 300 ended the day up by 0.01 percent, Germany's Dax ended down by 0.05 percent, France’s CAC finished the day up by 0.07 percent.
Wall Street rallied on Wednesday, multiplying its gains as investors bet on a moderation in the pace of U.S. monetary policy tightening after comments from Federal Reserve Chair Jerome Powell.
Dow Jones closed up by 2.51 percent, S&P 500 ended up by 2.31 percent, Nasdaq finished the day up by 2.96 percent.
Treasuries Recap
Yields on shorter-dated U.S. government bonds fell on Wednesday afternoon, steepening the yield curve, after Federal Reserve Chair Jerome Powell delivered a speech in which he signaled that an end to the bank's interest-rate hike cycle may be closer than previously suggested.
Two-year treasury yields, which reflect traders' rate-hike expectations, dropped 3 basis points, last at 2.80 percent. The shorter end of the yield curve fell faster than the long end, widening the spread between two- and 10-year yields by 1.9 basis points.
Commodities Recap
Gold prices rose as much as 1 percent on Wednesday from two-week lows as the U.S. dollar tumbled after Federal Reserve Chairman Jerome Powell indicated that interest rates were near normal, soothing investor worries over the pace of rate hikes.
Spot gold was up 0.7 percent at $1,222.45 per ounce at 2:48 p.m. EST (1948 GMT) after rising as much as 1 percent to $1,226.24. During the session, it also fell to $1,210.65, the lowest since Nov. 15.U.S. gold futures settled up $10.20, or 0.8 percent, at $1,223.60.
Oil prices fell about 2.5 percent on Wednesday after U.S. crude inventories rose for the 10th straight week to the highest in a year, adding to worries about a worldwide supply glut.
U.S. crude settled down $1.27, or 2.5 percent, at $50.29 a barrel, its lowest since Oct. 9, 2017. Brent crude ended $1.45, or 2.4 percent, lower at $58.76 a barrel.
