Market Roundup
• U.S. Q4 GDP 2nd Estimate, 2.5%, 2.5% forecast, 2.6% previous.
• U.S. Q4 GDP Sales prelim, 3.3%, 3.1% forecast, 3.2% previous.
• U.S. Q4 GDP Cons Spending Prelim, 3.8%, 3.8% previous.
• U.S. Q4 GDP Deflator Prelim, 2.3%, 2.4% forecast, 2.4% previous.
• U.S. Jan Pending Homes Index, 104.6, 110.1 previous, 109.8 revised.
• U.S. Jan Pending Sales Change MM, -4.7%, 0.3% forecast, 0.5% previous, 0.0% previous.
• U.S. Mortgage Market Index w/w, 382.9, 372.9 previous.
• U.S. MBA 30-Yr Mortgage rate, 4.64%, 4.64% previous.
• U.S. Q4 Core PCE Prices Prelim, 1.9%, 1.9% forecast 1.9% previous.
• U.S. Feb Chicago PMI, 61.9, 64.2 forecast, 65.7% previous.
• CA Jan Producer Prices MM, 0.3%, 0.5% forecast, -0.1% previous.
• CA Jan Producer Prices YY, 2.0%, 2.2% previous, 2.3% r previous.
• CA Jan Raw Materials Prices MM, 3.3%, -0.9% previous.
• CA Jan Raw Materials Prices YY, 7.7%, 6.2% previous.
• US regulators examine Wall Street’s Volcker rule wish list –sources.
• Eurozone inflation slows, underlining ECB caution.
• EU says to regulate N.Irish trade unless Britain acts fast.
• Mexico concerns about U.S. steel tariffs hang over NAFTA talks.
Looking Ahead - Economic Data (GMT)
• 28 Feb 21:45 New Zealand Q4 Terms of Trade QQ, -0.2% forecast, 0.7% previous
• 28 Feb 21:45 New Zealand Q4 Terms of Trade - Exp Vol, 1.6% forecast, 0.3% previous
• 28 Feb 21:45 New Zealand Q4 Terms of Trade - Imports, 3.5% forecast, -2.6% previous
• 28 Feb 21:45 New Zealand Q4 Terms of Trade - Exports, 4.2% forecast, -1.9% previous
• 28 Feb 23:30 Australia Feb AIG Manufacturing Index, 58.70 previous
• 28 Feb 23:50 Japan Foreign Bond Investment w/e JPY, -553.1 bln previous
• 28 Feb 23:50 Japan Foreign Invest JP Stock w/e JPY, 127.1 bln previous
• 28 Feb 23:50 Japan Q4 Business Capex YY, 4.2% previous
• 1 Mar 00:30 Japan Feb Nikkei Mfg PMI, 54.0 previous
• 1 Mar 00:30 Australia Q4 Capital Expenditure, 0.9% forecast, 1.0% previous
• 1 Mar 00:30 Australia Q4 Building Capex, 1.2% previous
• 1 Mar 00:30 Australia Q4 Plant/Machinery Capex, 0.7% previous
• 1 Mar 01:45 China Feb Caixin Mfg PMI Final, 51.3 forecast, 51.5 previous
• 1 Mar 05:00 Japan Feb Consumer Confidence Index, 44.7 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Swedish Central Bank Governor Stefan Ingves talks about economy and monetary policy - Stockholm
• 08:00 Bank of Spain Governor Luis María Linde to speak at economy event - Santa Cruz de Tenerife, Spain
• 10:30 ECB's Daniele Nouy speaks at Delphi Economic Forum III “New Globalization and Growth Challenges” - Delphi, Greece
• 11:30 Philip Lane of Ireland Central Bank presents the in-depth report of the European Systemic Risk Board task force on safe assets, followed by a discussion with Levin Holle of Federal Ministry of Finance, Germany - Brussels
• 15:00 Fed's Jerome Powell delivers semi-annual monetary policy testimony before the Senate Banking Committee - Washington
Currency Summaries
EUR/USD is likely to find support at 1.2089 levels and currently trading at 1.2206 levels. The pair has made session high at 1.2365 and hit lows at 1.2183 levels. Euro declined against the dollar on Wednesday as greenback was bolstered by an upbeat assessment of the U.S. economy from the Federal Reserve's new chairman, which raised expectations the central bank could aggressively increase interest rates over the next two years. The greenback in February was on track to post its best monthly performance since November 2016. Fed Chairman Jerome Powell struck an optimistic tone about the U.S. economy on Tuesday, fueling views the U.S. central bank would raise rates four times this year rather than three. Slightly disappointing U.S. data on Wednesday a lower-than-expected second estimate of gross domestic product for the fourth quarter and a weaker-than-forecast report on the U.S. Midwest manufacturing sector - failed to dent the dollar's rally. Data showed U.S. GDP expanded at a 2.5 percent annual rate in the fourth quarter, instead of the previously reported 2.6 percent pace, declining from the third quarter's brisk 3.2 percent. The Chicago purchasing management index was a weaker-than-expected 61.9 in February, compared with a consensus forecast of 64.2. The dollar index rose 0.3 percent to 90.687, after earlier notching a five-week peak. Meanwhile, the euro fell to a six-week low and was last down 0.3 percent at $1.2199.
GBP/USD is supported in the range of 1.3715 levels and currently trading at 1.3775 levels. It reached session high at 1.3887 and dropped to session low at 1.3769 levels. The British pound declined against the greenback on Wednesday after the EU's chief Brexit negotiator said a transition deal was not guaranteed and the prime minister said the EU's draft legal text would undermine Britain. The British currency extended losses to trade down as much as 1 percent at $1.3768 versus the dollar, its weakest since Feb. 9. Sterling rallied at the start of this year, partly because investors were confident Britain can buy itself more time to agree on terms of its departure from the European Union with a transition deal, that politicians want to agree in March at an EU leaders' summit. But comments by EU chief negotiator Michel Barnier on Wednesday renewed concerns about whether that was feasible. Any delay could encourage doubt about an interest rate hike by the Bank of England in May, which investors now expect. The BoE said this month that rates would need to rise a bit more than expected and sooner, as the economy showed resilience and inflationary pressure grew. But its monetary assessment is dependent on the smooth progress in talks with the EU. Against the euro, sterling slipped to a six-day low of 87.80 pence. But that was still within the broad 87-89 pence per euro band that has held in recent weeks.
USD/CAD is supported at 1.2760 levels and is trading at 1.2828 levels. It has made session high at 1.2840 and lows at 1.2773 levels. The Canadian dollar weakened to a nine-week low against its U.S. counterpart on Wednesday as the greenback broadly firmed and domestic data showed a slower pace of domestic capital expenditure. The U.S. dollar rose against a basket of major currencies, boosted by an upbeat assessment of the U.S. economy on Tuesday by Fed Chairman Jerome Powell. The pace of capital expenditures in Canada is expected to cool in 2018 as a slowdown in spending intentions from the public sector are offset by increased investment in machinery and equipment, data from Statistics Canada showed.U.S. oil prices fell more than 2 percent and gasoline futures tumbled after the U.S. government said crude inventories rose more than expected while gasoline stocks posted a big build instead of the draw that was forecast. U.S. crude inventories rose by 3 million barrels for the week ending Feb. 23, compared with analyst expectations for a build of 2.1 million barrels. In separate data, Canadian producer prices rose 0.3 percent in January, lifted by higher prices for energy and petroleum products. The increase was short of economists' forecasts for a gain of 0.5 percent. The Canadian dollar was trading 0.3 percent lower at C$1.2836 to the greenback. The currency's strongest level of the session was C$1.2763, while it touched its weakest since Dec. 22 at C$1.2840.
AUD/USD is supported around 0.7758 levels and currently trading at 0.7767 levels. It hit session high at 0.7817 and made session lows at 0.7779 levels. The Australian dollar declined against US dollar on Thursday as Australian dollar was dragged lower by declining oil prices and a stronger greenback. The Aussie dollar was last trading at $0.7770, having shed 0.8 percent overnight. The lapse threatened its February trough at $0.7759 where a break would return it to territory last trod in December. Greenback strengthened after Federal Reserve Chairman Jerome Powell said he had become more confident about the economy and the upward path of inflation. That fuelled speculation Fed members would lift raise interest rates this year when they next meet in March. On the data front, U.S. economic growth slowed slightly more than initially thought in the fourth quarter after the strongest pace of consumer spending in three years depleted inventories and drew in imports as businesses struggled to produce enough goods and services. Gross domestic product expanded at a 2.5 percent annual rate in the final three months of 2017, instead of the previously reported 2.6 percent pace, the Commerce Department said in its second GDP estimate on Wednesday. That was a deceleration from the third quarter's brisk 3.2 percent pace.
Equities Recap
European shares fell on Wednesday as a batch of corporate results failed to offset concerns that U.S. interest rates could rise faster than expected.
UK's benchmark FTSE 100 closed down by 0.56 percent, the pan-European FTSEurofirst 300 ended the day down by 0.65 percent, Germany's Dax ended down by 0.45 percent, France’s CAC finished the day down by 0.4 percent.
U.S. stocks sold off late to end sharply lower on Wednesday, dragged down by worries over higher interest rates, and the Dow and S&P 500 capped their worst months since January 2016.
Dow Jones closed down by 1.51 percent, S&P 500 ended down 1.12 percent, Nasdaq finished the day down by 0.75 percent.
Treasuries Recap
The spread between short- and longer-dated U.S. Treasury yields shrank further on Wednesday after Federal Reserve Chairman Jerome Powell's optimistic outlook on the economy raised bets the U.S. central bank may raise interest rates faster.
Meanwhile, thirty-year bond yields, which are largely driven by future expectations of growth and inflation, dropped to 2.72 percent on Wednesday, the lowest since Nov. 9.
The spread between five-year and 30-year yields was 48.05 basis points, tighter than 49.85 basis points late on Tuesday.
The two-year Treasury yield, which is sensitive to traders' view on Fed policy, hit 2.286 percent, the highest since September 2008. It was last 2.262 percent, down a tad from Tuesday.
The benchmark 10-year Treasury yield was 2.870 percent, down nearly 4 basis points on the day.
Commodities Recap
Gold prices steadied on Wednesday after the previous session's more than 1 percent fall following comments by the Federal Reserve's new chairman that fueled views the U.S. central bank would raise rates four times this year rather than three.
Spot gold was flat at $1,317.94 per ounce by 1:34 p.m. EST (1834 GMT) and was poised to close February down 2 percent. On Tuesday, it hit the lowest since Feb. 9 at $1,313.26. U.S. gold futures settled down 70 cents or 0.1 percent, at $1,317.90 per ounce.
Oil prices pared losses on Wednesday, after data showing a build in U.S. crude inventories was tempered somewhat by a drop in U.S. crude production in December.
U.S. West Texas Intermediate crude fell 29 cents to $62.72 a barrel, a 0.5 percent decline, as of 1:03 p.m. EST (18:03 GMT). Brent crude futures for the most active May contract were down 56 cents at $66.07 a barrel.
