Market Roundup
• US w/e MBA Mortage Application, -0.2%, 4.9% previous.
• US w/e Mortgage Market Index, 398.5, 399.4 previous.
• US w/e MBA Purchase Index, 262.4, 262.4 previous.
• US w/e Mortgage Refinance Index, 1,145.5, 1,1149.5 previous.
• US w/e MBA 30-Yr Mortgage Rate, 4.73%, 4.66% previous.
• Germany trims 2018 growth forecast but remains upbeat.
• U.S. Supreme Court leans toward upholding Trump's travel ban.
• U.S. Congress girds for fight over expected Trump spending cuts.
• Trump and Apple CEO Cook meet at White House with trade the focus.
• Russia, betting on EU Trump talks, keeps powder dry in Rusal row for now.
• Friends or not, France's Macron challenges Trump in Congress speech.
• French central bank urges liquidity stress tests for funds.
Looking Ahead - Economic Data (GMT)
• 25 Apr 23:50 Japan w/e Foreign Bond Investment, 797.6 bln previous
• 25 Apr 23:50 Japan w/e Foreign Invest JP Stock, 308.3 bln previous
• 01:30 Australia Q1 Export Prices, 2.8% previous
• 01:30 Australia Q1 Import Prices, 2.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 07:30 Riksbank interest rate decision and monetary policy report
• 08:30 BoE's Executive Director Alex Brazier will participate in conference in London
• 09:00 The Riksbank will hold a press conference on the interest rate decision in Stockholm
• 11:45 ECB Governing Council meeting, followed by interest rate announcement in Frankfurt
• 12:30 ECB President Mario Draghi holds a press conference after an interest rate meeting in Frankfurt
Currency Summaries
EUR/USD is likely to find support at 1.2149 levels and currently trading at 1.2161 levels. The pair has made session high at 1.2200 and hit lows at 1.2161 levels. Euro edged lower against the dollar on Wednesday as dollar rose after a rise in benchmark U.S. Treasury yields above 3 percent led investors to consider whether the greenback was breaking out of a prolonged weak spell. The U.S. 10-year Treasury yield has risen to its highest in more than four years, driven by worries about the growing supply of government debt and inflationary pressures from rising oil prices. U.S. first-quarter gross domestic product data due on Friday could determine whether the dollar extends its gains further. Growth expectations have been cut significantly since the start of the year: the Atlanta Federal Reserve cut its forecast to 2.0 percent from 4.2 percent in January. But that 2.0 percent is a step up from the 1.9 percent forecast on April 16, suggesting optimism. The dollar's performance against a basket of major currencies rose as high as 91.241 in early New York trade, its strongest level since Jan. 12. The dollar index last stood at 91.229, up 0.5 percent from its last close. The dollar's gains on Wednesday drove the euro down past the two-month low hit on Tuesday because of concerns that firmer U.S. yields would reduce demand for the region's bonds at a time when hedge funds have amassed record long euro bets.
GBP/USD is supported in the range of 1.3900 levels and currently trading at 1.3924 levels. It reached session high at 1.3955 and dropped to session low at 1.3920 levels. The British declined against the greenback on Wednesday as the U.S. currency strengthened on the back of rising Treasury yields, while traders remained cautious ahead of British first-quarter economic growth numbers due on Friday. The release will be the last key data issued before the Bank of England's Monetary Policy Committee meeting early next month, and markets are split over whether the central bank will raise interest rates. Governor Mark Carney dented confidence that a rate hike would happen when he said last week that Britain's economic data was "mixed" and that there were several other MPC meetings later this year. That sent sterling plummeting from post-Brexit vote highs and left it down for the month of April. The pound did snap its losing streak and rise on Tuesday and overnight on news of a potentially positive M&A deal.But with the dollar rebounding on Wednesday as the 10-year Treasury yield topped 3 percent, investors sold the pound. The pound fell 0.3 percent to $1.3938 as the dollar gained across most major currencies, and sterling was left close to a five-week low of $1.3919.Sterling remains more than four cents off its post-Brexit vote highs of $1.4377 hit last week.
USD/CAD is supported at 1.2810 levels and is trading at 1.2841 levels. It has made session high at 1.2892 and lows at 1.2835 levels. The Canadian dollar weakened to a three-week low against its U.S. counterpart on Wednesday as oil and stock prices fell, while the greenback added to recent gains against a basket of major currencies. The U.S. dollar notched a four-month high, boosted by a rise in benchmark U.S. Treasury yields above 3 percent. Investors worry that increased borrowing costs could slow global growth, denting prospects for stocks and commodity-linked currencies such as the Canadian dollar.The price of oil, one of Canada's major exports, fell as rising U.S. fuel inventories and production weighed on an otherwise bullish market. The loonie has declined 2.5 percent since the Bank of Canada last week held its benchmark interest rate steady at 1.25 percent and said it did not know when or how aggressive it would need to be to keep inflation in check. The Canadian dollar was last trading 0.2 percent lower at C$1.2842 to the greenback. The currency touched its weakest level since April 3 at C$1.2897.
USD/JPY is supported around 108.68 levels and currently trading at 109.44 levels. It peaked to hit session high at 109.38 and made session lows at 109.01 levels. The dollar strengthened against the yen on Wednesday as yields on U.S. bonds rose past the 3 percent landmark, propping up the dollar on a global scale. The benchmark 10-year note yield edged up to 3.035 percent for a second day as jitters about growing federal borrowing spurred more selling in U.S. government debt. Should it climb above 3.041 percent, its peak in January 2014, it will likely move into territory last seen in summer 2011. The greenback had risen without pause through much of the past week as U.S.-China trade conflict woes receded and allowed the market to turn its attention back to dollar-supportive fundamentals, notably the surge by U.S. yields. Tuesday's data on U.S. consumer confidence and new home sales, both stronger in April, bolstered the case that the world's biggest economy will continue to grow in the coming quarters. Meanwhile, political risk declined after the United States said it would likely reach a trade agreement with China and that officials from both sides would sit down for negotiations in a few days. The U.S. currency was last trading 0.3 percent higher at 109.37 yen.
Equities Recap
Worries over rising bond yields and falling metals prices trumped well-received earnings updates from Kering and Credit Suisse on Wednesday, sending European shares to a one-week low.
UK's benchmark FTSE 100 closed down by 0.60 percent, the pan-European FTSEurofirst 300 ended the day down by 0.75percent, Germany's Dax ended down by 1.1 percent, France’s CAC finished the day down by 0.6 percent.
Wall Street eked out a small gain on Wednesday as optimism over a spate of upbeat earnings was offset by jitters over rising bond yields and corporate costs.
Dow Jones closed up by 0.23 percent, S&P 500 ended up by 0.18 percent, Nasdaq finished the day down by 0.04 percent.
Treasuries Recap
The benchmark U.S. Treasury 10-year yield edged above 3 percent on Wednesday as jitters about growing federal borrowing spurred more selling in the U.S. government bonds, paving the path for it to visit levels not seen since July 2011.
The 10-year yield was nearly 5 basis points higher than late Tuesday at 3.030 percent. If it were to climb above 3.04 percent, which was its peak in January 2014, it will likely test levels last seen in the summer of 2011.
The 5-year Treasury yield was up 3 basis points at 2.838 percent after rising to 2.854 percent earlier Wednesday, which was its highest since August 2009.
Two-year yield reached 2.508 percent, its highest level since September 2008 before retreating to 2.492 percent, up 1 basis point from late Tuesday.
The 30-year yield hit a two-month high at 3.169 percent.
Commodities Recap
Gold slumped to a five-week low on Wednesday as the dollar jumped and U.S. Treasury yields continued to rise on signs of U.S. economic strength and an easing in the U.S.-China trade conflict.
Spot gold was down 0.66 percent at $1,321.56 per ounce by 1:56 p.m. EDT (1756 GMT). It touched a session low of $1,318.51, the lowest level since March 21.
U.S. gold futures for June delivery settled down $10.20, or 0.8 percent, at $1,322.80 per ounce.
U.S. crude rose on Wednesday, shrugging off data showing rising domestic fuel inventories and production, and both U.S. crude and Brent held within sight of three-year highs reached the previous day.
Brent was down just 26 cents at $73.60 by 10:55 EDT (1555 GMT), just 2 percent below the November 2014 high of $75.47 reached on Tuesday. U.S. crude futures were up 1 cent at $67.71 a barrel.
