Market Roundup
• Fed votes 9-1 to hold rate steady, George lone dissenter.
• Fed Statement: Doesn’t give assessment of balance of risks, removes language from statement saying global/financial developments continue to pose risks.
• Fed Statement: Expects econ conditions will evolve in way that warrants gradual increases to FF rate, labor markets have improved, expects inflation to remain low in near-term, move to 2% in med-term.
• Wall St stocks steady, bond yields fall (curve flattens), oil hits ‘16 high after Fed, gold ends flat.
• US advance March goods trade deficit at USD 56.90Bn from -63Bn in Feb
• US March pending home sales +1.4% vs 0.5% forecast; rise to 10-mos high.
• ECB President Mario Draghi is ready to appear at Germany's Bundestag to defend the bank's loose monetary policies but warned that excessive criticism could hurt the ECB's effectiveness.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan All Household Spending YY Mar forecast -4.2%, 1.2%-previous
• 23:30 Japan All Household Spending MM Mar forecast -0.3%, 1.7%- previous
• 23:30 Japan CPI, Core Nationwide YY Mar forecast -0.2%, 0%- previous
• 23:30 Japan CPI, Overall Nationwide* Mar 0.3%- previous
• 23:30 Japan CPI Core Tokyo YY* Apr forecast -0.3%, -0.3%- previous
• 23:30 Japan CPI, Overall Tokyo* Apr -0.1%- previous
• 23:30 Japan Jobs/Applicants Ratio Mar forecast 1.28, 1.28- previous
• 23:30 Japan Unemployment Rate Mar forecast 3.3%, 3.3%- previous
• 23:50 Japan Foreign Bond Investment w/e 844.7b- previous
• 23:50 Japan Foreign Invest JP Stock w/e 538.6b- previous
• 23:50 Japan Industrial output prelim mm Mar f/c 2.9%, -5.2%- previous
• 23:50 Japan IP Forecast 1 Mth Ahead* Mar 3.9%- previous
• 23:50 Japan IP Forecast 2 Mth Ahead* Mar 5.3%- previous
• 23:50 Japan Retail Sales YY Mar forecast -1.5%, 0.4%- previous
• 05:00 Japan Construction Orders YY* Mar -12.4%-previous
• 05:00 Japan Housing Starts YY* Mar forecast -1.3%, 7.8%- previous
Currency Summaries
EUR/USD is likely to find support at 1.1265 levels and currently trading at 1.1323 levels. The pair has made session high at 1.1362 and hit lows at 1.1270 levels. The dollar declined slightly against the euro on Wednesday after a Federal Reserve statement reinforced expectations for two interest rate increases this year. The U.S. central bank held interest rates unchanged and left the door open for interest hike in June, however its statement indicated it was in no hurry to increase rates. The U.S. dollar briefly turned positive after the Fed statement, but reversed those gains not long afterward. The dollar was last down 0.2 percent against a basket of currencies to 94.380. The euro turned slightly negative against the dollar and hit a session low of $1.1274 immediately after the statement, but quickly retraced gains and hit a six-day high of $1.1361. The euro was last up 0.12 percent at $1.1324.
GBP/USD is supported in the range of 1.4400 levels and currently trading at 1.4536 levels. It reached session high at 1.4577 and hit low at 1.4470 levels. The sterling declined against US dollar on Wednesday as new polls showed the campaign is tighter and the Organization for Economic Co-operation and Development warned on Wednesday an "Out" vote would be a major negative shock that would leave the UK economy 3 percent smaller by 2020.. Earlier in the European session pound rose towards 1.4609 after data showed UK Gross domestic product (GDP) grew by 0.4 percent in the first three months of the year, in line with forecasts but slower than the 0.6 percent in the previous quarter. But the pair retreating in the late US session after slightly hawkish Federal Reserve statement.
USD/JPY is supported around 110.80 levels and currently trading at 111.52 levels. It hit session high at 111.75 levels and made session lows at 111.05 levels. The U.S. dollar inched slightly higher against the Japanese yen on Wednesday after the Federal Reserve announced it would keep U.S. interest rates unchanged. while the dollar weakened against other major currencies as Federal Reserve failed to deliver hawkish statement. However, Federal Reserve left the door open for an interest rate increase in June but signaled its rate hike path still would be a very gradual one. The Fed next meets on June 14-15. While the labor market continues to gain strength, inflation remains below the central bank's 2 percent target and mixed economic data could cloud the path to future rate hikes
USD/CAD is supported at 1.2555 levels and is trading at 1.2606 levels. It has made session high at 1.2694 and lows at 1.2600 levels. The Canadian dollar rose to hit 9-month high against its U.S. counterpart on Wednesday as oil prices bounced 3 percent and the dollar was sold across the board after Federal Reserve policy announced it would keep U.S. interest rates unchanged. Oil prices turned upward, with Brent crude , the international benchmark, up more than 3 percent to $47.23, its highest since early November. The loonie has rallied more than 16 percent from a 12-year low in January of C$1.4689, helped by better-than-expected domestic economic activity, fiscal stimulus and rebounding oil prices. The currency's weakest level was C$1.2632, while it touched its strongest since July 6 last year at C$1.2690.
Equities Recap
European shares edged up on Wednesday on the back of utilities and energy stocks, while Greek equities fell after euro zone officials delayed a meeting on releasing bailout funds.
UK's benchmark FTSE 100 closed up by 0.52 percent, the pan-European FTSEurofirst 300 ended the day up by 0.21 percent, Germany's Dax ended up by 0.34 percent, France’s CAC finished the day up by 0.53 percent.
U.S. stocks ended slightly higher on Wednesday after fears eased that the Federal Reserve would strongly signal it would raise interest rates in June, though a slump in Apple shares weighed on the Nasdaq index.
Dow Jones closed up by 0.31 percent, S&P 500 ended up by 0.18 percent, Nasdaq finished the day up by 0.51percent.
Treasuries Recap
Longer-dated U.S. Treasury debt prices rallied on Wednesday, snapping a seven-day streak of losses, as the Federal Reserve left the door open for an interest rate increase in June but signaled its rate hike path still would be a very gradual one.
Benchmark 10-year Treasury notes were up 20/32 in price, yielding 1.856 percent, down 7.5 basis points from late on Tuesday.
The 10-year yield on Tuesday touched 1.941 percent, its highest level since March 23.
The 30-year yield fell 5 basis points at 2.707 percent after reaching its highest since early February at 2.764 percent on Tuesday.
Commodities Recap
Gold rose for a third straight session on Wednesday, but pared gains after the U.S. Federal Reserve held interest rates unchanged but left the door ajar to a hike in June.
Spot gold was up 0.3 percent at $1,246.65 an ounce at 2:44 p.m. EDT (1844GMT).U.S. gold futures for April delivery settled up 0.6 percent at $1,249.20 an ounce prior to the Fed's statement.
Oil prices jumped about 3 percent on Wednesday, hitting new highs for 2016 as the dollar weakened after the Federal Reserve announced it would leave U.S. interest rates unchanged.
Front-month Brent finished up $1.44, at $47.18, having hit a 2016 high of $47.45 earlier.
WTI's front-month contract settled up $1.29, percent, at $45.33 a barrel, after hitting a 2016 high at $45.62.
