Market Roundup
• Markets await U.S. GDP, jobs data
• U.S. Treasury yields, dollar ticks up
•Fed can tame inflation without wrecking recovery -Clarida
• Brazil Apr Foreign direct investment (USD) 3.54B, 5.00Bforecast, 6.86B previous
• US Gasoline Inventories-0.005M, -0.614M, -1.963M previous
• US Crude Oil Inventories -1.662M,-1.050M forecast, 1.321M previous
Looking Ahead - Economic Data (GMT)
•01:30 Australia Plant/Machinery Capital Expenditure (QoQ) (Q1) 5.7% previous
•01:30 Australia Building Capital Expenditure (MoM) (Q1) 0.7% previous
•01:30 Apr Chinese Industrial profit YTD 137.3% previous
•01:30 Apr Chinese Industrial profit (YoY) 92.30% previous
•01:30 Australia Private New Capital Expenditure (QoQ) (Q1) 2.0% forecast, 3.0% 3.0%
Looking Ahead - Economic events and other releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro edged lower against dollar on Wednesday as dovish comments from ECB member weighed on euro. ECB board member Fabio Panetta on Wednesday said the ECB should not reduce the pace of asset purchases as the economic recovery is in an early phase and inflation remains too low. Euro rose earlier in the month, driven by speculation that a stronger economic outlook driven by speedier vaccinations in the bloc could prompt the ECB to slow its PEPP purchases at its June 10 meeting. The euro was last down 0.14percent at $1.2231. Immediate resistance can be seen at 1.2205(38.2%fib), an upside break can trigger rise towards 1.2279(23.6%fib).On the downside, immediate support is seen at 1.2152(38.2%fib), a break below could take the pair towards 1.2099(61.8%fib).
GBP/USD: Britain’s pound declined against the dollar on Wednesday, as a lack of fresh economic catalysts in a sparse data calendar attracted seller. Sterling is the second best-performing G10 currency versus the dollar this year, up 3.4% year-to-date and trailing only the commodity-linked Canadian dollar. That performance is a result of investors betting on a quicker reopening for Britain’s economy on the back of its rapid COVID-19 vaccination pace. Sterling was last 0.05% lower against the dollar at $1.4113, some way off a three-month high of $1.4233 hit last week. Immediate resistance can be seen at 1.4175(Daily high), an upside break can trigger rise towards 1.4216 (23.6%fib).On the downside, immediate support is seen at 1.4114 (Daily low), a break below could take the pair towards 1.4100(38.2%fib).
USD/CAD: The Canadian dollar fell on Wednesday for a second day against its broadly stronger U.S. counterpart, with some investors possibly unwinding bullish positions in the Canadian currency when it failed to breach a key level. Oil, one of Canada's major exports, settled 0.2% higher at $66.21 a barrel as a drop in U.S. crude stockpiles reinforced expectations of improving demand ahead of the peak summer driving season. The loonie was trading 0.5% lower at 1.2117 to the greenback, having hit its weakest since last Thursday at 1.2124.Immediate resistance can be seen at 1.3437(Daily high), an upside break can trigger rise towards 1.3467 (Feb 28th high).On the downside, immediate support is seen at 1.3386 (5 DMA), a break below could take the pair towards 1.3332 (11 DMA).
USD/JPY: The dollar gained against the Japanese yen Wednesday as Federal Reserve officials continued to downplay prospects of rising inflation. Fed vice chair for supervision Randal Quarles signaled the U.S. central bank’s plans to open talks on easing its bond buying program as the economy roars ahead and prices rise. On Tuesday, vice chair Richard Clarida said the Fed could curb inflation and engineer a “soft landing” without throwing the economic recovery off track. The greenback was up 0.14% against the yen at 108.89.Strong resistance can be seen at 109.48 (38.2%fib), an upside break can trigger rise towards 109.66 (Higher BB).On the downside, immediate support is seen at 108.99 (50%fib), a break below could take the pair towards 108.55(61.8%fib).
Equities Recap
European stocks approached record highs on Wednesday after U.S. Federal Reserve officials soothed investors' inflation worries, though the New Zealand dollar rose as the country's central bank hinted at a rate hike next year.
UK's benchmark FTSE 100 closed down by 0.04percent, Germany's Dax ended down by 0.09 percent, France’s CAC finished the day up by 0.02 percent.
U.S. stocks closed out Wednesday’s session with modest gains as recent comments from Federal Reserve officials helped tamp down concerns about runaway inflation and kept bond yields in check.
Dow Jones closed up by 0.03 percent, S&P 500 closed up by 0.19percent, Nasdaq settled up by 0.59 % percent.
Treasuries Recap
U.S. Treasury yields edged higher on Wednesday in choppy trading, with those on the long end rising from three-week lows, amid a recovery in risk appetite with gains in stocks as well as profit-taking from recent spikes in bond prices.
The fall in Treasury prices came despite a strong U.S. 5-year note auction, which came on the heels of an equally robust 2-year note sale on Tuesday.
Commodities Recap
Oil prices settled higher as a drop in U.S. crude stockpiles reinforced expectations of improving demand ahead of the peak summer driving season, offsetting worries that a possible return of Iranian supply would cause a glut.
Brent settled up 16 cents, or 0.3%, to $68.87 a barrel and U.S. West Texas Intermediate (WTI) crude settled up 14 cents, or 0.2%, at $66.21 a barrel.
Gold fell below the key $1,900 per ounce level on Wednesday, as a rebounding dollar and U.S. Treasury yields dimmed its appeal, although continued expectations of a dovish stance from U.S. Federal Reserve kept its losses limited.
Spot gold was 0.3% lower at $1,893.20 per ounce by 2:14 p.m. EDT (1814 GMT), having earlier hit its highest since Jan. 8 at $1,912.50. U.S. gold futures settled up 0.2% at $1,901.20 per ounce.
