Market Roundup
• Mexico reveals border infrastructure plan; Trump vows migration deal details
• Trump defends tariff strategy as China says it's 'not afraid of a trade war'
• US May PPI Final Demand YY, 1.8%, 2.0% forecast, 2.2% previous
• US May PPI Final Demand MM, 0.1%, 0.1% forecast, 0.2% previous
• US May NFIB Business Optmisism Idx, 105.00, 103.50 previous
• US May PPI exFood/Energy YY, 2.3%, 2.3% forecast, 2.4% previous
• US w/e Redbook YY, 5.0%, 5.8% previous
• US w/e Redbook MM, -2.6%, 1.4% previous
• Gold drops on profit booking, U.S.-China trade optimism
• Mexico central bank chief flags concern over ratings setbacks
Looking Ahead - Economic Data (GMT)
• 11 Jun 04:15 New Zealand Elec Card Retail Sale YY, 4.5% previous
• 12 Jun 00:30 Australia Jun Consumer Sentiment, 0.6% previous
Looking Ahead - Events, Other Releases (GMT)
• 08:15 ECB's Mario Draghi speaks in Frankfurt
• 09:00 ECB Board member Luis de Guindos speaks in Frankfurt
• 12:15 ECB Board member Benoit Coeure speaks in Frankfurt
Currency Summaries
EUR/USD: The euro slipped lower against the U.S. dollar on Wednesday, after Trump said that he had a "feeling" that a U.S.-China trade deal could be reached, though he again threatened to increase tariffs on Chinese goods if no agreement is reached. The euro dropped as Trump said he was considering sanctions over Russia's Nord Stream 2 natural gas pipeline project and warned Germany against being dependent on Russia for energy. The dollar briefly fell earlier on Wednesday after the U.S. Labor Department said its consumer price index edged up 0.1% last month. Excluding the volatile food and energy components, the core CPI nudged up 0.1% for the fourth straight month.The euro was down 0.33 percent at $1.1288 .Immediate resistance can be seen at 1.1361 (Higher Bollinger Band), an upside break can trigger rise towards 1.1400 (Psychological level).On the downside, immediate support is seen at 1.1287 (9 DMA), a break below could take the pair towards 1.1212 (20 DMA).
GBP/USD: Sterling edged lower against the dollar on Wednesday, after Britain's main opposition party said it would try to introduce parliamentary legislation to prevent a no-deal Brexit.Investors are concerned the next prime minister could put Britain on course for a no-deal divorce with the European Union and send the pound plummeting.Frontrunner Boris Johnson, a eurosceptic, has said he would be willing to take the nation out at the end of October, even if it meant leaving without a deal.But Labour on Wednesday will debate a motion to seize parliamentary time on June 25 to give lawmakers the chance to introduce legislation preventing a no-deal Brexit.Sterling was last trading at $1.2670, up 0.01 percent on the day. Immediate resistance can be seen at 1.2789 (Higher Bollinger Band), an upside break can trigger rise towards 1.2759 (Dec 10th High).On the downside, immediate support is seen at 1.2681 (9 DMA), a break below could take the pair towards 1.2653 (June10th Low).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Wednesday, extending its pull back from Monday's three-month high, as oil prices tumbled and investors worried that the trade dispute between the United States and China could worsen. The price of oil was weighed down by another unexpected rise in U.S. crude inventories and by a dimming outlook for global oil demand. U.S. crude oil futures settled 4% lower at $51.14 a barrel. At (2105 GMT), the Canadian dollar was trading 0.4% lower at 1.3340 to the greenback. The currency, which touched on Monday its strongest level since March 1 at 1.3226, traded in a range of 1.3274 to 1.3335..Immediate resistance can be seen at 1.3339 5 DMA), an upside break can trigger rise towards 1.3390 (11 DMA).On the downside, immediate support is seen at 1.3337 (5 DMA), a break below could take the pair towards 1.3234 (Lower Bollinger Band).
USD/JPY: The dollar was little changed against the Japanese yen on Wednesday, as trade tensions and U.S. interest rate policy remained in focus after President Donald Trump expressed optimism over making a trade deal with China.The greenback has come under pressure recently as the U.S.-China trade war threatens to derail global economic growth, adding to bets that the Federal Reserve is closer to cutting interest rates.A sustained decline against the euro has not yet emerged, however, as the U.S. currency still benefits from relatively higher rates than in Europe.The dollar was 0.01percent lower versus the Japanese yen at 108.49. Strong resistance can be seen at 108.55 (21 DMA), an upside break can trigger rise towards 109.14 (21 DMA).On the downside, immediate support is seen at 107.71 (Lower Bollinger Band), a break below could take the pair towards 107.00 (Psychological level).
Equities Recap
Weakness in oil companies and banks halted a week long rally in European shares on Wednesday, as soft Chinese factory activity data and Washington's tough stance on trade talks with Beijing prompted investors to cash in some of June's gains.
The UK's benchmark FTSE 100 closed down by 0.38 percent, FTSEurofirst 300 ended the day down by 0.29 percent, Germany's Dax ended down by 0.32 percent, and France’s CAC finished the down by 0.54 percent.
Wall Street ended down slightly on Wednesday, with bank stocks declining as prospects of a U.S. interest rate cut rose and energy shares tumbling along with oil prices.
Dow Jones closed down by 0.15 percent, S&P 500 ended down 0.19 percent, Nasdaq finished the day down by 0.38 percent.
Treasuries Recap
The U.S. Treasury yield curve was steeper on Wednesday after soft inflation data pulled short-dated yields lower, indicating increased expectations that the Federal Reserve will cut interest rates.
The two-year yield , which is a proxy for market expectations of rate cuts, was last 3.3 basis points lower at 1.888%. At the long end, the benchmark 10-year yield was 1.6 basis point lower at 2.124%. The spread between the two- and 10-year yields , the most common measure of the yield curve, rose to 23.7 basis points, from its close Tuesday at 21.3.
Commodities Recap
Gold prices gained momentum on Wednesday as the dollar dipped on speculation about the U.S. central bank cutting interest rates this year amid global economic growth concerns.
Spot gold was trading 0.5% higher at $1,332.77 per ounce as of 1:32 p.m. EDT (1732 GMT), a rebound from the previous session when it fell to a 10-day low of $1,319.35.U.S. gold futures settled 0.4% higher at $1,336.80 per ounce.
Oil prices tumbled 4% on Wednesday to their lowest settlements in nearly five months, weakened by another unexpected rise in U.S. crude stockpiles and by a dimming outlook for global oil demand.
Brent crude futures fell $2.32, or 3.7%, to settle at $59.97 a barrel, the international benchmark's lowest close since Jan. 28.
U.S. West Texas Intermediate crude futures ended $2.13, or 4.0%, lower at $50.72 a barrel, its lowest settlement since Jan. 14.
