Market Roundup
• Fed keeps target interest rate unchanged at 0.75 percent to 1.00 percent.
• Fed says consumer spending solid, business investment firm and inflation "running close" to target.
• Fed sees Q1 softness (advance Q1 GDP +0.7 pct) as "transitory".
• US ADP National employment 177.0k v 175k forecast, 255k -previous.
• US ISM N-Mfg PMI 57.5 v 55.8 forecast, 55.2 - previous.
• US ISM N-Mfg bus act 62.4 v 58.4 forecast 58.9 - previous.
• US Markit comp final PMI 53.2, 52.7 - previous.
• Tillerson says US is preparing additional sanctions targeting N. Korea if Pyongyang's actions warrant it.
• May says misrepresentation of Brexit negotiation was timed to affect British election outcome.
• US Republican Upton says his healthcare amendment would provide $8bln over five years for high-risk pools.
• Puerto Rico requests bankruptcy protection for public debt.
• U.S. Treasury says is currently studying the possibility of issuing ultra-long bonds with tenors greater than 30 years.
• French government bond yields fell to their lowest in four months in trading ahead of the evening election debate.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia Trade balance G&S (A$) 3400 mln forecast, 3574 mln – previous
• 01:30 Australia G&S imports -5.0% – previous
• 01:30 Australia G&S exports 1.0% – previous
• 01:45 China Caixin services PMI 52.2 - previous
Looking Ahead - Events, Other Releases (GMT)
• 02:00 China PBOC’s Gang Yi and Indonesian FinMin Sri Mulyani Indrawati speak at an ADB panel
• --:-- ASEAN Finance Ministers' and Central Bank Governors' Joint Meeting (ASEAN+3) (to May 5).
Currency Summaries
EUR/USD is likely to find support at 1.0849 levels and currently trading at 1.0884 levels. The pair has made session high at 1.0927 and hit lows at 1.0884 levels. The euro declined against the U.S. dollar on Wednesday as the dollar firmed across the board after the Federal Reserve signalled it was still on track for two more interest rate hikes this year. The Fed kept interest rates unchanged, downplayed weak first-quarter economic growth and emphasized the strength of the labor market in its statement following the end of a two-day policy meeting. The central bank also said consumer spending continued to be solid, business investment had firmed and inflation has been "running close" to its target. The euro fell by as much as 0.4 percent against the dollar, to a session trough of $1.0888 after the statement, after rising as high as $1.0936 earlier. The U.S. dollar index, which measures the greenback against six major currencies but the majority of whose weighting is against the euro, was last up 0.4 percent at 99.345.
GBP/USD is supported in the range of 1.2816 levels and currently trading at 1.2872 levels. It reached session high at 1.2927and dropped to session low at 1.2866 levels. Sterling declined against dollar on Wednesday as sterling came under selling pressure as nerves around Brexit negotiations and firmer dollar across the board weighed on Sterling. The dollar rose after the U.S. Federal Reserve held interest rates unchanged following its two-day policy meeting. The pound briefly dipped about 53 ticks after the Federal Reserve kept interest rates unchanged and downplayed weak first-quarter economic growth, keeping a rate increase in June on the table. On the data front, Britain's construction industry accelerated to a four-month high in April, adding to tentative signs that the economy might be recovering a little momentum after a lacklustre start to 2017, a survey showed on Wednesday. The Markit/CIPS UK Construction Purchasing Managers' Index (PMI) rose to 53.1 from 52.2 in March, against forecasts of economists for a slight fall.
USD/CAD is supported at 1.3617 levels and is trading at 1.3729 levels. It has made session high at 1.3735 and lows at 1.3677 levels. The Canadian dollar lost ground against its U.S. counterpart on Wednesday as oil fell and the dollar was buoyed after the U.S. Federal Reserve held interest rates unchanged following its two-day policy meeting. The U.S. Federal Reserve kept interest rates unchanged but downplayed weak first-quarter economic growth and emphasized the strength of the labor market, in a sign it could tighten monetary policy as early as June. Prices of oil, one of Canada's major exports retreated from earlier highs in choppy trade after U.S. government data showed a smaller-than-expected decline in domestic crude inventories and weak demand for gasoline, feeding concerns about a supply glut. The Canadian dollar was trading at C$1.3722 to the greenback, or 72.85 U.S. cents, down 0.1 percent. The currency traded in a range of C$1.3704 to C$1.3740. On Tuesday it had slumped to a fresh 14-month low at C$1.3758. On the data front, Canada’s trade report for March is due on Thursday, and the April employment report is due on Friday.
AUD/USD is supported around 0.7400 levels and currently trading at 0.7426 levels. It hit session high at 0.7475 and made session lows at 0.7418 levels. The Australian dollar declined against US dollar on Wednesday as Australian dollar was dragged down after dollar strengthened across the board after the Fed statement. The Federal Reserve kept rates unchanged at its May meeting but signaled it remains on track for its second rate hike of the year in June. The U.S. central bank, downplayed weak first-quarter economic growth and emphasized the strength of the labor market, in a sign it could tighten monetary policy as early as June. The Australian dollar reversed earlier gains to trade at $0.7425 in the late US session, after briefly popping up to $0.7466.The Aussie gained on Tuesday after the Reserve Bank of Australia (RBA) kept rates unchanged at a record low of 1.5 percent at its policy meeting and sounded a touch more upbeat about global growth, reinforcing expectations of a steady rate outlook.
Equities Recap
European shares slipped slightly from the 20-month highs they hit in the previous session, as investors locked in profits following some underwhelming company results on Wednesday.
UK's benchmark FTSE 100 closed down by 0.3 percent, FTSEurofirst 300 ended the day down by 0.02 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day down by 0.1 percent.
Wall Street ended slightly lower on Wednesday after the U.S. Federal Reserve held interest rates unchanged and investors digested another heavy round of earnings reports.
Dow Jones closed up by 0.02 percent, S&P 500 ended down 0.15 percent, Nasdaq finished the day down by 0.40 percent.
Treasuries Recap
Benchmark U.S. Treasury yields rose after the Federal Reserve kept interest rates unchanged and downplayed weak first-quarter economic growth, keeping a rate increase in June on the table.
Benchmark 10-year notes fell 4/32 in price to yield 2.31 percent, up from 2.30 percent on Tuesday.
Thirty-year bonds gained 15/32 in price to yield 2.96 percent, down from 2.98 percent on Tuesday.
The yield curve between 5-year notes and 30-year bonds flattened to 111 basis points, from 117 basis points on Tuesday.
Commodities Recap
Oil prices were little changed on Wednesday in a volatile session as the market mulled U.S. government data showing that while there were signs a crude glut may be receding, crude inventories remain large with gasoline demand weak.
U.S. crude settled up 0.3 percent at $47.82 and Brent crude settled up 0.7 percent at $50.79 a barrel.
Gold fell to a one-month low as the dollar firmed on Wednesday after the U.S. Federal Reserve kept interest rates unchanged as expected and the market reduced expectations of a surprise win by France's far-right presidential candidate.
Spot gold was down 0.8 percent at $1,246.76 an ounce by 2:58 p.m. EDT (1858 GMT), after falling below the 50-day and 200-day moving averages and touching its lowest since April 5 at $1,244.93.U.S. gold futures settled down 0.7 percent at $1,248.50.
