Market Roundup
• US Existing Home Sales Apr 5.57 mln vs 5.65 mln forecast, 5.70 mln previous.
• US Existing Home Sales Chg Apr 2.3% vs -1.1% forecast, 4.2% previous.
• US Monthly Home Price YY Mar 6.2%, 6.4% previous.
• US MBA Mortgage Application w/e 4.4%, -4.1% previous.
• US Building Permits R Numbers MM Apr 1.228 mln, 1.229 mln previous.
• Fed officials expected weakness would pass and that it would "soon be appropriate" to raise rates.
• Fed policymakers agreed that details of balance sheet plan should be announced soon, with start of reductions appropriate this year.
• Fed officials: saw near-term risks to the economic outlook as roughly balanced; global geopolitical uncertainty and possible emerging market strains as rates rise.
• McConnell: prospects 'pretty good' for passage of comprehensive tax reform bill.
• McConnell: he lacks votes to approve a senate healthcare bill.
• Draghi: current assessment suggests there is no reason to deviate from policy path.
• ECB's Draghi: the macroeconomic environment is improving.
• ECB's Jazbec: ECB should maintain stimulus until inflation rise sustainable.
• Bank of Canada holds rates, sees no cooling in housing yet.
• Russia says OPEC, non-OPEC producers to debate 12-month oil cut extension.
• House Democrats asks Deutsche Bank to detail if trump accounts have Russia ties.
• Mexico central bank chief: will form forex committee to discuss issues that affect the forex market.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e 1821.2 bln previous
• 23:50 Japan Foreign Invest JP Stock w/e 372.2 bln previous
Looking Ahead - Events, Other Releases (GMT)
• 22:00 Dallas Fed President Robert Kaplan participates in a moderated Q&A session before the C.D. Howe Institute Annual Directors' Dinner, in Toronto
• 02:00 St. Louis Fed President James Bullard gives presentation on the U.S. economy and monetary policy at Keio University
• --:-- BOJ Board Member Makoto Sakurai delivers a speech, attends a news conference in Saga, southern Japan
Currency Summaries
EUR/USD is likely to find support at 1.1139 levels and currently trading at 1.1212 levels. The pair has made session high at 1.1218 and hit lows at 1.1166 levels. Euro rose against the dollar on Wednesday as the dollar weakened after minutes of the latest Federal Reserve meeting showed policymakers agreed they should hold off on raising interest rates until they see evidence that a recent economic slowdown was transitory. The dollar index, which tracks the greenback against six major rivals, was down 0.17 percent to 97.184, after falling as low as 97.127.The minutes were the latest indication of the Fed's heightened caution over policy tightening since the central bank began lifting rates from near zero in December 2015. Nearly all policymakers at the May 2-3 meeting also said they favored starting the wind-down of the Fed's massive holdings of Treasury debt and mortgage-backed securities this year. The euro, which has enjoyed a bull run this month on factors including ebb in French political concerns and upbeat euro zone data, was up 0.2 percent against the greenback at $1.1204.
GBP/USD is supported in the range of 1.2902 levels and currently trading at 1.2957 levels. It reached session high at 1.2969 and dropped to session low at 1.2925 levels. Sterling recovered from earlier losses against the dollar on Wednesday after minutes of the Federal Reserve's last policy meeting suggested the U.S. central bank was cautious about raising interest rates. British Prime Minister Theresa May's Conservatives and the main opposition Labour Party will resume national campaigning for next month's election on Friday following a suicide bombing that killed 22 people in Manchester. Parties suspended campaigning for the June 8 vote after Monday's attack at a concert venue. Labour, the Conservatives and the Scottish National Party said they would resume local-level campaigning on Thursday and national events on Friday. Opinion polls, the publication of which was also paused after the bombing, suggest May's Conservatives are on track to win the election, although her double-digit poll lead had been narrowing before the attack. Sterling was 0.1 pecent higher against dollar at $1.2964 in the late US session.
USD/CAD is supported at 1.3398 levels and is trading at 1.3419 levels. It has made session high at 1.3532 and lows at 1.3413 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday after the Bank of Canada was more upbeat about the economy than some investors expected and as major oil producers looked set to possibly extend production cuts. The Bank of Canada held interest rates steady at 0.50 percent, as expected. It reiterated its position that excess capacity remains in the economy and wage growth is subdued, but noted strong spending by Canadians along with a housing boom and job growth. Prices of oil, one of Canada's major exports, edged higher after U.S. data showed a bigger than expected draw in crude inventories. U.S. crude prices were up 0.08 percent to $51.51 a barrel. Investors waited for news from Vienna, where ministers from the Organization of the Petroleum Exporting Countries and other nations were discussing whether to extend production cuts into the first quarter of 2018. The Canadian dollar was trading at C$1.3414 to the greenback, or 74.39 U.S. cents, up 0.5 percent. The currency's weakest level was C$1.3540, while it touched its strongest since April 24 at C$1.3414.
USD/JPY is supported around 111.00 levels and currently trading at 111.62 levels. It peaked to hit session high at 112.10 and made session lows at 111.51 levels. Japanese yen strengthened against US dollar on Tuesday after minutes of the Federal Reserve's latest meeting showed policymakers agreed they should hold off on raising rates until evidence a recent economic slowdown was transitory.. Nearly all policymakers at the May 2-3 meeting also said they favored starting the wind-down of the Fed's massive holdings of Treasury debt and mortgage-backed securities this year. The view on short-term interest rates, which the minutes said was "generally" shared by the nine officials who have a vote on policy this year, casts some doubt on Wall Street bets for a hike at the June 13-14 policy meeting. Fed officials, however, made clear their baseline expectation was for a return to stronger economic growth. The U.S. dollar index fell to session lows after the Fed minutes. It had been hovering just above its 6-/12 month lows as investors shifted from U.S. politics to monetary policy. The index was down 0.23 percent at 97.127.
Equities Recap
European shares, stuck just below 21-month highs for more than a week, struggled to gain momentum on Wednesday, with strength in banks and big oil majors offset by weakness in miners and autos.
UK's benchmark FTSE 100 closed up by 0.36 percent, the pan-European FTSEurofirst 300 ended the day down by 0.02 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.22 percent.
U.S. stocks ended up slightly on Wednesday, with the S&P 500 hitting a record high close, after minutes of the Federal Reserve's latest meeting showed policymakers view a rate hike coming soon.
Dow Jones closed up by 0.34 percent, S&P 500 up by 0.24 percent, Nasdaq finished the day up by 0.38 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday on investor relief after the Federal Reserve signaled a gradual approach on raising interest rates and winding down of its massive $4.5 trillion worth bond holdings.
Benchmark 10-year Treasury note yield fell more than 2 basis points at 2.257 percent, while 30-year bond yield declined 2 basis points to 2.294 percent.
Commodities Recap
Gold prices rose on Wednesday as the dollar slipped and minutes of the Federal Reserve's last policy meeting suggested the U.S. central bank was cautious about raising interest rates.
Spot gold traded at $1,256.02 an ounce by 2:50 p.m. EDT (1850 GMT), up 0.42 percent from Tuesday, when it slipped 0.7 percent after two days of gains. U.S. gold futures for June delivery settled 0.2 percent lower at $1,253.1 an ounce.
Oil prices retreated slightly Wednesday as investors reacted to a smaller-than-expected U.S. gasoline stocks draw as they awaited the outcome of discussions in Vienna between OPEC and other oil-exporting countries on whether to extend output cuts.
Benchmark Brent crude oil was down 39 cents a barrel to $53.76 by 11:56 a.m. EDT (1556 GMT). U.S. light crude was down 30 cents at $51.17.
