Market Roundup
• Euro lifted away from 28-month lows, Lagarde comments help
• Sterling bounces on bid to stop no-deal Brexit
• US Exports 207.40B, 206.30B previous
• US Imports 261.40B, 261.80B previous
• US Jul Trade Balance -54.00B, -53.50B forecast, -55.50B previous
• Canada Jul Exports 49.76B, 50.22B previous
• Canada Jul Imports 50.89B, 51.80B forecast, 50.28B previous
• Canada Labor Productivity (QoQ) (Q2) 0.2%,0.3% forecast, 0.4% previous
• Canada Jul Trade Balance -1.12B, -0.40B forecast, -0.06B previous
• US Redbook (YoY) 6.5%,5.7% previous
• US Redbook (MoM) -1.0%,-1.4% previous
• Brazil Aug Markit Composite PMI 51.9 , 51.6 previous
• US Aug ISM NY Business Conditions 50.3%,43.5% previous
• US Aug ISM-New York Index 879.0,878.8 previous
Looking Ahead - Economic Data (GMT)
23:50 Japan Foreign Bonds Buying 911.9B previous
23:50 Japan Foreign Investments in Japanese Stocks 3.9B
01:30 Australia Jul Exports (MoM) 1%
01:30 Australia Jul Imports (MoM) -4%
01:30 Australia Jul Trade Balance 7.200B, 8.036B previous
Looking Ahead - Events, Other Releases (GMT)
No significant events
Currency Summaries
EUR/USD: The euro rebounded on Wednesday, as comments from European policymakers introduced some doubt over the scale of a European Central Bank stimulus package expected next week, while investors sold the dollar for riskier currencies.Christine Lagarde, the ECB’s likely next president, said highly accommodative monetary policy for a prolonged period was necessary but she added that the bank needed to be mindful of the negative side-effects of such tools. Expectations for an interest cut, the relaunch of asset purchases and other ECB measures to stimulate the economy have weighed on the euro on Tuesday it hit a 28-month low of $1.0926. The single currency gained as much as 0.3% to $1.1032. Immediate resistance can be seen at 1.1047 (11 DMA), an upside break can trigger rise towards 1.1087 (21 DMA).On the downside, immediate support is seen at 1.0996 (5 DMA), a break below could take the pair towards 1.0900 (Psychological level).
GBP/USD: Sterling rallied above $1.22 on Wednesday for the first time since Aug. 30 as investors grew more optimistic about Brexit after British lawmakers took another step in an attempt to block a no-deal Brexit. Lawmakers who defeated Prime Minister Boris Johnson’s government late on Tuesday are hoping to pass a bill that seeks to stop Britain from leaving the European Union on Oct. 31 without transitional arrangements.The House of Commons approved the proposal by 327 to 299 in favor of the plan late on Wednesday. It now goes to the parliament’s upper chamber for approval. In late U.S. trading, sterling was up 1.13% at $1.2224 , having vaulted briefly to a one-week high of $1.2229 as it was boosted also by a 0.5% dollar pullback sparked by Tuesday's dismal U.S. manufacturing data. Immediate resistance can be seen at 1.2305 (11 DMA), an upside break can trigger rise towards 1.2355 (Higher Bollinger Band).On the downside, immediate support is seen at 1.2150 (21 DMA), a break below could take the pair towards 1.2100 (Psychological level).
USD/CAD: The Canadian dollar strengthened against the greenback on Wednesday, as expectations fell for a Bank of Canada interest rate cut over the coming months after the central bank, in a policy announcement, made no mention of future moves. The Bank of Canada held its benchmark interest rate at 1.75% as expected but said the escalating U.S.-China trade war was doing more damage to the global economy than it had forecast in July. Chances of an interest rate cut in October fell to about 50% from nearly 70% before the announcement, data from the overnight index swaps market showed. Canada's economy expanded at a surprisingly strong annualized rate of 3.7% in the second quarter, a pace much higher than the Bank of Canada had predicted, thanks to a resurgence in goods exports.The Canadian dollar was last trading 0.4% higher at 1.3290 to the greenback . Immediate resistance can be seen at 1.3380 (Higher Bollinger Band), an upside break can trigger rise towards 1.3400 (Psychological level).On the downside, immediate support is seen at 1.3187 (Lower Bollinger Band), a break below could take the pair towards 1.3176 (Aug 5th low).
USD/JPY: The dollar gained against the Japanese yen on Wednesday, as risk sentiment improved after global political worries eased with what markets perceived as positive news in Hong Kong, Italy and Britain. The yen, which draws safe-haven bids in times of geopolitical stress, dropped for the first time in four days against the greenback.Risk appetite rose on reports Hong Kong leader Carrie Lam would announce the formal withdrawal of an extradition bill that triggered months of unrest.In Italy, the 5-Star Movement approved a coalition deal with the Democratic Party, paving the way for a new government, while lawmakers opposed to a no-deal Brexit gained the upper hand in Britain, triggering a global equities rally.The dollar was 0.02 percent higher versus the Japanese yen at 106.34. Strong resistance can be seen at 106.89 (Higher Bollinger Band), an upside break can trigger rise towards 107.18 (50 DMA).On the downside, immediate support is seen at 105.72 (Sep 3rd low), a break below could take the pair towards 105.00 (Psychological level).
Equities Recap
A rally in Italian shares driven by the formation of a new government lifted European stocks on Wednesday, with investors also taking heart from an easing of political tensions in Britain and Hong Kong.
The UK's benchmark FTSE 100 closed up by 0.59 percent, Germany's Dax ended up by 0.96 percent, and France’s CAC finished the up by 1.21 percent.
Wall Street's main indexes rebounded on Wednesday, after robust economic data from China, easing tensions in Hong Kong and British lawmakers' approval of a law to delay Brexit provided a dose of optimism to investors worried about global growth.
Dow Jones closed up by 0.91 percent, S&P 500 ended up 1.08 percent, Nasdaq finished the day down by 1.30 percent.
Treasuries Recap
Two-year Treasury yields hit their lowest since September 2017, steepening the yield curve on Wednesday, after the Federal Reserve’s Beige Book report and GDPNow tool reflected expectations that growth would slow in the third quarter.
The two-year yield, which moves with expectations of interest rate cuts, fell as low as 1.430% and was last down 2.6 basis points to 1.436%.
Commodities Recap
Gold on Wednesday steadied near its highest in over six years as focus returned to economic woes with 10-year U.S. Treasury yields slumping to a three-year low, while a slight improvement in risk sentiment slowed bullion’s advance.
Spot gold fell 0.03% to $1,546.25 per ounce at 11:00 am EDT (1500 GMT), still near last week’s $1,554.56, its highest since April 2013.U.S. gold futures remained unchanged at $1,555.70.
Oil prices rose more than 4% on Wednesday, boosted by a wider market pickup on positive news from China, after three days of losses due to fears about a weakening global economy.
Brent futures rose $2.44, or 4.2%, to settle at $60.70 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $2.32, or 4.3%, to $56.26.
