Market Roundup
• US May Fed Funds Target Rate, 1.5-1.75%, 1.5-1.75% forecast, 1.5-1.75% previous
• US May Fed Int On Excess Reserves, 1.75%, 1.75% previous
• US Apr Total Vehicle Sales, 17.15 mln, 17.10 mln forecast,, 17.48 mln previous
• US w/e Mortgage Market Index, 388.6, 398.5 previous
• US w/e MBA 30-Yr Mortgage Rate, 4.80%, 4.73% previous
• US Apr ADP National Employment, 204k, 200k forecast, 241k previous
• US Apr ISM-New York Index, 779.3, 772.1 previous
• US Apr ISM NY Biz Conditions, 64.3, 54. previous
• As Trump visits State Department, Pompeo says N.Korea must denuclearize
• Euro zone economy slows as expected in first quarter
Looking Ahead - Economic Data (GMT)
• 2 May 22:30 Australia Apr AIG Services Index, 56.9 previous
• 3 May 01:30 Australia Mar Building Approvals, 1.0% forecast, -6.2% previous
• 3 May 01:30 Australia Mar Private House Approvals, 1.9% previous
• 3 May 01:30 Australia Mar Trade Balance G&S (A$), 650mln forecast,
• 3 May 01:30 Australia Mar Goods/Services Imports, 0.0% previous
• 3 May 01:30 AU Mar Goods/Services Exports, 0.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Bank of France Governor Francois Villeroy de Galhau is to speak at a conference in Paris
• 08:00 The Riksdag Committee on Finance will hold an open hearing with Riksbank Governor Stefan Ingves in Stockholm
• 08:00 Norway Central Bank announces interest rate decision in Oslo
• 12:00 ECB Vice-President Vitor Constancio will give Keynote speech at Joint ECB/EC Conference in Frankfurt
• 12:30 ECB Executive Board member Benoit Coeure moderating high-level a policy panel at Joint ECB/EC conference in Frankfurt
• 16:00 Swiss National Bank Chairman Thomas Jordan gives speech in Zurich, Sweden
Currency Summaries
EUR/USD is supported at 1.1915 levels and currently trading at 1.1944 levels. The pair has made session high at 1.2027 hit lows at 1.1933 levels. The euro declined against US dollar on Wednesday after the Federal Reserve held interest rates steady and gave no signals it was in a rush to increase the pace of rate hikes.In its statement, the Fed expressed confidence that a recent rise in inflation to near the U.S. central bank's target would be sustained, leaving it on track to raise borrowing costs in June, while it also said inflation "on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term." Ahead of the statement, some investors were nervous the Fed might sound more hawkish on policy tightening after recent concerns about rising inflation. The greenback has been bolstered in recent weeks by the expectation that the Fed will continue to raise rates while other central banks, including the European Central Bank, are seen as taking longer to normalize monetary policy. Investors had been betting the euro would appreciate against the U.S. currency as the ECB removed stimulus, before a spate of weaker-than-expected data made this less likely in the nearer-term. Investors are next focused on Friday's U.S. employment report for April for further indications of the strength of the economy and inflation pressures.
GBP/USD is supported in the range of 1.3520 levels and currently trading at 1.3567 levels. It reached session high at 1.3596 and dropped to session low at 1.3557 levels. Sterling gave up its earlier gains against dollar on Wednesday and fell back towards its lowest level since January as a stronger dollar and concerns about Brexit-related risks overshadowed data showing a rebound in construction activity in April.With the dollar rallying for the last fortnight and expectations of a Bank of England interest rate hike next month tumbling, sterling weakened to its worst level since Jan. 12, extending a bruising fortnight for the pound in which it has fallen by more than 7 cents. It hit a fresh 3-1/2 month low at $1.3581 after reports that senior British lawmakers who back Brexit had demanded that Prime Minister Theresa May drop a proposal for a customs partnership with the European Union once it leaves the bloc. That reignited concerns about a lack of British political unity about the Brexit talks and undermined the pound. Sterling had bounced after the Federal Reserve released its policy announcement, leaving interest rates unchanged. Wednesday’s IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) jumped to 52.5 in April from 47.0 in March. That was comfortably above the median expectation of 50.5 in a poll of economists and back above the 50 line denoting growth in activity. Sterling could not hold on to those gains and traded 0.1 percent lower at $1.3585.
USD/CAD is supported at 1.2800 levels and is trading at 1.2847 levels. It has made session high at 1.2882 and lows at 1.2805 levels. The Canadian dollar edged lower against its U.S. counterpart on Wednesday, pulling back from an earlier nine-day high as dollar rose across the board and investors turned their attention to NAFTA negotiation. U.S. Trade Representative Robert Lighthizer said on Tuesday that if a deal to revise the North American Free Trade Agreement cannot be reached with Canada and Mexico in about three weeks, its approval by the U.S. Congress could be in jeopardy. Lighthizer said at a U.S. Chamber of Commerce event that a deal to update NAFTA was needed quickly because of the lengthy notification process for congressional approval of trade deals. The dollar index rose 0.13 percent after the Federal Reserve left interest rates unchanged in its policy announcement. Oil prices gained on Wednesday, lifted by concerns that the United States may re-impose sanctions on major exporter Iran, although soaring U.S. supplies capped gains. The Canadian dollar was last trading 0.2 percent lower at C$1.2880 to the greenback. The currency's weakest level of the session was C$1.2880, while it touched its strongest since April 23 at C$1.2803.
AUD/USD is supported around 0.7472 levels and currently trading at 0.7508 levels. It hit session high at 0.7535 and made session lows at 0.7482 levels. The Australian dollars declined to hit multi-month lows on Wednesday, as the greenback trekked higher against most major currencies amid bets that interest rates will rise at a faster pace in the United States. In contrast, the central banks in Australia have reiterated the need for cash rates to remain at historic lows for a while yet. The divergence has pushed U.S. Treasury yields above those in Australia to the widest since mid-1998.The Australian dollar pushed below critical support of $0.7500 to near a one-year trough of $0.7472 touched on Tuesday. The Aussie has fallen in eight out of the last 10 sessions and has lost more than 4 percent since the beginning of this year. It surged 8.7 percent in 2017. The Federal Reserve held interest rates steady on Wednesday and expressed confidence that a recent rise in inflation to near the U.S. central bank's target would be sustained, leaving it on track to raise borrowing costs in June. On the data front, U.S. private-sector employers hired 204,000 workers in April, the smallest monthly increase since November, a report by a payrolls processor showed on Wednesday. The increase was more than what economists surveyed b had expected, which was that the ADP National Employment Report would show a gain of 200,000 private jobs.
Equities Recap
European shares rose on Wednesday, boosted by some strong earnings updates and a rising tech sector after results from Apple exceeded weak expectations.
UK's benchmark FTSE 100 closed up by 0.49 percent, the pan-European FTSEurofirst 300 ended the day up by 0.60 percent, Germany's Dax ended up by 1.59 percent, France’s CAC finished the day up by 0.29 percent.
U.S. stocks dropped on Wednesday as investors remained concerned about worsening trade relations between the United States and China and digested the Federal Reserve's decision to leave interest rates unchanged.
Dow Jones closed down by 0.73 percent, S&P 500 ended down by 0.73 percent, Nasdaq finished the day up by 0.42 percent.
Treasuries Recap
U.S. Treasury yields for most maturities fell on Wednesday as a quarterly refunding program that aims to finance the country's massive fiscal deficit came in short of expectations, reducing the pressure on prices caused by the increase in debt supply.
U.S. 10-year yields were at 2.970 percent, down from 2.976 percent late on Tuesday.U.S. 30-year yields, however, slid to 3.136 percent, from Tuesday's 3.137 percent.
On the front end of the curve, U.S. two-year yields hit a 9-1/2-year high of 2.521 percent. They were last at 2.5012 percent.
Commodities Recap
Gold steadied on Wednesday near 4-month lows as the dollar's uptrend paused, but prices of the precious metal are expected to remain under pressure from a significantly stronger U.S. currency and weak investment demand.
Spot gold was up 0.7 percent at $1,312.14 per ounce by 2:33 p.m. EDT (1833 GMT), while U.S. gold futures for June delivery settled down $1.20, or 0.1 percent, at $1,305.60.
Oil prices strengthened slightly ahead of the settlement Wednesday as the Federal Reserve held interest rates steady and expressed confidence that a recent rise in inflation would be sustained.
July Brent futures rose 31 cents to $73.42 a barrel by 2:15 p.m. EDT (1815 GMT), after falling nearly 3 percent on Tuesday to their lowest in two weeks. U.S. West Texas Intermediate crude futures were up 61 cents at $67.86.
