Market Roundup
• ECB to debate next week whether to end QE this year: Praet.
• US Apr International Trade $, -46.2 bln, -49.0 bln forecast, -49.0 bln previous.
• US Apr Goods Trade Balance (R), -67.34 bln, -68.19 bln previous.
• US Q1 Labor Costs Revised, 2.9%, 2.8% forecast, 2.7% previous.
• US Q1 Productivity Revised, 0.4%, 0.6% forecast, 0.7% previous.
• US w/e Mortgage Market Index, 370.8, 356.1 previous.
• US w/e MBA Mortgage Applications, 4.1% -2.9% previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.75%, 4.84% previous.
• CA Apr Trade Balance C$, -1.90 bln, -3.40 bln forecast, -4.14 bln previous.
• CA Apr Exports C$, 48.56 bln, 47.58 bln previous.
• CA Apr Imports C$, 50.47 bln, 51.72 bln previous.
• CA Apr Building Permits MM, -4.6%, 3.1% previous.
• Trump to stick to hard line on trade as G7 showdown looms.
• U.S. lawmakers want Trump to report on N.Korea nuclear program.
• US officials on roadshow to cut Iran investment, trade - sources
Looking Ahead - Economic Data (GMT)
• 6 Jun 22:30 Australia May AIG Construction Index, 55.4 previous
• 6 Jun 23:50 Japan w/e Foreign Bond Investment, -717.0 bln previous
• 6 Jun 23:50 Japan w/e Foreign Investment JP Stock, -380.0 bln previous
• 6 Jun 23:50 Japan May Foreign Reserves, 1,256.00 bln previous
• 7 Jun 01:30 Australia Apr Trade Balance G&S (A$), 1,000 mln forecast, 1,527 mln previous
• 7 Jun 01:30 Australia Apr Goods/Services Imports, 1.0% previous
• 7 Jun 01:30 Australia Apr Goods/Services Exports, 1.0% previous
• 7 Jun 05:00 Japan Apr Coincident Index, 0.4 previous
• 7 Jun 05:00 Japan Apr Lead Indicator, 0.9 previous
• 7 Jun N/A China May FX Reserves (Monthly), 3.100 tln forecast, 3.125 tln previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of England interest-rate setter Dave Ramsden speaks in London
• 07:40 First Deputy Governor Kerstin of Jochnick introduces talks on SABO's Financial Day and gives his impression of the economic situation in Sweden and the rest of the world in Stockholm
• 08:30 BoE's David Rule: Presentation at the City and Financial Global Conference on the Regulatory Landscape for the Insurance Sector 2018/19 in London
• 09:30 ECB's senior banking supervisor Korbinian Ibe speaks at a conference in Dublin
• 15:15 Bank of Canada's Stephen Poloz and Carolyn Wilkins will hold a press conference to discuss the contents of the Financial System Review in Ottawa
• 15:00 BoE's Dave Ramsden: Speech at Barclays Inflation Conference in London
• 18:00 Former Fed Chairman Ben Bernanke participates in conversation, "Lessons Learned from 10 Years of Quantitative Easing" before the American Enterprise Institute in Washington
Currency Summaries
EUR/USD is likely to find support at 1.1681 levels and currently trading at 1.1765 levels. The pair has made session high at 1.1796 and hit lows at 1.1759 levels. The euro strengthened to hit two weeks high against US dollar on Wednesday after officials said the European Central Bank could wind down its stimulus program by the end of the year, as inflation has risen to its target. Europe’s common currency was on track to post its largest weekly gain versus the dollar since mid-February. Having revived growth with an unprecedented 2.55 trillion euro ($2.99 trillion) bond purchase program, the ECB has been debating whether to end the purchases this year as the threat of deflation has passed and the bloc is on its best growth run in a decade. Many traders expected the central bank to remain cautious at its June 14 policy meeting, given the uncertainty caused by a political crisis in Italy. But ECB chief economist Peter Praet said on Wednesday the central bank would next week debate whether to unwind bond purchases gradually. Praet's comments pushed the euro to $1.1796, the highest since May 22, and it also hit a more-than-one-week high of 1.1640 francs versus the safe-haven Swiss franc. The euro's rise put pressure on the U.S. dollar index which measures the greenback versus a basket of six major currencies. The index fell 0.4 percent to 93.518.
GBP/USD is supported in the range of 1.3359 levels and currently trading at 1.3407 levels. It reached session high at 1.3442 and dropped to session low at 1.3394 levels. Sterling strengthened against the dollar on Wednesday as a weaker dollar and better-than-expected data earlier in the week buoyed the pound, but analysts said the British currency remained stuck in a trading range until there was more clarity about the economy and Brexit talks. After sliding from a 2018 high of more than $1.43 in April to below $1.33 as a resurgent dollar hit the currency and expectations of a Bank of England interest rate rise collapsed, the pound has since edged slightly higher. Data this week, including a widely watched survey of the dominant services sector on Tuesday, suggest weaker economic momentum in the first quarter was temporary and the economy is recovering. Sterling rose 0.2 percent to $1.3426, but fell 0.2 percent against the euro to 87.635 after strong gains versus the single currency on Tuesday. A political crisis in Italy and an escalating trade dispute between the United States and other major economies have meanwhile dominated trading in currency markets in the last week, keeping sterling flows relatively quiet. Still, major risks are on the horizon for the British currency.
USD/CAD is supported at 1.2851 levels and is trading at 1.2958 levels. It has made session high at 1.2955 and lows at 1.2857 levels. The Canadian dollar strengthened to a near one-week high against its U.S. counterpart on Wednesday as domestic data showed a narrower-than-expected trade deficit but some gains were pared ahead of this week's G7 summit. Canada’s trade deficit in April shrank to a six-month low of C$1.90 billion from C$3.93 billion in March, as exports climbed to a record high and imports dropped, Statistics Canada said. The shortfall was considerably less than the C$3.40 billion deficit forecast by analysts. Top U.S. allies are set for a showdown with Washington at this week's G7 summit in Canada as the Trump administration shows no sign of backing down from protectionist policies that have upset trading partners and unnerved investors. The U.S. dollar fell against a basket of major currencies after officials said the European Central Bank could wind down its stimulus program by end-2018, boosting the euro. The price of oil, one of Canada's major exports, fell even after Venezuela raised the prospect of a halt to some crude exports. The Canadian dollar was last trading 0.2 percent higher at C$1.2958 to the greenback, or 77.24 U.S. cents. The loonie touched its strongest since May 31 at C$1.2857 but pared its gains.
AUD/USD is supported around 0.7635 levels and currently trading at 0.7661 levels. It hit session high at 0.7675 and made session lows at 0.7647 levels. The Australian dollar rose against its U.S. counterpart on Wednesday after data showed the country's economy expanded at a faster-than-expected pace last quarter. Gross domestic product (GDP) rose by 1 percent in the March quarter, from an upwardly revised 0.5 percent the previous quarter, data from the Australian Bureau of Statistics (ABS) showed. Annual growth sprang to 3.1 percent from the December quarter's 2.4 percent. The last time the economy ran that fast was in the second quarter of 2016.The result just beat market forecasts for growth of 0.9 percent in the latest quarter and 2.8 percent on-year, pushing the Australian dollar to near a six-week high at $0.7665. The Reserve Bank of Australia (RBA) on Tuesday held rates at a record low 1.50 percent and reiterated the need for policy to remain stimulatory as it awaits a revival in inflation. The U.S. dollar fell against a basket of major currencies after officials said the European Central Bank could wind down its stimulus program by end-2018. Oil prices fell on signs Saudi Arabia and other big producers may increase production and on a surprise build in domestic crude stockpiles.
Equities Recap
European stocks closed flat on Wednesday at the end of a choppy session during which hawkish comments by the European Central Bank lifted the euro and bond yields.
UK's benchmark FTSE 100 closed up 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 0.07 percent, Germany's Dax ended up by 0.4 percent, France’s CAC finished the day down by 0.1 percent.
Wall Street indexes rallied on Wednesday with help from financial stocks as investors eyed strong economic data and trade war fears took a back seat while Nasdaq registered its third straight record closing high.
Dow Jones closed up by 1.37 percent, S&P 500 ended up by 0.84 percent, Nasdaq finished the day up by 0.67 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday, with the 10-year yield hitting a 1-1/2-week high on worries that the European Central Bank would end the expansion of its massive bond purchase program this year.
In mid-afternoon trading, the benchmark 10-year Treasury yield was up nearly 6 basis points at 2.975 percent after touching a 1-1/2 week high, while two-year yields increased over 3 basis points to 2.524 percent.
Commodities Recap
Gold prices were steady on Wednesday, see-sawing in a narrow range as a weaker dollar and trade tensions provided support but investor anticipation of a U.S. rate hike from the Federal Reserve next week weighed on prices.
Spot gold was flat at $1,295.80 per ounce by 1:50 p.m. ET (17:50 GMT). U.S. gold futures for August delivery settled down 80 cents, or 0.1 percent, at $1,301.40 per ounce.
Oil prices fell on Wednesday on worries that global supply is climbing after U.S. inventories rose unexpectedly and Saudi Arabia and other big producers signaled that they may increase output.
U.S. light crude settled down 79 cents, or 1.2 percent, at $64.73 a barrel. Brent pared losses late in the session, settling down 2 cents at $75.26 a barrel. In post-settlement trade, Brent turned positive, rising 18 cents a barrel.
