Market Roundup
• Fed to stop shrinking portfolio this year, Powell says
• ECB need not change rate guidance just yet, Weidmann says
• US trade chief sees long-term China challenges, continued tariff threat
• US Dec Factory Orders MM, 0.1%, 0.5% forecast, -0.6% previous, -0.5% revised
• US Dec Durable Goods, R MM, 1.2%, 1.2% previous
• US Dec Nondef Cap Ex-Air R MM, -1.0%, -0.7% previous
• US Jan CPI MM SA, -0.1%, 0.2% previous
• US Dec Pending Homes Index 103.2, 99.0 forecast, 98.7 previous
• US Dec Pending Sales Change MM 4.6%, 0.4% forecast, -2.2% previous, -2.3% revised
• US 22 Feb, w/e Mortgage Market Index, 384.8, 365.3 previous
• Ex-lawyer Cohen assails Trump but gives no direct evidence of collusion
• Trump touts rapport with North Korea's Kim at summit, 'satisfied' with talks
• CA Jan CPI Inflation YY, 1.4%, 1.5% forecast, 2.0% previous
• CA Jan CPI BoC Core YY, 1.5%, 1.7% previous
Looking Ahead - Economic Data (GMT)
• 27 Feb 22:30 Australia Feb AIG Manufacturing Index, 52.5 previous
• 27 Feb 23:30 Japan Feb CPI, Overall Tokyo, 0.4% previous
• 27 Feb 23:50 Japan Jan Retail Sales YY, 1.1% forecast, 1.3% previous
• 28 Feb 00:00 New Zealand Feb NBNZ Business Outlook, -24.1% previous
• 28 Feb 00:30 Australia Q4 Capital Expenditure, 0.5% forecast, -0.5% previous
• 28 Feb 01:00 China Feb NBS Non-Mfg PMI, 54.7 previous
• 28 Feb 01:00 China Feb NBS Manufacturing PMI, 49.5 forecast, 49.5 previous
• 28 Feb 01:00 China Feb Composite PMI, 53.2 previous
• 28 Feb 05:00 Japan Jan Housing Starts YY, 11.0% forecast, 2.1% previous
• 28 Feb 05:00 Japan Jan Construction Orders YY, -3.7% previous
• 28 Feb 05:00 Japan Jan Unemployment Rate, 2.4% forecast, 2.4% previous
Looking Ahead - Events, Other Releases (GMT)
• 00:00 Cleveland Fed's Loretta Mester participates in the Second Annual Women in Economics Symposium hosted by the Federal Reserve Bank of St. Louis, in St. Louis, Mo
• 01:30 BOJ board member Hitoshi Suzuki delivers a speech to business leaders in Ibaraki, eastern Japan, and holds a news conference in Mito, Japan
• 11:30 Open Lecture on "The euro turns 20: ECB monetary policy", which will be attended by the deputy director-general of the ECB's research department, Philipp Hartmann in Berlin
• 13:00 Fed's Richard Clarida speaks on "A View from the Federal Reserve Board" before the National Association for Business Economics 35th Annual NABE Economic Policy Conference in Washington D.C.
• 13:50 Fed's Raphael Bostic participates in discussion, "The Economic and Housing Landscape: An Update" before the "Big Data, Big Money: Exploring Banking's Next Horizon" conference hosted by the Federal Reserve Bank of Atlanta
• 17:15 Fed's Patrick Harker speaks before the Philadelphia Inquirer 2019 Influence of Finance Awards, in Philadelphia
• 18:00 Fed's Robert Kaplan to participate in moderated question-and-answer session before the Real Estate Council of San Antonio
Currency summaries
EUR/USD: The euro slipped lower against the U.S. dollar on Wednesday, as greenback strengthened as investors grew cautious about U.S. trade talks with China after the country's trade representative said there are still serious issues to work through to secure a deal and ensure that future agreements are met. The greenback was trading lower before Trade Representative Robert Lighthizer made his comments before the House Ways and Means Committee on Wednesday at a hearing on U.S.-China issues. The euro was down 0.2 percent at $1.1366. An index that tracks the dollar versus a basket of six major currencies was up 0.13 at 96.16. Immediate resistance can be seen at 1.1390 (100 DMA), an upside break can trigger rise towards 1.1443 (Jan 28th high).On the downside, immediate support is seen at 1.1355 (21 DMA), a break below could take the pair towards 1.1326 (11 DMA).
GBP/USD: Sterling rallied to its highest levels in seven months against dollar on Wednesday, as investors ramped up bets that a no-deal Brexit was less likely and that Britain's departure from the European Union would be delayed.On a day when most high-yielding currencies including the Australian dollar came under pressure and safe-haven bets like the Swiss franc gained thanks to geopolitical concerns, the pound was the standout performer versus the dollar. The pound rallied 0.6 percent to its highest since July 2018 at $1.3335. For the month, it is the best performing currency against the dollar among major currencies. Immediate resistance can be seen at 1.3365 (23.6% retracement level), an upside break can trigger rise towards 1.3400 (Psychological level).On the downside, immediate support is seen at 1.3241 (38.2% retracement level), a break below could take the pair towards 1.3135 (50% retracement level).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday, as higher oil prices outweighed downbeat domestic inflation data that supported a patient approach from the Bank of Canada on raising interest rates further. The price of oil, one of Canada's major exports, climbed after a surprising plunge in U.S. crude inventories and as OPEC's de facto leader Saudi Arabia appeared unfazed by pressure from U.S. President Donald Trump to prevent oil prices from rising. At (2031 GMT), the Canadian dollar was trading 0.15 percent higher at 1.3148 to the greenback. Immediate resistance can be seen at 1.3175 (5 DMA), an upside break can trigger rise towards 1.3208 (11 DMA).On the downside, immediate support is seen at 1.3117 (23.6% retracement level), a break below could take the pair towards 1.3067 (Feb 1st low).
USD/JPY: The U.S. dollar strengthened against the yen on Wednesday, ahead of Thursday's fourth-quarter gross domestic product figure, despite the growth slowdown suggested by Wednesday's report that the U.S. goods trade deficit widened significantly in December. The Commerce Department said the goods trade gap jumped 12.8 percent to $79.5 billion in December as slowing global demand and a strong dollar weighed on exports. Exports declined 2.8 percent and imports rose 2.4 percent. The federal government on Thursday will report U.S. economic growth for the fourth quarter of 2018. The dollar was 0.39 higher versus the Japanese yen at 111.00. Strong resistance can be seen at 111.00 (Psychological level), an upside break can trigger rise towards 111.45 (100 DMA).On the downside, immediate support is seen at 110.25 (21 DMA), a break below could take the pair towards 109.85 (50 DMA).
Equities Recap
European shares fell on Wednesday, snapping a three-day winning streak amid growing India-Pakistan tensions, and a warning from Beiersdorf hammered consumer staples stocks while Air France-KLM and Marks & Spencer sank.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.37 percent, Germany's Dax ended down by 0.5 percent, France’s CAC finished the day down by 0.6 percent.
The S&P 500 flitted between positive and negative territory on Wednesday afternoon but was well above its session low after testimonies to U.S. Congress from trade and central bank officials as well as President Donald Trump's former lawyer brought few surprises.
Dow Jones closed down by 0.27 percent, S&P 500 ended down 0.05 percent, Nasdaq finished the day up by 0.07 percent.
Treasuries Recap
U.S. Treasury yields rose in afternoon trade ahead of Thursday's fourth-quarter gross domestic product figure, despite the growth slowdown suggested by Wednesday's report that the U.S. goods trade deficit widened significantly in December.
The yield curve was steeper as two-year yields rose at a slower rate than 10-year yields. The two-year yield moves in step with market forecasts of interest rate policy, but Wednesday's move seemed disconnected from Federal Reserve Chairman Jerome Powell's remarks to Congress on Wednesday, in which he said the U.S. central bank would stop shrinking its $4 trillion balance sheet later this year.
Commodities Recap
Oil futures gained about 2 percent on Wednesday after U.S. crude inventories unexpectedly plummeted and as Saudi Arabia brushed aside comments from U.S. President Donald Trump seeking to keep oil prices from climbing.
U.S. crude futures settled at $56.94 a barrel, up $1.44, or 2.6 percent, the biggest daily percentage rise in nearly four weeks. Brent crude futures rose $1.18, or 1.8 percent, to end at $66.39 a barrel.
Gold prices fell to their lowest in nearly two weeks on Wednesday, pressured by a mild revival in the dollar after comments from the U.S. Trade Representative dampened expectations of a quick resolution to the U.S.-China trade dispute.
Spot gold slipped 0.68 percent to $1,319.19 per ounce at (2105 GMT). The yellow metal fell to its lowest since Feb. 15 at $1,316.43 earlier in the session.U.S. gold futures settled down 0.5 percent at $1,321.2 per ounce.
