Market Roundup
• US Wholesale Inventories (MoM) 0.4%, 0.4% forecast 0.4% previous
• Canada Interest Rate Decision, 1.75 %, 1.75 % forecast 1.75 % previous
• U.S. crude stocks fall more than 9 mln barrels -EIA
Looking Ahead - Economic Data (GMT)
• 22:45 June New Zealand Electronic Card Retail Sales (YoY)
• 22:45 June New Zealand Electronic Card Retail Sales (MoM)
• 23:01 June UK RICS House Price Balance
• 23:50 Japan Foreign Bonds Buying
• 23:50 Japan Foreign Investments in Japanese Stocks
• 01:00 Australia MI Inflation Expectations
• 01:30 May Australia Home Loans (MoM)
• 04:30 Japan Tertiary Industry Activity Index (MoM)
Looking Ahead - Events, Other Releases (GMT)
• 11:30 ECB Publishes Account of Monetary Policy Meeting
• 13:10 Reserve Bank of Australia (RBA) Assistant Governor Guy Debelle (since March 2007) is to speak. As a key adviser to RBA board members, who decide short term interest rates.
• 14:00 Federal Reserve Chair Jerome Powell (Feb. 2018 – Feb. 2022) is to testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC.
• 15:10 FOMC Member Williams Speaks.
• 16:15 Federal Reserve Bank of Atlanta President Raphael Bostic Speaks. His public engagements are often used to drop subtle clues regarding future monetary policy.
• 16:30 Richmond Fed President Thomas Barkin Speaks. His public engagements are often used to drop subtle clues regarding future monetary policy.
17:30 U.S. Federal Open Market Committee (FOMC) Member Quarles Speaks.
21:00 FOMC Member Kashkari Speaks .
Currency Summaries
EUR/USD:The euro rose above $1.12 against dollar on Wednesday, bouncing off two-week lows, as Jerome Powell struck a downbeat tone in congressional testimony, saying trade uncertainties and concerns about the global outlook continued to exert pressure on the U.S. economy. The greenback hit session lows versus the euro and yen after Powell’s comments, which reinforced expectations the Fed will cut interest rates for the first time in a decade at its next monetary policy meeting later this month. At ( 19:57) GMT, the euro was up 0.40 percent at $1.1253. An index that tracks the dollar versus a basket of six major currencies was down 0.40 at 97. Immediate resistance can be seen at 1.1255 (100 DMA), an upside break can trigger rise towards 1.1285 (20 DMA).On the downside, immediate support is seen at 1.1239 (5 DMA), a break below could take the pair towards 1.1200 (Psychological level).
GBP/USD:The British pound held near two years low against greenback on Wednesday, as better-than-expected readings on the British economy did little to lift the British currency .Growing fears of a no-deal Brexit under a new prime minister, and weak data in recent weeks, have raised fears that the Bank of England will have to reverse its relatively confident outlook on the British economy and join its global peers in starting to cut interest rates. Britain’s economy grew more than expected in May, helped by a rebound in car production after Brexit-related shutdowns. The pound edged 0.3% higher to $1.2503 still close to Tuesday’s low of $1.2439, its lowest in more than two years, barring a flash crash earlier this year. Immediate resistance can be seen at 1.2519 (5 DMA), an upside break can trigger rise towards 1.2585 (11 DMA).On the downside, immediate support is seen at 1.2411 (Lower Bollinger Band), a break below could take the pair towards 1.2400 (Psychological level).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday, recovering from a one-week low the day before, as oil prices rose and after Bank of Canada held interest rates steady. The Bank of Canada held interest rates steady as expected on Wednesday and made clear it had no intention of easing monetary policy, while highlighting the risks trade wars posed to the global economy. The central bank, which has sat on the sidelines since last October amid an economic slowdown, maintained its overnight rate at 1.75% and made no mention of future rate moves. By contrast, the Federal Reserve is expected to cut benchmark U.S. interest rates as soon as the end of July. Traders had bet the Bank of Canada would not follow suit, helping push the Canadian dollar to near eight-month highs against the greenback.At (20:08 GMT), the Canadian dollar was trading 0.34% higher at 1.3080 to the greenback. Immediate resistance can be seen at 1.3073 (9 DMA), an upside break can trigger rise towards 1.3144 (Daily High).On the downside, immediate support is seen at 1.3038 (July 4th Low), a break below could take the pair towards 1.2931 (23.6% retracement).
USD/JPY: The dollar weakened against the Japanese yen on Wednesday, after U.S. Federal Reserve Chairman Jerome Powell doused expectations of an interest rate cut. Powell said concerns about trade policy and a weak global economy "continue to weigh on the U.S. economic outlook" and the Fed intended to "act as appropriate" to sustain a decade-long expansion. Although expectations for a 50-basis-point rate cut at a Fed meeting later this month have evaporated after forecast-beating job gains were reported last week, investors still expect a25-basis-point cut due to weak inflation and worries about growing business fallout from the U.S.-China trade war.The dollar was 0.36 percent lower versus the Japanese yen at 108.45. Strong resistance can be seen at 109.30 (Higher Bollinger Band), an upside break can trigger rise towards 110.14 (Ichimoku Cloud Top).On the downside, immediate support is seen at 108.25 (9 DMA), a break below could take the pair towards 108.08 (21 DMA).
Equities Recap
European shares closed lower for a fourth straight session on Wednesday, as concerns about trade tensions and a weak global economy highlighted by Fed chair Jerome Powell overshadowed short-lived optimism of an interest rate cut later in the month.
UK's benchmark FTSE 100 closed down by 0.08 percent, Germany's Dax ended down by 0.51 percent, France’s CAC finished the day down by 0.8 percent.
The benchmark S&P 500 briefly crossed the 3,000-point mark for the first time on Wednesday after dovish remarks from Federal Reserve Chairman Jerome Powell boosted the case for an interest rate cut later this month.
Dow Jones closed up by 0.29 percent, S&P 500 ended up by 0.43 percent, Nasdaq finished the day up by 0.75 percent.
Treasuries Recap
The U.S. Treasury yield curve steepened on Wednesday, after the Federal Reserve's concerns about global growth increased expectations that the U.S. central bank may cut rates more sharply than expected in July.
The spread between two- and 10-year yields was last up to 23.5 basis points, its highest in a week. It hit a month low of 14.2 basis points on Tuesday.
Commodities Recap
Gold prices recouped losses to rise nearly 1% on Wednesday as the dollar slid after U.S. Federal Reserve Chairman Jerome Powell fanned expectations of an interest rate cut, citing risks to the U.S. economy.
Spot gold rose 0.8% to $1,408.40 per ounce as of11:28 am ET (1528 GMT), having made its way to a high of $1,411an ounce. Prices had dropped to $1,389.55 earlier in the session.
U.S. gold futures for August delivery rose 0.7% to$1,410.30 per ounce.
Oil prices gained $2 a barrel on Wednesday after U.S. crude inventories shrank more than expected and as major producers evacuated rigs in the Gulf of Mexico ahead of an expected storm.
Brent crude futures were up $2.31, or 3.6%, to $66.47 a barrel by 12:52 p.m. EDT (1652 GMT). U.S. West Texas Intermediate (WTI) crude futures climbed $2.03, or 3.5%, to $59.86 a barrel.
