Market Roundup
• US import prices post first drop in 6-months, -0.2% v -0.1% forecast, 0.1% previous, Export prices -0.8% v 0.1% forecast.
• ECB’s Knot: ECB needs to be more flexible as it chases inflation.
• EU’s Juncker: Brexit not the end of European Union.
• BOJ to weigh tougher hurdles for easing exit – Nikkei.
• BIS: Central banks should learn to live with low inflation.
• China's Aug central bank FX sales hit highest in 6-months, as bank sought to support the yuan; PboC sold 191.9bn yuan.
• UK labour mkt withstands Brexit shock, but wage growth slows, Jobless rate steady at 4.9%; Claimant count rises, hinting at slowdown.
• US crude stocks unexpectedly slip, fall 559k bbls vs expected 3.8mio bbl build – EIA.
• U.S. distillate stocks at highest level seasonally since 2010 – EIA.
• Copper hits 3-wk high on brighter China demand prospects.
• US yield curve at steepest point in two months, ECB, BOJ seen as less supportive of long-term debt.
• Ford to move all small-car production to Mexico from US – CEO.
• Brazil's Lula and wife charged with corruption -Globo TV.
Looking Ahead - Economic Data (GMT)
• 22:30 New Zealand Manufacturing PMI Aug 55.8
• 22:45 New Zealand GDP Production QQ*
Q2 forecast 1.1%, 0.7%-previous
• 22:45 New Zealand GDP -Annual-Avg, * Q2 forecast 2.8%, 2.4%- previous
• 22:45 New Zealand GDP -Annual* Q2 forecast 3.7%, 2.8%- previous
• 22:45 New Zealand GDP Expenditure QQ* Q2 0.5%- previous
• 23:00 Japan Reuters Tankan DI Sep 100%- previous
• 23:50 Japan Foreign Bond Investment w/e -1326.4b- previous
• 23:50 Japan Foreign Invest JP Stock W/e 1.9b- previous
• 01:30 Australia New Motor Vehicle Sales m/m Aug -1.3%-previous
• 01:30 Australia Employment* Aug forecast 15.0k, 26.2k- previous
• 01:30 Australia Full Time Employment* Aug -45.4k- previous
• 01:30 Australia Participation Rate* Aug forecast 64.9%, 64.9%- previous
• 01:30 Australia Unemployment Rate* Aug forecast 5.7%, 5.7%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1213 levels and currently trading at 1.1248 levels. The pair has made session high at 1.1273 and hit lows at 1.1242 levels. euro rose against dollar on Wednesday as the dollar slipped on expectations that the U.S. Federal Reserve was unlikely to raise interest rates next week. Expectations that the U.S. Federal Reserve will raise rates next week have receded, putting pressure on the dollar. Expectations that the U.S. Federal Reserve will raise rates next week have receded, putting pressure on the dollar. Markets are pricing in just a 15 percent chance that the Fed will hike U.S. interest rates during its Sept. 20-21 meeting. Many now expect a rise in December after the U.S. presidential election. The euro was last up 0.26 percent against the dollar at $1.1246. The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.32 percent at 95.331. U.S. retail sales data on Thursday and consumer inflation data on Friday will next be watched for signs of the strength of the U.S. economy.
GBP/USD is supported in the range of 1.3100 and currently trading at 1.3235 levels. It reached session high at 1.3240 and hit low at 1.3137 levels. Sterling inched higher in the US session, reversing earlier losses made on data that showed resilience in Britain's labour market. Traders waited for the upcoming UK retail sales data and Bank of England policy announcement on Thursday. The BoE, which is set to makes a policy announcement, is not expected to introduce new measures, having last month cut interest rates to record lows and reintroduced an asset-purchase programme. Sterling initially declined to $1.3134 from $1.3200, but reversed course trade at $1.3237 as traders were cautious ahead key UK economic data. Speculation about the timing of the Federal Reserve's next interest rate hike also has shaken investors following contrasting comments from Fed officials.
USD/CAD is supported at 1.3120 levels and is trading at 1.3192 levels. It has made session high at 1.3209 and lows at 1.3136 levels. The Canadian dollar slipped to a 6-week low against the greenback on Wednesday, as the crude prices slipped lower and the greenback strengthened despite reduced expectations that the U.S. Federal Reserve will raise rates next week. Oil fell despite data from an industry group that showed a smaller-than-expected build in U.S. crude stockpiles. U.S. crude prices were down 0.60 percent at $44.63 a barrel. On the data front, Canadian home prices climbed 11.4 percent in August from a year earlier, data showed. Leading the gains were the two hottest markets, Vancouver and Toronto, where prices have more than doubled in just over 11 years. The Canadian dollar was last trading at C$1.3195 to the greenback, weaker than Tuesday's close of C$1.3170.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7474 levels. It hit session high at 0.7494 and made session lows at 0.7450 levels. The Australian dollar declined to hit 1-1/2 month lows against dollar on Wednesday as falling oil prices as continued bearish bets on Australian dollar-weighted on the pair. The Australian dollar held at $0.7467 after falling the most in 2-1/2 months on Tuesday and breaching major chart support at $0.7490.Investors are anxious ahead of the Bank of Japan's policy meeting next week after reports it was studying options to steepen the bond yield curve or to take rates deeper into negative territory. Longer-term Japanese bond yields have been rising sharply as a result, pushing up yields across the globe and forcing investors out of carry trades in currencies such as the Aussie. The shift has seen investors close out long Aussie positions particularly against the euro and the yen.
Equities Recap
European shares ended slightly lower on Wednesday, giving up earlier gains as oil and luxury stocks declined, with Bayer closing off its highs after clinching a $66 billion deal to buy Monsanto.
UK's benchmark FTSE 100 closed up by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 1.04 percent, Germany's Dax ended up by 0.01percent, France’s CAC finished the day down by 0.2 percent.
Wall Street was set to end the first quarter with a whimper on Thursday after a month-long rally that rescued the S&P 500 from its worst start to a year since 2009.
Dow Jones closed down by 0.17 percent, S&P 500 ended down by 0.05 percent, Nasdaq finished the day up by 0.37 percent.
Treasuries Recap
The U.S. Treasury yield curve rose to its steepest levels in more than two months on Wednesday, although bond weakness ebbed after a dramatic selloff on Tuesday sent long-dated yields to three-month highs.
Benchmark 10-year notes ended up in 13/32 price to yield 1.69 percent, down from 1.73 percent on Tuesday.
Commodities Recap
Gold prices rose on Wednesday, breaking a five-day decline as the dollar slipped against a basket of currencies, with the market waiting for clues on the timing of an increase in U.S. interest rates.
Spot gold was up 0.4 percent at $1,323.50 an ounce by 3:00 p.m. EDT (1900 GMT). It touched $1,315.27 on Tuesday, the lowest in more than a week. U.S. gold futures settled up 0.18 percent at $1,326.10.
Oil prices fell about 3 percent for a second straight day on Wednesday, after data showing large weekly builds in U.S. petroleum products offset a surprise draw in crude stockpiles.
Brent crude futures settled down $1.25, or 2.7 percent, at $45.85 per barrel.
U.S. West Texas Intermediate (WTI) crude futures slid $1.32 cents, or 2.9 percent, to settle at $43.58.
