Market Roundup
• US Apr PPI Final Demand YY, 2.6%, forecast, 3.0% previous.
• US Apr PPI Final Demand MM, 0.1%, 0.2% forecast, 0.3% previous.
• US Mar Wholesale Inventories, R MM, 0.3%, 0.5% forecast, 0.5% previous.
• US Mar Wholesale Sales MM, 0.3%, 0.5% forecast, 1.0% previous.
• US w/e Mortgage Market Index, 387.1, 388.6 previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.78%, 4.80% previous.
• US w/e MBA Mortgage Applications, -0.4%, -2.5% previous.
• Atlanta Fed's Bostic: Trade uncertainty may be sapping business investment.
• CA Mar Building Permits MM, 3.1%, 2.0% forecast, -2.6% previous.
• Americans freed by North Korea before Trump-Kim summit head home.
• Trump says U.S.-North Korea summit will not be at demilitarized zone .
• Europeans work to save Iran deal, and business, after Trump pulls out.
• Saudi Arabia will not act alone to fill any Iran oil shortfall - OPEC source.
• ECB's Lane says too soon to say if demand slowdown hitting economy.
Looking Ahead - Economic Data (GMT)
• 9 May 21:00 New Zealand May 9 Cash Rate, 1.75% forecast, 1.75% previous
• 9 May 23:50 Japan Apr Bank Lending YY, 2.0% previous
• 9 May 23:50 Japan w/e Foreign Bond Investment, 950.3 bln previous
• 9 May 23:50 Japan w/e Foreign Invest JP Stock, 480.4 bln previous
• 9 May 23:50 Japan Mar Current Account NSA JPY, 3.009 bln forecast, 2,076 bln previous
• 10 May 01:30 China Apr PPI YY, 3.5% forecast, 3.1% previous
• 10 May 01:30 China Apr CPI YY, 1.9% forecast, 2.1% previous
• 10 May 01:30 China Apr CPI MM, 0.1% forecast, -1.1% previous
• 10 May 05:00 Japan Apr Economy Watchers Poll SA, 48.9 previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Reserve Bank of New Zealand announces Official Cash Rate (OCR) and Monetary Policy Statement in Wellington
• 09:15 ECB's Draghi and executive board member Benoit Coeure attend an event in Aachen, Germany
• 11:00 BoE publishes summary of the Monetary Policy Committee meeting and Inflation report in London
Currency Summaries
EUR/USD is likely to find support at 1.1800 levels and currently trading at 1.1852 levels. The pair has made session high at 1.1888 and hit lows at 1.1838 levels. The euro slid to a new 2018 low against US dollar on Wednesday before recovering slightly, as investors bet on dollar strength due to relatively higher interest rates, while the U.S. exit from an Iran nuclear pact and political uncertainty in Italy also boosted greenback. The single currency did recover some of its losses in European trading but traders and analysts said the rush by investors unwinding their short positions on the greenback was unlikely to be over. Trump on Tuesday pulled the United States out of the deal with Iran, raising the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies. Sentiment towards the euro cooled after Italian President Sergio Mattarella's call to bickering political parties to rally behind a "neutral government" were met with immediate opposition and raised the prospect of elections being held as early as July. After falling 0.3 percent to $1.1823 versus the dollar, its lowest in 2018, the euro recovered to trade last trade at $1.1852 in the late US session. The euro has lost one percent of its value in May as investors betting on a falling dollar were caught out and rushed to cover their positions, further pushing the greenback higher.
GBP/USD is supported in the range of 1.3474 levels and currently trading at 1.3546 levels. It reached session high at 1.3601 and dropped to session low at 1.3517 levels. Sterling held near a four-month low on Wednesday before a Bank of England meeting where interest rates are expected to be left unchanged. Weak UK economic data and renewed worries about Brexit have hurt the pound in recent weeks and led markets to almost discount the possibility of interest rates rising on Thursday. Traders will be scrutinising the central bank decision for signs of whether an increase is likely later this year. A close vote in the nine-member Monetary Policy Committee could prepare markets for a rate move in August. Early on Wednesday, sterling dropped as low as $1.3499, close to Tuesday's lows, its weakest since Jan. 11, then recouped some of its losses as the dollar lost some ground. Against the euro, sterling gained 0.3 percent to 87.325 pence as the stronger dollar pulled the single currency down across the board. Investors have been selling pounds on expectations the BoE will not tighten monetary policy and as tensions have resurfaced over what Britain's relationship with the European Union should look like.
USD/CAD is supported at 1.2800 levels and is trading at 1.2854 levels. It has made session high at 1.2942 and lows at 1.2823 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday, rebounding from a nearly seven-week low the day before, as the price of oil surged after U.S. President Donald Trump abandoned a nuclear deal with Iran. Trump announced on Tuesday the "highest level" of sanctions against the OPEC member, raising the risk of conflict in the Middle East and casting uncertainty over the supply of oil, one of Canada's major exports. Gains for the loonie came as Mexico launched a counterproposal to U.S. demands to toughen automotive industry content rules under the North American Free Trade Agreement (NAFTA). The U.S. dollar pared some recent gains as data showed a smaller-than-expected increase in U.S. producer prices in April .On the data front, the value of Canadian building permits rose 3.1 percent in March, more than economists' forecasts for a gain of 2.0 percent, on increased plans to build apartment buildings in the provinces of Quebec and British Columbia, data from Statistics Canada showed. The Canadian dollar was last trading 0.7 percent higher at C$1.2854 to the greenback. The currency traded in a range of C$1.2822 to C$1.2942.
AUD/USD is supported around 0.7410 levels and currently trading at 0.7461 levels. It hit session high at 0.7471 and made session lows at 0.7444 levels. The Australian dollar edged higher against greenback on Wednesday as greenback lost some ground on mild profit-taking, but the greenback was expected to resume its rise as a result of solid U.S. economic growth and further monetary tightening by the Fed. The Aussie dollar was huddled at $0.7460, having touched its lowest since last June at $0.7410. It has now shed almost four U.S. cents in less than three weeks. The U.S. dollar has been on a tear as economic indicators there outpaced much of the rest of the advanced world, forcing a mass shake-out of short dollar positions particularly against the euro and sterling. That has also shaken confidence in a synchronous global recovery, sending funds toward U.S. assets at the cost of emerging markets from Argentina to Turkey. This trend has been doubly negative for the Aussie since many investors use the commodity-leveraged currency as a liquid proxy for global growth and emerging markets, selling it as a hedge when times are troubled. Adding to the strain was President Donald Trump's decision to walk away from the nuclear deal with Iran, leaving investors uncertain as to what might happen next in the Middle East.
Equities Recap
European shares were supported on Wednesday by strength in oil stocks after U.S. President Donald Trump pulled the United States out of Iran's nuclear agreement, boosting crude prices.
The UK's benchmark FTSE 100 closed up by 1.2 percent, FTSEurofirst 300 ended the day up by 0.70percent, Germany's Dax ended up by 0.3 percent, and France’s CAC finished the up by 0.2 percent.
Wall Street rallied on Wednesday as surging oil prices boosted energy stocks following U.S. President Donald Trump's decision the previous day to quit a nuclear deal with Iran.
Dow Jones closed up by 0.75 percent, S&P 500 ended up 0.97 percent, Nasdaq finished the day up by 0.99 percent.
Treasuries Recap
The benchmark U.S. government note yield rose back above 3 percent on Wednesday morning, a level hit in April for the first time in more than four years, ahead of the auction of $25 billion in new supply later in the day.
The 10-year note yield was last trading at 2.993 percent, after hitting a session high of 3.014 in early morning trade. Across maturities, yields were generally higher: the 30-year bond yield was 3.144 percent, 2 basis points above its last close. The two-year yield added 1 basis point to reach 2.522 percent.
Commodities Recap
Gold prices dipped on Wednesday as safe-haven buying failed to kick in after the United States withdrew from the Iranian nuclear accord, and as rising U.S. Treasury yields added pressure.
Spot gold lost 0.1 percent at $1,312.89 an ounce, after touching a one-week low of $1,304.11.U.S. gold futures for June delivery settled down 70 cents, or 0.05 percent, at $1,313 per ounce.
Oil prices rose about 3 percent on Wednesday and hit fresh 3-1/2 year highs after a bigger-than-expected drawdown in U.S. oil inventories extended gains from the United States' decision to quit a nuclear deal with Iran.
Brent crude futures rose $2.36, or 3.2 percent, to settle at $77.21 a barrel. The global benchmark hit a session high of $77.43, the highest since November 2014. U.S. West Texas Intermediate (WTI) crude futures rose $2.08 to settle at $71.14 a barrel, a 3-percent gain.
