Market Roundup
• US Pending Home Sales Change MM May -08.% vs 0.8% forecast, -1.7% previous.
• US MBA Mortgage Application w/e -6.2%, 0.6% previous.
• US Mortgage Market Index w/e 417.4, 445.2 previous.
• US MBA 30-Yr Mortgage Rate w/e 4.13%, 4.13% previous.
• US Adv Wholesale Inventory May 0.3%, -0.5% previous.
• BOE's Carney: MPC will debate issues around raising rates "in the coming months".
• Carney: Readiness to raise rates hinges on how much weaker consumption is offset by business investment.
• Carney: MPC is clear that its tolerance for above-target UK inflation is limited.
• ECB chief did not intend to signal imminent policy tightening - ECB sources.
• Russian foreign min: We will react with dignity, proportionally to any US pre-emptive intervention in Syria.
• BOC's Patterson: Economic drag from lower oil prices largely behind us;
rate cuts have helped facilitate economy's adjustment.
• BOC’s Poloz: Interest rate cuts have done their job and the bank needs to consider its options-CNBC.
• Brazil’s Meirelles: GDP is likely to increase 2% in Q4 YY, down from expected 2.7%.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e, 1090.1b previous
• 23:50 Japan Foreign Invest JP Stock w/e, -331.6b previous
• 23:50 Japan Retails sales YY May,forecast 2.6%, 3.2% previous
• 01:00 Australia HIA New Home Sales MM May, 0.8% previous
• 01:00 New Zealand NBNZ Business Outlook Jun, 14.9% previous
• 01:00 New Zealand Building Consents MM Jun, 38.3% previous
Looking Ahead - Events, Other Releases (GMT)
• 06:30 Bank of Japan Board Member Yutaka Harada speaks at capital markets seminar in Tokyo
Currency Summaries
EUR/USD is likely to find support at 1.1304 levels and currently trading at 1.1304 levels. The pair has made session high at 1.1389 and hit lows at 1.1290 levels. Euro rose against the dollar on Wednesday as the dollar declined after hawkish comments from the head of the Bank of England fueled bets on tighter monetary policy in Europe, while Tuesday's delay to a U.S. healthcare vote also weighed on the dollar. The euro extended the prior session's rally against the dollar, which had sent it to its strongest one-day percentage gain against the greenback in more than a year, while sterling also jumped after BoE Governor Mark Carney said the central bank is likely to need to raise interest rates as the British economy comes closer to operating at full capacity. The euro rose as much as 0.5 percent against the dollar to a one-year high of $1.1390 after jumping 1.4 percent Tuesday. The dollar index, which measures the greenback against a basket of six major rivals, fell as much as 0.4 percent to hit a more than seven-month low of 95.967.
GBP/USD is supported in the range of 1.2832 levels and currently trading at 1.2928 levels. It reached session high at 1.2983 and dropped to session low at 1.2795 levels. Sterling rose against the dollar on Wednesday after Bank of England Governor Mark Carney said an interest rate rise was probably necessary and the bank would debate this "in the coming months”. The pound jumped by well over a cent after Carney's comments to hit $1.2971 and was last trading at $1.2927, up 0.88 percent on the day. That left it up 1.2 percent on the day. Speaking at a European Central Bank conference in Portugal, Carney said policymakers would need to look at the extent to which stronger business investment offset a slowdown in consumption, as well as growth in wages and labour costs. The remarks showed a shift in emphasis since a speech last week when Carney said now was not the time to raise rates. He did not repeat that phrase on Wednesday, and markets immediately priced in a greater chance of an earlier-than-expected rise.
USD/CAD is supported at 1.3300 levels and is trading at 1.3011 levels. It has made session high at 1.3115 and lows at 1.3011 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as Canadian dollar was boosted after comments by Bank of Canada Governor Stephen Poloz that raised expectations of an interest rate hike as early as next month. Interest rate cuts made in 2015 have done their job and the Bank of Canada needs to consider its options at its upcoming interest rate decision as excess capacity is used up, Poloz said in a CNBC interview in Europe. Oil futures climbed to their highest in more than a week despite a surprise build in U.S. crude inventories, as buyers were encouraged by a small weekly decrease in U.S. production. The U.S. Energy Information Administration (EIA) said crude stocks rose 118,000 barrels last week, while weekly production declined 100,000 barrels per day (BPD) to 9.3 million BPD. That was the biggest decline in weekly output since July 2016. The Canadian dollar was trading at C$1.3024 to the greenback, up 1.26 percent. The currency's weakest level of the session was C$1.3198, while it touched its strongest since Feb. 24 at C$1.3024.
AUD/USD is supported around 0.7584 levels and currently trading at 0.7640 levels. It hit session high at 0.7641 and made session lows at 0.7603 levels. The Australian dollar strengthened against the dollar on Wednesday as higher oil prices and weaker dollar across the board boosted the Australian dollar. The dollar index slid as Bank of England Governor Mark Carney said a debate on the need to raise interest rates is due "in the coming months," adding to a hawkish tone out of the European Central Bank on Tuesday. Carney’s remarks convinced traders that European monetary policy was shifting in a more hawkish direction, analysts said. The monetary policy comments out of Europe and Britain come as the U.S. Senate delayed a healthcare legislation vote. U.S. economic data released on Wednesday showed contracts to buy previously owned homes unexpectedly fell in May, the third straight monthly decline, while mortgage applications fell the most in six months last week. Aussie was last up 0.78 percent against the U.S. dollar at 0.7643.
Equities Recap
European shares ended flat on Wednesday as a third day of gains for banking stocks in a session dominated by bets about future central bank action offset a tech sell-off.
The UK's benchmark FTSE 100 closed down by 0.6 percent, FTSEurofirst 300 ended the day down by 0.01 percent, Germany's Dax ended down by 0.2 percent, and France’s CAC finished the day flat.
Wall Street rallied on Wednesday, with the S&P 500 tallying its biggest one-day percentage gain in about two months, as financial and tech stocks led a broad market rebound.
Dow Jones closed up by 0.66 percent, S&P 500 ended up 0.86 percent, Nasdaq finished the day up by 1.42 percent.
Treasuries Recap
Long-dated U.S. Treasury prices weakened on Wednesday as central banks in Europe were deemed to strike a more hawkish tone, even after reports that markets had misinterpreted comments by European Central Bank President Mario Draghi on Tuesday.
Benchmark 10-year notes fell 7/32 in price to yield 2.22 percent, up from 2.20 percent late on Tuesday. The yields rose as high as 2.256 before the ECB reports.
Commodities Recap
Gold prices rose on Wednesday as the dollar weakened for a second straight day following a global cyber attack and a delay to U.S. healthcare legislation that fueled doubts about President Donald Trump's ability to pass measures expected to boost the economy.
Spot gold was up 0.2 percent at $1,249.20 an ounce by 2:09 p.m. EDT (1809 GMT). It was on track to close June down 1.5 percent, but for the second quarter finished little changed. U.S. gold futures settled up 0.2 percent at $1,249.10.
Oil futures climbed more than 1 percent on Wednesday to their highest in more than a week as buyers were encouraged by a small weekly decrease in U.S. production and shrugged off a surprise build in crude inventories in the world's top oil consumer.
Brent futures gained 66 cents, or 1.4 percent, to settle at $47.31 a barrel, while U.S. West Texas Intermediate crude rose 50 cents, or 1.1 percent, to settle at $44.74 per barrel.
