Market Roundup
• Fed's Powell says fully intends to serve his four-year term
• Fed's Powell says risk of waiting too long on policy change is not prominent now
• Senior U.S.-Chinese trade negotiators to confer before Trump-Xi G20 meeting
• US 14 Jun, w/e Mortgage Market Index, 511.8, 529.8 previous
• US 14 Jun, w/e MBA 30-Yr Mortgage Rate, 4.14%, 4.12% previous
• CA May CPI Inflation YY, 2.4%, 2.1% forecast 2.0% previous
• CA May CPI BoC Core YY, 2.1%, 1.5% previous
• CA May Core CPI MM SA, 0.3%, 0.2% previous
• CA May CPI YY SA, 2.33%, 2.11% previous
Looking Ahead - Economic Data (GMT)
• 19 Jun 22:45 New Zealand Q1 GDP Prod Based YY, SA 2.4% forecast, 2.3% previous
• 20 Jun N/A Japan BOJ Rate Decision, -0.10% forecast, -0.10% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Finland central bank Governor Olli Rehn, Bank of England Deputy Governor Sam Woods, Single Resolution Board's Chair, Elke König, and European Banking Authority Chairman Jose Manuel Campa speak at financial conference in Brussels.
• 02:30 Bank of Japan Governor Haruhiko Kuroda speaks to reporters at the end of the central bank policy meeting in Tokyo
• 07:30 ECB Vice President Luis de Guindos to speak at economy event in Santander
• 08:00 Norway Central Bank to hold announcement of the executive board's interest rate decision and publication of Monetary Policy followed by press conference in Oslo
• 09:30 Swedish Central Bank Deputy Governor Martin Floden will discuss the management of the foreign exchange reserves at the 8th BBVA Seminar for Public Sector Investors and Issuers in Porto, Portugal
• 09:50 Keynote speech by ECB bank supervisor Andrea Enria at FIBI International Banking Conference 2019 organised by the Banking & Payments Federation Ireland in Dublin, Ireland
• 11:00 Bank of England to announce rate decision and to publish the minutes of the meeting, after the rate decision in London
• 18:00 UK Finance Minister Philip Hammond and Bank of England Governor Mark Carney to make their annual Mansion House speeches at a dinner hosted by the Lord Mayor of the City of London
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Wednesday, after the U.S. Federal Reserve announced it held interest rates steady in June, but signaled a possible rate cut by the end of the year. Responding to an increase in economic uncertainty and a drop in inflation, the U.S. central bank said it "will act as appropriate to sustain" the American economy's expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates. Nearly half its policymakers now show a willingness to lower borrowing costs over the next six months. Seven of 17 policymakers said they expected it would be appropriate to cut rates by half a percentage point by the end of 2019, and an eighth member saw a rate cut of a quarter point as appropriate. The euro was up 0.01 percent at $1.1227. Immediate resistance can be seen at 1.1265 (9 DMA), an upside break can trigger rise towards 1.1300 (Psychological level).On the downside, immediate support is seen at 1.1221 (21 DMA), a break below could take the pair towards 1.1182 (June 18th low).
GBP/USD: The pound rose higher against dollar on Wednesday, breaking a six-week losing streak, as investors trimmed some large short bets against the British currency built up in recent weeks.The pound has fallen by 5% since early May, as concern grew that arch-Brexiteer Boris Johnson, the top contender to become the next British Prime Minister, will lead the country out of the European Union with or without a deal by Oct. 31. But a dovish tilt by global major central banks, including the U.S. Federal Reserve and the European Central Bank, has lifted some of the gloom over the British currency. The pound rose 0.70% to $1.2643, up from Monday's five-month low of $1.2507. Immediate resistance can be seen at 1.2655 (21 DMA), an upside break can trigger rise towards 1.2700 (Psychological level).On the downside, immediate support is seen at 1.2598 (5 DMA), a break below could take the pair towards 1.2507 (June 18th Low).
USD/CAD: The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Wednesday, as domestic data showed the highest inflation rate since last October and as the greenback broadly fell after a Federal Reserve interest rate decision. Canada’s annual inflation rate climbed to a seven-month high of 2.4% in May, Statistics Canada data indicated. Compared to April, prices were up 0.4%, led by big increase in the recreation, education and reading category. The U.S. dollar weakened against a basket of major currencies after the Federal Reserve announced it held interest rates steady in June, but signaled a possible rate cut by the end of the year. The Canadian dollar was trading 0.7% higher at 1.3281 to the greenback. Immediate resistance can be seen at 1.3367 (5 DMA), an upside break can trigger rise towards 1.3404 (21 DMA).On the downside, immediate support is seen at 1.3221 (Lower Bollinger Bands), a break below could take the pair towards 1.3200 (Psychological level).
USD/JPY: The dollar weakened against the Japanese yen on Wednesday, after the Federal Reserve signaled possible interest rate cuts over the rest of this year.The U.S. central bank held interest rates steady, as expected, but said it "will act as appropriate to sustain" the country's economic expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates.The market expects the Fed could cut rates as soon as its next meeting, in July. Nearly half of the Fed's policymakers now show a willingness to lower borrowing costs over the next six months. Investors' hopes that the Fed would soon cut interest rates were fueled on Tuesday when European Central Bank President Mario Draghi hinted at economic stimulus, comments that drove up stocks and weakened yields. The dollar was 0.02 percent lower versus the Japanese yen at 108.07. Strong resistance can be seen at 108.41(9 DMA), an upside break can trigger rise towards 108.76 (21 DMA).On the downside, immediate support is seen at 108.00 (Psychological level), a break below could take the pair towards 107.97 (Daily low).
Equities Recap
European stock markets were flat on Wednesday after posting their best results in five months a day earlier thanks to a strong policy speech from European Central Bank chief Mario Draghi that flagged a potential return to bond-buying and lower interest rates.
The UK's benchmark FTSE 100 closed down by 0.6 percent, FTSEurofirst 300 ended the day down by 0.03 percent, Germany's Dax ended down by 0.01 percent, and France’s CAC finished the up by 0.01 percent.
The S&P 500 approached its record high on Wednesday after the Federal Reserve signaled potential U.S. interest rate cuts later this year, reassuring investors worried that the U.S.-China trade war could stall economic growth.
Dow Jones closed up by 0.16 percent, S&P 500 ended up 0.29 percent, Nasdaq finished the day up by 0.42 percent.
Treasuries Recap
U.S. Treasury yields retreated on Wednesday after the Federal Reserve held interest rates steady, as expected, but flagged possible rate cuts of as much as half a percentage point later this year as inflation remained below its target.
U.S. 10-year note yields fell to 2.031% from 2.058% late on Tuesday.Yields on U.S. 30-year bonds dropped to 2.54%, from 2.552% on Tuesday. At the short end of the curve,
U.S. 2-year yields slid to 1.753%, the lowest in about 1-1/2 years, from Tuesday's 1.862%. They were last at 1.755%.
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Commodities Recap
Gold prices climbed on Wednesday after the U.S. Federal Reserve signalled interest rate cuts were possible later this year, as it responded to increased economic uncertainty and tepid inflation.
Spot gold rose 0.3% to $1,349.40 per ounce as of 2:43 p.m. EDT (1843 GMT). U.S. gold futures settled 0.1% lower at $1,348.8 per ounce.
Oil futures were mostly steady on Wednesday as price support from a larger-than-expected decline in U.S. crude inventories was countered by a lull in equities.
Brent crude futures settled at $61.82 a barrel, shedding 32 cents, or 0.5%. U.S. West Texas Intermediate (WTI) crude futures settled at $53.76 a barrel, falling 14 cents, or 0.26%. On Tuesday, WTI had recorded its biggest daily rise since early January.
