Market Roundup
• Fed's Kaplan sees 3 more interest rate hikes 'likely'.
• U.S. manufacturers say tariffs pushing prices higher -Fed .
• Prolonged market slump could bruise U.S. economy -Fed's Mester.
• US Sep New Home Sales-Units, 0.553M, 0.625M forecast, 0.629M previous, 0.585M revised.
• US Sep New Home Sales-Chg m/m, -5.5%, -1.4% forecast, 3.5% previous, -2.0% revised.
• US Sep Build Permits Number SA, 1.270M, 1.241M previous.
• US Aug Monthly Home Price Index, 266.0, 265.0 previous, 265.4 revised.
• US Oct Markit Comp Flash PMI, 54.8, 53.9 previous.
• US Oct Markit Mfg Flash PMI, 55.9, 55.5 forecast, 55.6 previous.
• US Oct Markit Svcs PMI Flash, 54.7, 54.0 forecast, 53.5 previous.
• US 19 Oct w/e Mortgage Market Index, 337.8, 322.1 previous.
• Bank of Canada Rate Decision, 1.75%, 1.75% forecast, 1.50% previous.
• Suspicious packages sent to top U.S. Democrats, CNN as election looms.
Looking Ahead - Economic Data (GMT)
• 24 Oct 21:45 New Zealand Sep Imports (NZD), 5.54B previous
• 24 Oct 21:45 New Zealand Sep Trade Balance (NZD), 1,484M previous
• 24 Oct 21:45 New Zealand Exports (NZD), 4.05B previous
• 24 Oct 23:50 Japan 20 Oct w/e Foreign Bond Investment (JPY), 1,016.9B previous
Looking Ahead - Events, Other Releases (GMT)
• 24 Oct 23:00 Fed's Lael Brainard participates in a Q&A and receives award at the Council for Economic Education's 2018 Visionary Awards in New York
• 25 Oct NA ECB Governing Council meeting, followed by interest rate announcement in Frankfurt
• 25 Oct NA BOE's Sam Woods speaks at a Mansion House City Banquet in London
• 25 Oct 01:10 BOJ's Masazumi Wakatabe speaks at a symposium co-hosted by the Faculty of Economics, Keio University and Nikkei Inc in Tokyo
• 25 Oct 08:00 Norway Central Bank announces the Executive Board's interest rate decision
• 25 Oct 12:30 ECB's Mario Draghi holds a press conference after the interest rate meeting in Frankfurt
• 25 Oct 10:00 Riksbank's Stefan Ingves participates in a panel as part of the seminar at Åbo Akademi University, Turku, Finland
• 25 Oct 16:15 Fed's Richard Clarida speaks on "Outlook for the U.S. Economy and Monetary Policy" before a Peterson Institute for International Economics luncheon, in Washington DC
Currency Summaries
EUR/USD is likely to find support at 1.1400 levels and currently trading at 1.1493 levels. The pair has made session high at 1.1413 and hit lows at 1.1376 levels. The euro slipped lower against the U.S. dollar on Wednesday signs that economic growth could be slowing across the euro zone weighed on single currency. Euro zone business growth slowed much faster than expected this month, a widely-watched Purchasing Managers Index (PMI) survey showed. German private-sector growth slowed to its lowest level in more than three years, and manufacturing in France hit a 25-month low, according to other surveys. Against the dollar, the euro fell as much as 0.65 percent, breaking below the technically significant level of $1.14. It was last trading at $1.1391 and headed towards its biggest daily loss since Sept 27. Weakness in the single currency supported the dollar, which rose 0.4 percent against a basket of currencies to 96.380. The European Central Bank holds its monetary policy meeting on Thursday, and investors will be looking for any comments about the deepening row between the European Union and Italy over Rome's budget.
GBP/USD is supported in the range of 1.2839 levels and currently trading at 1.2876 levels. It reached session high at 1.3040 and dropped to session low at 1.2864 levels. Britain's pound declined against the dollar on Wednesday before British Prime Minister Theresa May was due to meet Conservative Party lawmakers, some of whom have discussed toppling her in anger at her Brexit negotiations. May is seeking to win over lawmakers in her party who oppose her approach to the negotiations, which are stuck at an impasse just over five months before the United Kingdom leaves the European Union. The prospect of a leadership challenge and of politics scuppering an agreement with the EU has weakened the currency in recent days. Some of May's senior ministers and lawmakers from the Northern Irish party that props up her government were seen entering her Downing Street residence on Wednesday. Disagreement on a fallback plan for the border between Northern Ireland and Ireland is a key sticking point in the Brexit talks. Sterling fell on Wednesday to $1.2889, its lowest since Sept. 5, and traded down 0.7 percent.
USD/CAD is supported at 1.2930 levels and is trading at 1.3039 levels. It has made session high at 1.3096 and lows at 1.2966 levels. The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Wednesday after the Bank of Canada opened the door to a faster pace of tightening as it raised interest rates, as expected, for the fifth time since July 2017.The central bank increased its key interest rate by 25 basis points to 1.75 percent and said it would continue to hike to at least 2.5 percent to keep inflation in check, while it dropped previous references to a gradual pace of tightening. The central bank targeted a neutral stance for interest rates, which it estimates to be between 2.5 percent and 3.5 percent. Money markets implied a policy rate of 2.43 percent in December 2019, up from 2.37 percent before the rate announcement. Gains for the loonie came even as the U.S. dollar climbed to its highest in more than two months against a basket of other major currencies. The Canadian dollar was trading 0.28 percent higher at 1.3054 to the greenback. The currency touched its strongest level since Oct. 17 at 1.2966.
USD/JPY is supported around 111.92 levels and currently trading at 112.20 levels. It peaked to hit session high at 112.42 and made session lows at 112.07 levels. The dollar declined against the Japanese yen on Monday as spooked investors ran for safety on global economic and political worries while U.S. Treasuries prices climbed and the U.S. dollar surged. Investors have been unnerved by a myriad of issues including some disappointing earnings reports, uncertainty over Brexit, Italy's budget spat with the European Commission, upcoming U.S. midterm congressional elections and pressure on Saudi Arabia over the killing of a prominent journalist.Also straining investor sentiment was the Federal Reserve's Beige Book report on economic conditions which pointed to U.S. factories raising prices because of tariffs while inflation appeared modest or moderate in most parts of the country. On the data front, sales of new U.S. single-family homes fell to a near two-year low in September and data for the prior three months was revised lower, the latest indications that rising mortgage rates and higher prices were sapping demand for housing. The Japanese yen strengthened 0.24 percent versus the greenback at 112.20 per dollar.
Equities Recap
European shares failed to rebound on Wednesday as weak results from chipmaker STMicro and Deutsche Bank, and falling U.S. stocks, kept the mood bearish despite strong results from Gucci owner Kering that boosted the luxury sector.
The UK's benchmark FTSE 100 closed up 0.2 percent, FTSEurofirst 300 ended the day down by 0.16 percent, Germany's Dax ended down by 0.8 percent, and France’s CAC finished the down by 0.3 percent.
U.S. stocks plunged again on Wednesday, confirming a correction for the Nasdaq and erasing the Dow and S&P 500's gains for the year, as disappointing forecasts from chipmakers and weak home sales data fueled jitters about economic and profit growth.
Dow Jones closed down by 2.43 percent, S&P 500 ended down 3.09 percent, Nasdaq finished the day up by 4.51 percent.
Treasuries Recap
U.S. benchmark 10-year Treasury yields fell to three-week lows on Wednesday, weighed down by weakness in stocks and ongoing political uncertainty ahead of the U.S. congressional elections.
The benchmark 10-year note yields fell to 3.105 percent from 3.166 percent late on Tuesday. Ten-year yields earlier fell to 3.102 percent, a three-week low. U.S. 30-year yields dropped to 3.333 percent from Tuesday's 3.364 percent.
Commodities Recap
Gold fell on Wednesday, as a rising dollar spurred investors to take profits after tumbling stocks pushed the metal to a more than three-month peak in the previous session.
Spot gold was down 0.1 percent at $1,228.75 an ounce at 13:46 p.m. EDT (1746 GMT). U.S. gold futures fell 0.3 percent to $1,232.80 an ounce.
Oil prices rose modestly on Wednesday, rebounding after several days of weakness as a much bigger-than-expected drawdown in U.S. gasoline and diesel inventories augured a seasonal increase in refining demand.
Brent crude settled at $76.17 a barrel, down 27 cents, or 0.4 percent. The global benchmark is more affected by the outlook for world supply, and Saudi Arabia's saying it plans on boosting output may reduce buying interest in Brent.
