Market Roundup
• US Productivity Prelim Q2 0.9%, 0.7% forecast, 0.1% previous.
• US Wholesale Int(y), R MM Jun 0.7%, 0.6% forecast, 0.6% previous.
• US Wholesale Sales MM Jun 0.7%, 0.1% forecast, -0.1% previous.
• US MBA Mortgage Application w/e 3.0%, -2.8% previous.
• US Mortgage Market Index w/e, 418.7, 406.6 previous.
• US Labor Costs Prelim Q 1.2% 0.6%, 1.2% forecast, 5.4% previous.
• US economy is seen growing 3.5% in Q3 vs 3.7% estimate Aug 4 - Atlanta Fed.
• JP Morgan raises US Q2 GDP growth estimate to 2.6% from 2.4% .
• Fed's Evans: Reasonable to begin trimming balance sheet next month.
• Evans: Fed should be 'very careful' in assessing future rate hikes.
• Evans: US economy 'doing well,' expect 2.25% to 2.5% growth over next few years.
• US money market assets increased in latest week-iMoneyNet.
• US Defense Secretary issues stark warning to North Korea.
• FBI raided former Trump campaign manager Manafort's home in July.
• Brexit transition period desirable for UK and EU banks – BoE.
• Mexico annual inflation rises to the fastest pace in 8 ½ years.
• Mexico Fin min: Current peso level will help curb pressure on consumer prices.
• Brazil’s Goldfajn: Real interest rates could drop further in long run if reforms are approved.
• Brazil inflation turns positive in July; annual rate slows.
• Venezuela inflation quickens to 248.6 pct in year to July –opposition.
• Venezuela economy to shrink 7-10 pct this year –Fedecamaras.
• Offshore ringgit trade is against Malaysia's policy – cenbank.
Looking Ahead - Economic Data (GMT)
• 21:00 New Zealand Cen Bank Interest Rate N/a, 1.75% forecast, 1.75% previous
• 23:50 Japan Corp Good Price MM Jul 0.2% forecast, 0.0% previous
• 23:50 Japan Corp Goods Price YY Jul 2.4% forecast, 2.1% previous
• 23:50 Japan Machinery Orders MM Jun 3.7% forecast, -3.6% previous
• 23:50 Japan Machinery Orders YY Jun -1.0% forecast, 0.6%
Looking Ahead - Events, Other Releases (GMT)
• 14:00 NY Fed President Dudley will deliver opening remarks on employment trends and wage inequality - NY
Currency Summaries
EUR/USD is likely to find support at 1.1687 levels and currently trading at 1.1751 levels. The pair has made session high at 1.1760 and hit lows at 1.1687 levels. The euro inched higher against the greenback in the late US session on Wednesday as investors dumped risker assets and rushed to safe-haven assets after President Donald Trump's "fire and fury" warning to North Korea escalated tensions with the nuclear-armed nation. North Korea said it was considering plans to fire missiles at Guam, a U.S.-held Pacific island, after President Trump's warning on Tuesday. Trump followed his warning with a tweet on Wednesday about the strength of the American nuclear arsenal, but expressed hope it would not need to be used. The dollar turned lower versus a basket of currencies and was at a near two-week low against the Swiss franc, a traditional safe haven. The dollar index fell 0.05 percent, with the euro up 0.03 percent to $1.1754.
GBP/USD is supported in the range of 1.2947 levels and currently trading at 1.3000 levels. It reached session high at 1.3011 and dropped to session low at 1.2967 levels. Sterling was little changed against the greenback on Wednesday as investors looked to key data due next week for clues on the health of the British economy as the country prepares to leave the European Union. The pound had been supported in recent weeks by the view that the Bank of England would soon hike interest rates, perhaps even by the end of this year. But despite BoE rate-setters last week trying to drive home the message that interest rates are likely to rise, the market focused on the fact that policymakers voted 6-2 in favour of keeping rates at their record lows. The Bank also revised down its growth and inflation forecasts, and warned of Brexit risks. Having hit an 11-month high against the dollar before the BoE meeting, sterling has since lost around 2 percent. It was trading flat on Wednesday at $1.3000, close to the previous day's low of $1.2953.
USD/CAD is supported at 1.2660 levels and is trading at 1.2705 levels. It has made session high at 1.2720 and lows at 1.2687 levels. The Canadian dollar lost ground against its U.S. counterpart on Wednesday as worries about increased U.S.-North Korea tension weighed on the Canadian dollar, offsetting higher oil prices and stronger-than-expected domestic housing data. President Donald Trump's warning that North Korea faced "fire and fury," and Pyongyang's threat of possible retaliation, drove investors out of stocks and into the yen, Swiss franc, gold and government debt. Canadian housing starts rose in July to a seasonally-adjusted annual rate of 222,324 from June's upwardly revised 212,948, data from the Canada Mortgage and Housing Corporation showed. Economists had expected a 205,000 annual rate. The value of Canadian building permits unexpectedly rose in June, up 2.5 percent, on increased plans for commercial buildings, separate data from Statistics Canada showed. The Canadian dollar was trading at C$1.2702 to the greenback, or 78.78 U.S. cents, down 0.2 percent.
AUD/USD is supported around 0.7850 levels and currently trading at 0.7883 levels. It hit session high at 0.7886 and made session lows at 0.7861 levels. The Australian dollar dipped against US dollar on Wednesday as heightening tensions between North Korea and the United States rattled markets, pushing commodity related currencies lower. Markets around the globe took a leg lower after North Korea said it is considering plans for a missile strike on the U.S. Pacific territory of Guam, just hours after President Donald Trump told the North that any threat to the U.S. would be met with "fire and fury. The Aussie dollar was down 0.34 percent on its U.S. counterpart to $0.7887 and touched a three-week trough at one point. Against the yen, the Aussie sank 0.71 percent to 86.68 yen, the lowest in a month. Oil prices edged higher after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited gains.
Equities Recap
European shares fell back on Wednesday as geopolitical tensions sent all major benchmarks into negative territory, accompanied by a slight uptick in volatility in what is typically a quiet period of summer trading for the market.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.77 percent, Germany's Dax ended up by 1.2 percent, France’s CAC finished the day down by 1.5 percent.
U.S. stocks were on track for their biggest one-day dip in a month on Wednesday after U.S. President Donald Trump's "fire and fury" warning to North Korea escalated global uncertainty.
Dow Jones closed down by 0.17 percent, S&P 500 ended down 0.04 percent, Nasdaq finished the day down by 0.28 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday, and yields on the benchmark 10-year note hit a six-week low, as escalating tensions between the United States and North Korea spurred demand for safe-haven assets such as government debt.
In late trading, U.S. 10-year yields were at 2.237. They hit 2.212 percent earlier, the lowest level since June 28 and nearly 7 basis points lower than Tuesday's close.
U.S. 30-year bond yields slid to a six-week trough of 2.790 percent, compared with 2.867 percent late on Tuesday. Yields were last at 2.815 percent.
U.S. 2-year yields touched a low of 1.323 percent, matching a low hit four weeks ago.
Commodities Recap
Gold rose to the highest in nearly two months on Wednesday, after North Korea said it is considering an attack on the U.S. Pacific territory of Guam and U.S. President Donald Trump boasted of the strength of the American nuclear arsenal.
Spot gold was up 1.25 percent at $1,275.98 an ounce by 2:30 p.m. EDT (1830 GMT), after reaching its highest since mid-June at 1276.10. U.S. gold futures for December delivery settled up 1.3 percent at $1,279.30.
Oil prices were about 1 percent higher on Wednesday after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited price gains.
Brent crude, the global benchmark, ended the session up 56 cents, or 1.1 percent, at $52.70, after two days of declines. U.S. West Texas Intermediate (WTI) crude gained 39 cents, or 0.8 percent to settle at $49.56.
FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest
