Market Roundup
• US private sector adds 298k jobs in February vs 190k forecast, 261k previous –ADP.
• US Q4 productivity (revised) 1.3% v 1.5% forecast, 1.3% previous; Labor costs 1.7% V 1.6% forecast, 1.7% previous.
• US Jan wholesale sales m/m -0.1% v 0.5% forecast, 2.4% previous; inventories -0.2% v -0.1% forecast, -0.1% previous.
• US crude oil drops more than 5%, lowest since Dec 15 on supply issues.
• Atlanta Fed’s GDPNow Q1 GDP forecast drops 0.1% to 1.2% from 1.3% Mar 7, after weak US wholesale trade data.
• UK’s Hammond: UK faces tougher Brexit challenge after 2017 resilience, Growth forecast raised for ‘17, lower next 3-yrs.
• Rebound in German IP eases growth concerns, IP +2.8% in Jan; Ifo survey shows increased investment plans.
• Fillon backers seek unity to revive French presidential bid, New poll again shows Fillon knocked out in round one.
• OPEC cut 40% more in Feb than pledged in oil deal, non-OPEC 50-60% compliant, Saudis cut more than its share.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e -202.0b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -261.1b- previous
• 00:00 Japan Overtime Pay Jan -1.90%- previous
• 01:30 China PPI YY* Feb forecast 7.7%, 6.90%- previous
• 01:30 China CPI YY* Feb forecast 1.7%, 2.50%- previous
• 01:30 China CPI MM* Feb forecast 0.6%, 1.00%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0492 levels and currently trading at 1.0538 levels. The pair has made session high at 1.0562 and hit lows at 1.0535 levels. Euro declined against the dollar on Tuesday as dollar strengthened across the board after U.S. hiring in the private sector surged in February, underscoring the economy's strength and adding to expectations the Fed will raise rates when policy-setters meet on March 15.The ADP National Employment Report showed private payrolls grew by 298,000 jobs last month, well above economists' expectations for a gain of 190,000. January's private payrolls gains were revised up to 261,000 from 246,000. The euro fell to a five-day low after the payrolls data and ahead of a meeting of the European Central Bank on Thursday. There is little expectation that ECB President Mario Draghi will announce changes to the bank's monetary policy at its meeting on Thursday. Traders and investors expect the ECB to maintain its loose monetary policy despite rising inflationary pressures. The dollar index gained 0.28 percent at 102.100. The dollar edged up 0.25 percent to $1.0539 versus the euro.
GBP/USD is supported in the range of 1.2092 levels and currently trading at 1.2162 levels. It reached session high at 1.2175 and dropped to session low at 1.2141 levels. Sterling declined against the U.S. dollar on Wednesday as the dollar gathered strength on the prospect of a U.S. interest rate hike. Dollar also strengthened across the board after the ADP National Employment report showed the U.S. private sector added 298,000 jobs last month, well above expectations for a 190,000 increase. Investors are awaiting February non-farm payrolls data on Friday as a barometer of the U.S. economy after Federal Reserve Chair Janet Yellen said last week the central bank was poised to lift rates. Stronger-than-expected U.S. payroll numbers, could help cement expectations that the Federal Reserve will raise interest rates next week. The pound fell half a percent on the day against the greenback, hitting a seven-week low of $1.2139, and another 0.2 percent against the euro. The dollar index, which pits the greenback against six major currencies, rose 0.3 percent.
USD/CAD is supported at 1.3440 levels and is trading at 1.3492 levels. It has made session high at 1.3500 and lows at 1.3438 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as lower oil prices and stronger greenback pressured Canadian dollar. Gains for the greenback came as data showed U.S. private employers added 298,000 jobs in February, well above economists' expectations. Stronger-than-expected U.S. payroll numbers, due for release on Friday, could help cement expectations that the Federal Reserve will raise interest rates next week. Oil prices plunged 5 percent to the lowest in nearly seven weeks on Wednesday as U.S. crude inventories surged to new record high, feeding concerns a global could persist even with OPEC output curbs. On the data front, the seasonally adjusted annualized rate of housing starts rose to 210,207 units from an upwardly revised 208,934 in January, the Canadian Mortgage and Housing Corporation (CMHC) said. Economists had expected starts to decline to 200,000. The Canadian dollar was trading at C$1.3462 to the greenback, or 74.28 U.S. cents, weaker than Tuesday's close of C$1.3416, or 74.55 U.S. cent.
AUD/USD is supported around 0.7498 levels and currently trading at 0.7527 levels. It hit session high at 0.7541 and made session lows at 0.7523 levels. The Australian dollar declined against US dollar on Wednesday as greenback found buying interest after data showed hiring by U.S. private employers surged, solidifying bets on a Federal Reserve interest rate increase next week. The ADP National Employment Report showed private payrolls grew by 298,000 jobs last month, well above economists' expectations for a gain of 190,000. January's private payrolls gains were revised up to 261,000 from 246,000. Bets that the Fed could hike rates soon have been steadily growing for weeks after several policymakers from the U.S. central bank publicly stressed that possibility. The dollar gained after U.S. hiring in the private sector surged in February, underscoring the economy's strength and adding to expectations the Fed will raise rates when policy-setters meet on March 15. The Australian dollar slipped to hit low $0.7517. It was last trading at $0.7523.
Equities Recap
European shares rose on Wednesday, with results-driven gains from German sportswear company Adidas and British security company G4S partly offset by losses from EDF and Boskalis.
UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 provisionally closes up the day down by 0.16 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day up by 0.3 percent.
The S&P 500 and the Dow Jones Industrial Average dipped on Wednesday as energy stocks suffered their worst drop in nearly six months.
Dow Jones closed down by 0.33 percent, S&P 500 ended down by 0.22 percent, Nasdaq finished the day up by 0.07 percent.
Treasuries Recap
U.S. Treasury yields jumped on Wednesday, with the two-year yield hitting its highest levels in more than 7-1/2 years, as a strong gain in U.S. private-sector jobs in February cemented expectations that the Federal Reserve would raise interest rates next week.
Medium- to long-dated Treasury yields reached their highest levels since December after the ADP report. The 10-year Treasury yield hit 2.583 percent, last seen on Dec. 20, before easing to 2.554 percent, up over 4 basis points from late on Tuesday.
The two-year Treasury yield, which is especially sensitive to traders' views on Fed policy, rose to 1.378 percent, the highest since August 2009. It was last at 1.354 percent, up 2 basis points from late Tuesday.
Commodities Recap
Gold prices extended losses to a five-week low on Wednesday as the dollar gathered strength on the prospect of a U.S. interest rate hike.
Spot gold was down 0.5 percent at $1,209.49 an ounce by 2:59 p.m. EST (1959 GMT), after touching its lowest since Feb. 1 at $1,206.05, putting it on track for its fifth straight session in the red.The most active U.S. gold futures for April delivery settled down 0.6 percent at $1,209.40.
Oil prices plunged 5 percent to their lowest levels this year on Wednesday as U.S. crude inventories surged much more than expected to a record high, stoking concerns a global glut could persist even as OPEC tries to prop up prices with output curbs.
U.S. West Texas Intermediate crude settled at $50.28 per barrel, down $2.86, or 5.38 percent after falling to its lowest level since Dec. 15.
Brent crude slumped to its lowest level since Dec. 8 at $52.93, before settling at $53.11, down $2.81 or 5.03 percent.
