Markets
- GBP/USD -0.35%, USD/JPY +0.3%, EUR/USD -0.4%
- DXY +0.4%, Brent -0.15%, DAX -0.03%, Iron -0.67%
- EZ Apr Final infl. -0.2% y/y vs -0.2% prel, -0.2% exp
- UK Apr Jobless 2.4k vs 14.7K previous, 4.3k exp
- UK Mar ILO rate 5.% vs 5.1% previous, 5.1% exp
- UK Mar Avg Earnings 3m 2.0% vs 1.8% previous, 1.7%
- Buba’s Weidmann-accommodating policy appropriate
- Weidmann- policy should not be maintained longer than necessary
- UK YouGov poll 44% remain, 40% to leave, 12% undecided
- Japan Q1 GDP +0.4% q/q, +1.7% AR, +0.1% and +0.2% eyed
- ChiefCabSec Suga – GDP data confirms success in battle against deflation
- Japan PM Abe to meet coalition partner Komeito head to talk sales tax hike
- Japan growth strategy assumes sales tax hike next year
- RBA AsstGov Debelle – China should continue to pursue gradual fin’l reform
Economic Data Preview
- (0830 ET/1230 GMT) The Statistics Canada will release data on foreign investment in Canadian securities for the month of March.
- (0830 ET/1230 GMT) Chile's gross domestic product is expected to increase by 1.2 percent in the first quarter from the fourth on seasonally adjusted terms. On an annual basis, first-quarter growth is likely to have been 1.8 percent.
- (1030 ET/1430 GMT) The Energy Information Administration reports its Crude Oil Stocks for the week ending May 13.
- (1400 ET/1800 GMT) Federal Open Market Committee issues minutes from its meeting of April 26-27, 2016.
- (1950 ET/2350 GMT) Japan's machinery orders are likely to have increased 0.5 percent for the month of March, after posting a decline of 9.2 percent in Feb.
Key Events Ahead
- (1145 ET/1545 GMT) FedTrade Ops 15-yr F.Mae/Fr.Mac max $600 mln.
FX Beat
USD: The dollar index, against a basket of currencies was up 0.1 percent at 94.717, having tocuhed an early high of 94.990, its highest level since April 25.
EUR/USD: The euro hit a three-week high against the dollar on Wednesday on renewed expectations that the Federal Reserve could raise interest rates soon. The major trades 0.2 percent lower at 1.1286, having touched a low of 1.1256 earlier in the session. The short term trend is slightly bullish as long as resistance 1.1365 (21 day MA) holds. Any break below 1.1250 will drag the pair till 1.1200/1.11500. On the higher side minor resistance is around 1.13650 (21 day MA) and any break above targets 1.1400/1.1480/1.1530 level. The Minor resistance is at 1.1300/1.1325. Overall bearish invalidation is only above 1.16200.
USD/JPY: The Japanese yen trades 0.1 percent lower at 109.32, pulling away from a high of 108.72 touched earlier in the session. The greenback rose to a high of 109.60, after the Federal Reserve official stated that there could be two to three rate hikes this year. The minor weakness can be seen only below 108 levels. Any break below 108.40 will drag the pair down till 108/107.45 (Tenken-Sen)/106.99 (61.8% retracement of 105.54 and 109.36). The minor support is at 109, while on the higher side major resistance is around 109.50 and any indicative break above targets 110/110.75.
GBP/USD: Sterling touched a 2-1/2-week high against the euro after a poll showed the "In" campaign in the lead ahead of the June 23 referendum on Britain's European Union membership. The pound was strengthened after the employment rate in Britain hit a record high, however earnings excluding bonuses grew more slowly than expected, capping the major's gains. Sterling was 0.4 percent up at 1.4522, hovering towards a high of 1.4537. Against the euro, the pound trades at 0.7 percent higher at 77.65, its strongest level since late April. The short term trend is bearish as long as resistance 1.4550 holds. Any indicative break above 1.4550 will take the pair to next level till 1.4600/1.4660.The minor resistance is at 1.4530, while on the lower side any break below 1.4500 will drag the pair till 1.44450/1.4400 level.
USD/CHF: The Swiss franc trades 0.2 percent lower at 0.9826 against the dollar, hovering towards an intra-day low of 0.9843 and away from a peak of 0.9663 struck in the previous week. The short term trend is slightly bullish as long as support 0.9745 (10 day EMA) holds. On the higher side any break above 0.9800 will take the pair to next level till 0.9900/0.9925/1.000. Any violation below 0.9745 will drag the pair down till 0.9680/0.9630.The minor support is around 0.9780. The short term trend is reversal only below 0.9500.
AUD/USD: The Australian dollar reversed its previous day’s gains after speculations of U.S. interest rates hike as early as June boosted the U.S. dollar. The Aussie trades 0.5 percent lower at 0.7287, having touched a low of 0.7262 earlier in the session. The short term trend is slightly bearish as long as resistance 0.7370 (10 day EMA) holds. On the higher side major resistance is around 0.7370 and break above targets 0.7410/0.7480. The major support is around 0.7250 and break below will drag the pair till 0.7200/0.710.
NZD/USD: The New Zealand dollar trades 0.3 percent lower at 0.6784, recovering from a low of 0.6761, but away from a peak of 0.6842 struck in the previous session. The kiwi slumped after two days of successive gains. Even a rise in prices of the global dairy trade auction held overnight failed to strengthen the kiwi. Immediate support is seen at 0.6755 (May 13 Low), break below could take the pair to 0.6746. On the higher side, resistance is located at 0.6842 (Previous Session High).
Equities Recap
European shares slumped as the dollar to a 3-week high on speculations that the Federal Reserve will raise interest rate rise within months.
Europe's FTSEurofirst 300 and UK's FTSE both edged down 0.2 pct, Germany's DAX dropped 0.7 pct and France's CAC lost 0.5 pct.
Tokyo's Nikkei edged down 0.05 pct at 16,644.69, Australia's S&P/ASX 200 index slumped 0.68 pct at 5,359.40 points, and MSCI's broadest index of Asia-Pacific shares outside Japan, lost 1.1 percent.
Shanghai composite index declined 1.3 pct at 2,807.51 points, while CSI300 index closed down 0.6 pct at 3,068.04 points. HK’s Hang Seng index closes down 1.5 pct at 19,826.41 points.
Commodities Recap
Oil futures edged lower, pulling away from 2016 highs hit in the previous session, as the impact of unplanned supply disruptions from Nigeria and Canada were tempered by rising supplies. International Brent crude futures were trading at $49.32 a barrel at 1056 GMT, while U.S. West Texas Intermediate WTI crude futures were 16 cents lower at $48.15 a barrel.
Gold declined after strong U.S. economic data and comments from the central bank officials strengthened expectations that the Federal Reserve could soon hike interest rates. Spot gold slipped 0.4 percent to $1,272.87 per ounce at 1055 GMT, after gaining 0.5 percent in the previous session. U.S. gold futures fell 0.2 percent to $1,275.
Treasuries Recap
The U.S. Treasuries slumped after reading strong April consumer price index and hawkish comments from Federal Reserve officials. The yield on the benchmark 10-year Treasury note which moves inversely to its price rose 3bps to 1.786 pct by 1120 GMT. However, markets now await minutes from the April FOMC meeting on Wednesday, which could provide some details of growing dissent with the current extended pause, adding some support to more hawkish sentiment seen recently.
The European bonds slumped on Wednesday, lifted by a rise in U.S. Treasury yields after data and hawkish comments from Federal Reserve officials boosted expectations for a U.S. interest rate rise this year. The benchmark German 10-year bonds yield rose 1bp 0.144 pct, French 10-year bunds yield jumped 2bps to 0.492 pct, Irish equivalents inched higher 2bps to 0.825 pct, Spanish 10-year bonds yield climbed 1bp to 1.574 pct, Netherlands 10-year bonds yield rose 1bp at 0.368 pct, British 10-year bonds yield rose 2bps to 1.392 pct by 0845 GMT.
The Japanese government bonds traded modestly lower after reading higher than expected first quarter GDP figure. Firmer crude oil prices also supported the cause and future course is likely to be ruled by the movements in the crude oil market. The yield on the benchmark 10-year bonds rose 1bp to -0.098 pct, yield on 30-years bonds rose 2bps to 0.371 pct, yield on 40-year bonds climbed 1bp to 0.392 pct and the yield on 2-year bonds hovered at -0.241 pct by 0600 GMT.
The U.K Gilts plunged after data showed stronger than expected April labour market data. Also, investors drove-out from safe-haven buying as Brexit angst eased after YouGov EU referendum poll for the Times newspaper showed that maximum participants voted against leaving European Union. The yield on the benchmark 10-year bonds rose 3bps to 1.400 pct by 1000 GMT.
The Australian government bonds traded nearly flat after data showed weaker than expected first quarter wage price index. On the other hand, firmer crude oil prices restricted investors from safe-haven buying. Moreover, bond prices are likely to be ruled by the movements in global crude oil. The yield on the benchmark 10-year Treasury note which moves inversely to its price remained steady at 2.301 pct and the yield on the 2-year Treasury bond stood unchanged to 1.644 pct by 1130 GMT.
