Market Roundup
•Canada Common CPI (YoY) 4.6%, 4.2%forecast,2.6% previous
•Canada Trimmed CPI (YoY) 5.5%,5.6% forecast, 5.4% previous
•Canada Median CPI (YoY) 4.9%,5.1% forecast,4.9% previous
•Canada Jun CPI (YoY) 8.1%,8.4% forecast, 7.7% previous
•Canada Jun CPI (MoM) 0.7%,0.9% forecast, 1.4% previous
•Canada Jun Core CPI (MoM) 0.3%, 0.8% previous
•Canada Jun RMPI (MoM) -0.1%,2.5% previous
•Canada Jun Core CPI (YoY) 6.2%,5.9%forecast,6.1% previous
•US Jun Existing Home Sales 5.12M,5.38M forecast, 5.41M previous
•US Jun Existing Home Sales (MoM) -5.4%, -3.4% previous
•EU Jul Consumer Confidence -27.0, -24.9 forecast, -23.6 previous
•US Cushing Crude Oil Inventories 1.143M,0.316M previous
•US Crude Oil Inventories -0.446M, 1.357M forecast, 3.254M previous
Looking Ahead - Economic Data (GMT)
•03:00 Japan BoJ Interest Rate Decision -0.10% forecast, -0.10% previous
•03:00 New Zealand Credit Card Spending (YoY) 2.2% previous
Looking Ahead - Economic events and other releases (GMT)
• 03:00 Japan BoJ Outlook Report (YoY)
• 03:00 Japan BoJ Press Conference
Currency Summaries
EUR/USD: The euro declined against the dollar on Wednesday as dollar strenthed ahead of a rate decision by the European Central Bank on Thursday . The U.S. dollar rose after three straight days of declines that left the greenback at two-week lows as expectations for upcoming rate hikes from the ECB and U.S Federal Reserve have shifted. The market anticipates a larger 50 basis points hike from the ECB and the Fed hiking by 75 basis points as they attempt to combat inflation. As recently as last week, it was widely expected the ECB would hike by 25 basis points while the Fed would likely raise rates by 100 basis points.. Immediate resistance can be seen at 1.0281(21DMA), an upside break can trigger rise towards 1.0310(38.2% fib).On the downside, immediate support is seen at 1.0179 (14DMA), a break below could take the pair towards 1.0110 (23.6%fib).
GBP/USD: Sterling steadied against the dollar on Wednesday as data showed that UK inflation rose to a 40-year high but was only slightly above forecast. Inflation data supported bets that the Bank of England will opt for a 50 basis point rate hike next month, but sterling's moves were limited as the magnitude of the hike was priced in. The central bank is expected to raise rates for the sixth time since December. Bank of England Governor Andrew Bailey said that a 50 bps increase in borrowing costs - unseen in Britain in a quarter of a century - was on the table but not locked in. Sterling was flat at $1.1967 against the U.S. dollar , after climbing to an 11-day high on Tuesday. Immediate resistance can be seen at 1.2051(14DMA), an upside break can trigger rise towards 1.2098(38.2%fib).On the downside, immediate support is seen at 1.1950(14DMA), a break below could take the pair towards 1.1856 (23.6%fib).
USD/CAD: The Canadian dollar strengthened against the greenback on Wednesday after data showed an acceleration in consumer price inflation in the month of June . Data from Statistics Canada showed the country's annual inflation rate accelerated to 8.1% in June of 2022, the highest since January 1983. Core consumer prices in Canada increased 6.2% in June of 2022 over the same month in the previous year. It is the highest core inflation rate since at least 1984. U.S. August crude futures fell $1.96 to settle at $102.26 a barrel on Wednesday. The loonie was trading 0.1% lower at C$1.2877 to the greenback, after trading in a range of 1.2855 to 1.2906.Immediate resistance can be seen at 1.2924 (5DMA), an upside break can trigger rise towards 1.2952 (23.6%fib).On the downside, immediate support is seen at 1.2866 (38.2%fib), a break below could take the pair towards 1.2788 (50%fib).
USD/JPY: The dollar strengthened against the Japanese yen on Wednesday as dollar gained ahead of Bank of Japan’s meeting. The Bank of Japan is set to raise its inflation forecast on Thursday but maintain ultra-low interest rates and warn of risks to a fragile economy, reinforcing its position as an outlier in a wave of global increases to borrowing costs. While rising fuel and commodity costs have pushed Japan's inflation above its 2% target, the BOJ is in no rush to withdraw stimulus as slowing global growth cloud the outlook for an economy yet to fully recover from the COVID-19 pandemic's scars.The decision will come hours before that of the European Central Bank, which will consider a bigger-than-expected 50 basis point rate increase to tame soaring inflation. Strong resistance can be seen at 139.44 (23.6%fib), an upside break can trigger rise towards 140.00(Psychological level).On the downside, immediate support is seen at 137.56 (9DMA), a break below could take the pair towards 136.91 (38.2%fib).
Equities Recap
European stocks dipped on Wednesday as worries about gas supplies kept investors worried .
The UK's benchmark FTSE 100 closed down by 0.44 percent, Germany's Dax ended down by 0.20 percent, and France’s CAC finished the down by 0.22 percent.
U.S. stocks ended higher on Wednesday with the tech-heavy Nasdaq booking a 1.6 % gain on positive earnings signals with a wary eye on inflation and more interest rate hikes by the Fed.
Dow Jones closed up by 0.15 percent, S&P 500 ended up 0.59 percent, Nasdaq finished the day up by 1.58 percent.
Treasuries Recap
Benchmark U.S. 10-year Treasury yields were mixed on Wednesday as traders navigated whether gas disruptions to Europe could push the euro zone to a deep recession, with prices remaining in a tight range.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was unchanged at 3.231%.
Commodities Recap
Gold prices fell on Wednesday as a firmer dollar countered limited support for bullion from expectations the U.S. Federal Reserve may not resort to a 100-basis-point interest rate hike next week.
Spot gold was down 0.6% at $1,700.23 per ounce by 2:06 p.m. EDT (1806 GMT). U.S. gold futures settled down 0.6% at $1,700.20.
Oil prices slipped on Wednesday, after U.S. government data showed lower gasoline demand during the peak summer driving season and as interest rate hikes by central banks to fight inflation fed fears the economy could slow, cutting energy demand.
Brent crude prices for September fell 43 cents to settle at $106.92 a barrel. U.S. West Texas Intermediate (WTI) crude for August fell $1.96 to settle at $102.26 a barrel. The WTI contract expires on Wednesday.
