Market Roundup
• Fed minutes showed policymakers confident of need for rate hikes on eve of Trump win.
• US Oct durable goods +4.8% vs forecast +1.5%; previous revised up.
• Markit US manufacturing PMI, new orders highest since October 2015.
• Markit U.S. manufacturing flash Nov PMI 53.9; forecast, Oct were both 53.4.
• Jobless claims close to forecast at 251k vs consensus 250k.
• U.S. new home sales unexpectedly fall in October.
• Offshore yuan hits new record low in volatile trade.
• ECB seeks to lend out more bonds to avert market freeze: sources.
• Swiss National Bank ready to act over Italian referendum – Maechler.
• Atlanta Fed leaves U.S. Q4 GDP growth view at 3.6 percent.
• UK cuts growth forecasts in first budget plan since Brexit vote.
• UK seen borrowing 122 billion pounds more than expected in March -OBR figures.
• Mexico economy posts fastest quarterly growth in 2 years.
Looking Ahead - Economic Data (GMT)
• 00:30 Japan Nikkei Manufacturing PMI Flash Nov 51.4-previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0500 levels and currently trading at 1.0554 levels. The pair has made session high at 1.0566 and hit lows at 1.0525 levels. Euro declined against the dollar on Wednesday as the dollar firmed across the board after upbeat U.S. economic data showed that economy was on track for steady growth and reinforced expectations that Federal Reserve will hike interest rate next month. U.S. durable goods orders rebounded in October and Americans filing for unemployment benefits rose from a 43-year low last week, the trend in jobless claims remained consistent with a tightening labor market. The data reinforced expectations the Federal Reserve would hike interest rates at its December meeting and minutes of the bank's November policy meeting showed rate setters appeared confident that a rise would come relatively soon. The minutes released on Wednesday backed the consensus view that the Fed is poised to raise rates in December. The euro continued its descent, down 0.7 percent at $1.0546, after touching its lowest level for the year. The euro is facing a host of political risks in the coming months, including an Italian constitutional referendum in less than two weeks and French and German elections next year, that are seen as likely to drive the currency lower.
GBP/USD is supported in the range of 1.2324 levels and currently trading at 1.2440levels. It reached session high at 1.2470 and dropped to session low at 1.2363 levels. Sterling initially declined against US dollar in the early US session but reversed course as investors unwound short positions against the pound after UK finance minister Philip Hammond announced new UK budget. Sterling rose after finance minister Philip Hammond ramped up his forecasts for government borrowing to the tune of an extra 122 billion pounds ($151 bln) over the next five years. Down by almost a fifth against the dollar over the past year, sterling has proven more resilient since the start of October, helped by signs the economy is doing better than many economists had feared after June's vote to leave the EU. The pound jumped above $1.25 on Monday after Prime Minister Theresa May pledged to address business concerns that Britain could fall off a "cliff edge" when it exits the European Union, hinting at some form of transitional agreement. Sterling has struggled to push on since, and analysts are still divided over the broader outlook for the currency heading into the formal launch of Brexit talks next year.
USD/CAD is supported at 1.3376 levels and is trading at 1.3496 levels. It has made session high at 1.3515 and lows at 1.3461 levels. The Canadian weakened against its U.S. counterpart on Wednesday as upbeat U.S. economic data reinforced expectations that Federal Reserve will hikes interest rate sooner and market players looked past an upcoming meeting of major oil producers. Investors expect rate increases by the Fed next month and in 2017. In contrast, the Bank of Canada is expected to stand pat until 2018. The loonie hit its weakest in eight months last week at C$1.3589, but recovered some ground in recent days as oil rallied on hopes of a supply cut at an upcoming meeting of the Organization of the Petroleum Exporting Countries. Oil prices declined as investors doubted that OPEC would agree a large enough production cut to significantly reduce the global crude surplus when it meets next week. U.S. crude oil futures CLc1 settled 7 cents lower at $47.96 a barrel amid doubts that OPEC would agree a large enough production cut to significantly reduce the global crude surplus when it meets next week.
AUD/USD is supported around 0.7310 levels and currently trading at 0.7386 levels. It hit session high at 0.7400 and made session lows at 0.7372 levels. The Australian dollar declined against US dollar on Wednesday after dollar boosted by data that showed new orders for U.S. manufactured capital goods rebounded in October, while consumer sentiment jumped this month in the wake of Trump’s election. The Australian dollar resisted the dramatic falls against the dollar as the strength in commodities prices supported Aussie dollar. The Aussie is still down three cents in the two weeks since Republican Donald Trump won the U.S. Presidency and triggered a jump in inflation wagers and Treasury yields. A sustained break above $0.7420, the 23.6 percent retracement of this month's move would test $0.7488. Minutes from the Fed's Nov. 1-2 meeting showed Federal Reserve policymakers appeared confident on the eve of the U.S. presidential election that the economy was strengthening enough to warrant interest rate increases soon.
Equities Recap
European shares steadied on Wednesday, with basic resources companies underpinning the broader market following a rise in metals prices.
UK's benchmark FTSE 100 ended flat , the pan-European FTSEurofirst 300 provisionally closes up by 0.08 percent, Germany's Dax ended down by 0.4 percent, France’s CAC finished the day down by 0.3 percent.
The S&P 500 inched lower on Wednesday afternoon, hurt by declines in Eli Lilly and other healthcare shares, while the Dow edged higher along with industrial stocks in light trading ahead of a U.S. holiday.
Dow Jones closed up by 0.30 percent, S&P 500 ended up by 0.07 percent, Nasdaq finished the day down by 0.12 percent.
Treasuries Recap
U.S. Treasury yields fell from multi-year highs on Wednesday after the Treasury Department saw very strong demand for an auction of seven-year notes, and after minutes from the Federal Reserve’s November meeting contained no large surprises.
Two-year notes fell 2/32 in price to yield 1.13 percent, after rising as high as 1.15 percent earlier, the highest since April 6 2010.
U.S. benchmark 10-year Treasury notes dropped 9/32 in price to yield 2.35 percent, after earlier rising to 2.42 percent, the highest since July 15, 2015.
Commodities Recap
Gold fell more than 2 percent to a 9-1/2-month low on Wednesday as a buoyant dollar extended its rally to the highest since 2003 on the back of upbeat U.S. economic data that further cemented a case for increasing interest rates next month.
Spot gold dropped 1.9 percent at $1,188.82 an ounce by 2:34 p.m. EST (1934 GMT), after falling 2.5 percent to $1,181.45, the lowest since Feb. 10. U.S. gold futures settled down 1.8 percent at $1,189.30.
Oil prices turned positive on Wednesday despite investor doubts that OPEC will agree to a production cut large enough to make a significant dent in the global glut of crude.
In the U.S. market, West Texas Intermediate (WTI) crude oil futures rose 8 cents to $48.11 a barrel by 12:35 p.m. EDT (1735 GMT) after trading between $47.40 and$48.43.
Brent crude futures were up 5 cents at $49.16 a barrel, also trading in $1-range between $48.56 and $49.50.
