Market Roundup
• China strikes back with duties on U.S. soybeans, planes; markets drop.
• Fed's Bullard: U.S. China trade spat means a "bumpy ride".
• U.S. Mar ADP National Employment, 241k, 205k forecast, 235k previous, 246k revised.
• U.S. Feb Durable Goods, R MM, 3.0%, 3.1% previous.
• U.S. Feb Factory Orders MM, 1.2%, 1.7% forecast, -1.4% previous, -1.3% revised.
• U.S. Mar Markit Comp Final PMI, 54.2, 54.3 previous.
• U.S. Mar Svcs PMI Final, 54.0, 54.1 revised.
• U.S. w/e MBA Mortgage Applications Survey Composite Index, -3.3%, 4.8% revised.
• U.S. w/e MBA 30-Yr Mortgage Rate, 4.69%, 4.69% revised.
• Toronto homes sales, prices slump in March.
• Easter price push keeps ECB on track for ending stimulus.
Looking Ahead - Economic Data (GMT)
• 4 Apr 23:30 Australia Mar AIG Services Index, 54.0 revised
• 4 Apr 23:50 Japan w/e Foreign Bond Investment, 790.1 bln revised
• 4 Apr 23:50 Japan w/e Foreign Invest JP Stock, -2,161.6 bln revised
• 5 Apr 01:30 Australia Feb Trade Balance G&S (A$), 700 mln forecast, 1,055 mln previous
• 5 Apr 01:30 Australia Feb Imports, -2.0% previous
• 5 Apr 01:30 Australia Feb Exports, 4.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 16:00 Governing Board of the SNB Andrea Maechler speaks on "Heute und morgen: Ein Blick in die digitale Zukunft" - Zurich
• 16:00 Alternate member of the SNB Governing Board Dewet Moser speaks on " Yesterday and today:change in the money and foreign exchange market " - Zurich
• 17:00 Fed Atlanta President Raphael Bostic speaks on "Financial Literacy" at the University of South Florida - Sarasota-Manatee
Currency Summaries
EUR/USD is likely to find support at 1.2200 levels and currently trading at 1.2281 levels. The pair has made session high at 1.2314 and hit lows at 1.2269 levels. Euro edged lower against the dollar in the US session on Wednesday as dollar was bolstered by a rebound on Wall Street, as investors turned less pessimistic about the impact of China's move to slap tariffs on key U.S. imports in response to a similar measure from the United States. Some analysts said the trade tension may not have as severe an impact on the dollar as initially thought. And if it ends up having an impact, it could be either a positive or negative factor for the greenback. China on Wednesday proposed tariffs on U.S. imports including soybeans, planes, cars, beef and chemicals. The Chinese plan came hours after Washington unveiled a detailed breakdown of some 1,300 Chinese industrial, transport and medical goods that could be subject to 25 percent duties. The Chinese news dominated the market, overshadowing a U.S. employment report by payrolls processor ADP which showed a higher-than-expected 241,000 private sector jobs created last month. The dollar dipped 0.1 percent against a basket of six major currencies to 90.14, while the euro edged down slightly versus the dollar to $1.2277.
GBP/USD is supported in the range of 1.4000 levels and currently trading at 1.4077 levels. It reached session high at 1.4089 and dropped to session low at 1.4014 levels. Sterling strengthened against the dollar on Wednesday despite data showing a sharp slowdown in British construction activity, as an escalation in the U.S.-China trade dispute hit demand for the U.S. currency. Since Britain signed a transition agreement last month for exiting the European Union, concerns about Brexit have abated as investors focus on the state of the UK economy before an expected interest rate rise in May. Data showed construction sector activity last month was at its weakest since just after the 2016 Brexit vote. Unusually cold weather was blamed for the slowdown. In late US session, sterling held on to some of its gains, rising 0.2 percent to $1.4077 at 2015 GMT. The pound fell 0.1 percent versus the euro to 87.31 pence amid a broader rally in the euro. Banks are split over whether sterling can continue its winning streak this year against most major currencies. Some investors remain sceptical about the odds of the Bank of England tightening policy because of lingering economic uncertainties and say dollar weakness is keeping sterling above $1.40.
USD/CAD is supported at 1.2700 levels and is trading at 1.2765 levels. It has made session high at 1.2847 and lows at 1.2755 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday after China retaliated in a trade dispute with the United States, but Wall Street rebounded from a steeply lower opening on the notion a tariff war has not begun and any impact is too early to foresee. The Canadian dollar also got a boost from growing investor optimism on a deal to revamp the North American Free Trade Agreement. The United States, Canada and Mexico could soon announce a deal in principle to update NAFTA that would likely tackle the key issue of autos content while leaving other contentious chapters to be dealt with later, three sources familiar with the matter said on Tuesday. Oil prices slipped to a two-week low as the speed with which Beijing responded to U.S. measures, within 11 hours, raised the prospect of a quickly spiraling dispute that could crimp the global economy, including the demand for crude. The Canadian dollar was trading 0.3 percent higher at 1.2765 to the greenback. The currency's weakest level of the session was C$1.2845, while it touched its strongest since Feb. 28 at C$1.2775.
AUD/USD is supported around 0.7648 levels and currently trading at 0.7714 levels. It hit session high at 0.7710 and made session lows at 0.7680 levels. The Australian dollar gained against US dollar on Wednesday as upbeat data on retail sales boosted Australian dollar across the board. The Aussie added 0.3 percent to $0.7714 from Tuesday's low of $0.7652. The currency has been flirting with the 77-cent mark in the past week but has managed to breach that level. Data showing a 0.6 percent rise in February retail sales was enough to push the Aussie past that barrier. Analysts had looked for only a 0.3 percent increase, following a tepid 0.2 percent uptick in January. The figures from the Australian Bureau of Statistics (ABS) showed gains in every single state and territory except the two mining states of Western Australia and Queensland. All industries from household goods to restaurants and clothing and footwear rebounded. Other data out on Wednesday pointed to resilience in the housing market. Approvals to build new homes eased 6.2 percent in February, but that followed hefty gains in January. While traders cheered the upbeat figures, economists appeared less convinced the recovery will last as sluggish wages and household incomes sap spending power.
Equities Recap
European shares fell for a second day after China unveiled new tariffs against U.S. products, increasing concerns of an escalating trade standoff between the two countries.
UK's benchmark FTSE 100 closed up by 0.07 percent, the pan-European FTSEurofirst 300 ended the day down by 0.43 percent, Germany's Dax ended down by 0.39 percent, France’s CAC finished the day down by 0.18 percent.
Wall Street's three major indexes staged a comeback to close around 1 percent higher on Wednesday as investors turned their focus to earnings and away from a trade conflict between the United States and China that wreaked havoc in earlier trading.
Dow Jones closed up by 0. 96 percent, S&P 500 ended up 0. 1.14 percent, Nasdaq finished the day up by 1.43 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday and stocks recovered much of their earlier losses, after China retaliated against the Trump administration’s plan to impose tariffs on Chinese goods.
Benchmark 10-year note yields rose to 2.784 percent, after earlier falling to 2.748 percent on safety buying.
Commodities Recap
Oil prices settled slightly lower on Wednesday, as a surprise draw in U.S. crude stockpiles triggered a rebound from session lows hit after China proposed a broad range of tariffs on U.S. exports that fed fears of a trade war.
Brent crude futures lost just 10 cents to settle at $68.02 a barrel, a 0.15 percent loss. U.S. West Texas Intermediate (WTI) crude futures fell 14 cents to settle at $63.37 a barrel, off 0.22 percent.
Gold prices eased from a one-week high, but still remained up on Wednesday, as the U.S. dollar dipped versus the yen and share markets faltered after China retaliated against a U.S. move to slap tariffs on $50 billion worth of its imports.
Spot gold was up 0.2 percent at $1,335.66 per ounce by 1:33 p.m. EDT (1733 GMT), while U.S. gold futures futures for June delivery settled up $2.90, or 0.2 percent, at $1,340.20.
