Market Roundup
• US Markit Comp Flash PMI Aug, 56.00, 54.60 previous.
• US Markit Mfg PMI flash Aug, 52.5, 53.3 forecast, 53.3 previous.
• US Markit Svcs PMI flash Aug, 56.9, 54.9 forecast, 54.7 previous.
• US New Home Sales-Units Jul, 0.57 mln, 0.61 mln forecast, 0.61 mln previous.
• US New Home Sales Chg Jul, -9.40%, 0.30% forecast, 0.80% previous.
• US MBA Mortgage Applications w/e, -0.50%, 0.10% previous.
• US business borrowing for equipment rises 12.9 pct in July -ELFA.
• Fitch: US 'AAA' rating at risk if debt ceiling not raised.
• Mexico, Canada dismiss Trump threats to scrap NAFTA trade pact.
• Igniting QE debate, ECB's Weidmann calls for quick end -paper.
• UK finance sector proposes "ambitious" post-Brexit trade pact.
• Brazil inflation hits fresh 18-year low, fuels rate cut bets
Looking Ahead - Economic Data (GMT)
• 08:30 Great Britain GDP 2nd Release Q2, 0.30% MM, 1.70% YY forecast, 0.30%, 1.70% previous
Looking Ahead - Events, Other Releases (GMT)
• Kansas Fed Reserve Bank hosts Economic Symposium in Jackson Hole
Currency Summaries
EUR/USD is likely to find support at 1.1740 levels and currently trading at 1.1817 levels. The pair has made session high at 1.1823 and hit lows at 1.1786 levels. Euro inched higher against dollar on Wednesday in a generally risk-averse market after U.S. President Donald Trump's threat of a government shutdown and comments about the possible termination of a North American trade agreement weighed on the greenback. Trump warned late on Tuesday he might terminate the NAFTA trade treaty with Mexico and Canada after three-way talks failed to bridge deep differences. He also said he may shut down the government if he does not get funding for a wall on the U.S.-Mexico border. The euro was propped up by strong German and French PMI survey readings, although analysts warned the single currency's gains could be short-lived due to concerns about heavy one-sided bets. PMI data from Germany and France showed both countries registering strong private-sector growth in August, separate surveys showed. That boosted confidence that the euro zone's biggest economies are likely to maintain their momentum in the September quarter. The euro rose 0.4 percent to $1.1818 and hit a fresh 10-1/2-month peak against the British pound, near 92 pence.
GBP/USD is supported in the range of 1.2778 levels and currently trading at 1.2800 levels. It reached session high at 1.2805 and dropped to session low at 1.2778 levels. Sterling declined against the dollar on Wednesday as concerns about Britain's economic prospects and the Brexit process encouraged investors to push the pound lower. The government is striving to move forward the formal discussions on leaving the European Union with a series of position papers that have outlined potential compromises over some of the issues likely to block progress this year. There was new hope from another paper on Wednesday that Prime Minister Theresa May was seeking ways to resolve an argument over the influence of EU courts after Britain leaves, but markets have so far been unimpressed. Sterling was trading at $1.2802, its weakest since June 28. Against the euro, it fell more than half a percent to 92.24 pence. Apart from levels hit during a short-lived overnight "flash crash" in October, that was its weakest in eight years.
USD/CAD is supported at 1.2520 levels and is trading at 1.2544 levels. It has made session high at 1.2592 and lows at 1.2541 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices held steady and the greenback struggled to shrug off political uncertainty. The dollar sagged and rates on Treasury debt slipped after U.S. President Donald Trump's threat to shut down the government and nix a trade accord with Canada and Mexico rankled investors. Trump's comments at a rally in Phoenix on Tuesday came as lawmakers face a deadline in late September to raise the U.S. debt ceiling or risk defaulting on debt payments. Oil prices rose after U.S. crude inventories declined for the eighth straight week and U.S. crude production increased only slightly. With few domestic drivers to move the currency this week, investors are awaiting speeches from Fed Chair Janet Yellen and European Central Bank President Mario Draghi on Friday in Jackson Hole, though neither is expected to announce new policy messages.
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USD/JPY is supported around 108.50 levels and currently trading at 108.96 levels. It peaked to hit session high at 109.22 and made session lows at 108.94 levels. The dollar edged down against the yen on Wednesday after U.S. President Donald Trump raised the spectre of a government shutdown to fulfill a campaign pledge, but overall moves among major currencies were limited ahead of this week's Jackson Hole global central bankers' conference. At a rally with his supporters in Phoenix, Trump referred to his vow to build a wall at the U.S.-Mexican border and said, "If we have to close down the government, we are building that wall." In wide-ranging comments, he also signalled the possible termination of the NAFTA treaty with Mexico and Canada to jumpstart negotiations and said the standoff with North Korea over its weapons programs might have taken a positive turn. The U.S. government is bumping up against its debt ceiling, with the possibility that it will be unable to pay all its bills in October and face a shutdown unless Congress approves an increase in its borrowing capacity by the end of next month. The dollar fell 0.50 percent to 109.01 yen, down from around 109.67 before Trump's statement and below an earlier session high of 109.23 yen. But it remained well above a four-month low of 108.605 yen set late last week.
Equities Recap
Media stocks weighed on European markets on Wednesday, led lower by sharp declines in advertising giant WPP after it cut sales forecasts on weakening demand.
UK's benchmark FTSE 100 closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.50 percent, Germany's Dax ended up by 0.37 percent, France’s CAC finished the day down by 0.27 percent.
U.S. stocks ended lower on Wednesday as investors mulled President Donald Trump's threat to shut down the government if funds are not secured to build a Mexico border wall.
Dow Jones closed down by 0.39 percent, S&P 500 ended down 0.34 percent, Nasdaq finished the day down by 0.30 percent.
Treasuries Recap
U.S. Treasury yields fell on safety buying on Wednesday after President Donald Trump said that he would be willing to risk a government shutdown to secure funding for a border wall, raising fears that a battle to raise the debt ceiling could delay payments on some bonds.
Benchmark 10-year notes gained 12/32 in price to yield 2.17 percent, down from 2.22 percent on Tuesday.
Commodities Recap
Gold prices edged up on Wednesday, drawing support from political uncertainty in the United States and the weak dollar before a major central banking conference there this week.
Spot gold was up 0.4 percent at $1,289.27 an ounce by 1:43 p.m. EDT (1743 GMT), hovering below last week's nine-month-high at $1,300.80. U.S. gold futures settled up 0.3 percent at $1,294.70.
Oil prices rose on Wednesday after U.S. crude inventories declined for the eighth straight week and as a storm approached the Gulf Coast with the potential to disrupt oil and refined products output.
Brent crude futures rose 70 cents to settle at $52.57 a barrel, while U.S. West Texas Intermediate crude futures settled at $48.41, up 58 cents.
