Market Roundup
• Fed debated April rate hike but caution reigned due to global fears.
• Fed: Two members saw it appropriate to raise rates in Mar, citing US strength despite overseas volatility.
• Fed: Some indicated an increase in April may be warranted if data remained consistent w/growth, jobs & inflation goals.
• Fed’s Bullard: US economic growth is tepid, this is the bigger issue (BBG Radio).
• Fed’s Mester: Fed to follow correct path, regardless of market view; slow rate rises provide insurance ag downside risks (DJ).
• Canada's Ivey purchasing index cools further in March, 50.1 vs 55.0 forecast, 53.4 previous.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Construction Index Mar 46.1-previous
• 23:50 Japan Foreign Bond Investment w/e 1164.1b- previous
• 23:50 Japan Foreign Invest JP Stock w/e -358.5b- previous
• 23:50 Japan Foreign Reserves Mar 1254.10b- previous
Looking Ahead - Events, Other Releases (GMT)
• 00:30 Japan- Bank of Japan to hold quarterly meeting of its regional branch managers. Bank of Japan Governor Haruhiko Kuroda will deliver a brief speech at the outset of the meeting. The branch managers will also publish the BOJ's quarterly report on regional economies.
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1398levels. The pair has made session high at 1.1417 and hit lows at 1.1329 levels. The U.S. dollar declined against euro on Wednesday as risk aversion due to global economic growth concerns helped euro gain against US dollar in the early US session and after FOMC statement dollar unable to rally on less dovish FOMC Minutes. Minutes from the Federal Reserve's latest policy meeting indicating no rate hikes in April also weakened the U.S. currency, making dollar-denominated oil more attractive to those holding the euro and other currencies. The euro last traded down 0.1 percent at $1.1372, down from a session high of $1.1400 hit earlier. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.07 percent at 94.711.
GBP/USD is supported in the range of 1.4000 currently trading at 1.4119 levels. It reached session high at 1.4165 and hit low at 1.4024 levels. The British pound initially slipped sharply to hit 1-month low against the dollar on Wednesday as heightened fears of a possible British exit from the European Union further intensified on first week of April. Data last week showed Britain's current account deficit grew to 7 percent of GDP in the final quarter of 2015, a reminder of how exposed Britain would be if foreign investors are deterred by a decision to quit the EU, a so-called Brexit. Sterling fell more than 1 percent against the dollar to a five-week low of $1.4006, before recovering to trade at $1.4120, still down 0.5 percent on the day. It was down 0.5 percent at 80.74 pence against the euro, having fallen to 81.05 pence per euro, its lowest since June 2014.
USD/CAD is supported at 1.3030 levels and is trading at 1.3100 levels. It has made session high at 1.3128 and lows at 1.3062 levels. The Canadian dollar surged higher against its U.S. counterpart on Wednesday as crude oil prices rose and investors scaled back bullish bets on US dollar. Crude oil futures rose as hopes for an agreement among exporters to freeze output underpinned the market. U.S. crude prices were up 2.54 percent at $36.80 a barrel. Meanwhile, the pace of purchasing activity in Canada slowed again in March .The seasonally adjusted index fell to 50.1 from 53.4 in February, short of analysts' expectations for a pick up to 55.0. The decrease left the index just barely above the 50 threshold that indicates an increase in the pace of activity. The currency's strongest level of the session was C$1.3124, while its weakest level was C$1.3187.
USD/JPY is supported around 109.00 levels and currently trading at 109.80 levels. It hit session high at 110.41 and made session lows at 109.28 levels. Japanese yen surged higher against US dollar on Wednesday on doubts that the Bank of Japan would intervene to halt the yen's appreciation, while the dollar unable to rally on less dovish FOMC minutes. The dollar fell below 110 yen for a second straight day and hit 109.85 yen, its lowest level since late October 2014, after Japanese Prime Minister Shinzo Abe told the Wall Street Journal that countries should avoid seeking to weaken their currencies with arbitrary intervention. The dollar regained ground and last traded down 0.28 percent at the 110 yen level. The dollar has fallen more than 8 percent against the yen so far this year, partly on a more dovish Fed.
Equities Recap
European shares rose on Wednesday after steep declines in the previous session, with the retail sector boosted by a smaller-than-expected fall in profits at Hennes & Mauritz.
UK's benchmark FTSE 100 closed up by 1.15 percent, the pan-European FTSEurofirst 300 ended the day up by 0.74 percent, Germany's DAX ended up by 0.69 percent, France’s CAC finished the day up by 0.77 percent.
U.S. stocks rose on Wednesday, bolstered by gains in healthcare shares after the collapse of the $160 billion merger of Pfizer and Allergan, and by a rise in energy shares.
Dow Jones closed up by 0.65 percent, S&P 500 ended up by 1.06 percent, Nasdaq finished the day up by 1.59 percent.
Treasuries Recap
U.S. Treasury yields rose from one-month lows on Wednesday, led by longer-dated bonds as a rebound in oil and stock prices prompted investors to sell safe-haven government debt.
Benchmark 10-year Treasuries were down 6/32 in price to yield 1.748 percent, up 2 basis points from late Tuesday when the 10-year yield fell to 1.715 percent, the lowest since March 1.
The 10-year yield has held well below long-term moving averages after posting its steepest quarterly drop since the March-June quarter of 2012.
The 30-year note also fell in price, dropping 21/32 to yield 2.581 percent, up 3 basis points on the day.
Commodities Recap
Oil prices rose 5 percent on Wednesday, their biggest advance in three weeks, after the U.S. government reported a surprise draw in domestic crude stockpiles versus market expectations for a new record high.
U.S. crude's front-month contract settled up $1.86 at $37.75 a barrel. It rallied to $37.90 earlier, after falling to $35.24 a day ago, its lowest since March 4.
The front-month in Brent, the European benchmark, settled up $1.97 at $39.84 a barrel. Its session peak was $39.94.
Gold fell 1 percent on Wednesday as a recovery in equities prompted some profit-taking after Tuesday's rally, while minutes of the U.S. Federal Reserve's lastpolicy meeting showed concern about "appreciable downside risks" in the global economy.
Spot gold was down 0.6 percent to $1,223.73 an ounce at 2:39 p.m. EDT (1839 GMT) after falling 1.1 percent. U.S. gold futures for June delivery settled down 0.5 percent at $1,223.80 an ounce.
