Market Roundup
•US Dec Core Durable Goods Orders (MoM) 0.7%, 0.5% forecast, 0.4% previous
•US Dec Durable Goods Orders (MoM) 0.2%,0.9%, 1.0% previous
•US Dec Goods Orders Non Defense Ex Air (MoM) 0.6%,0.6% forecast, 0.5% previous
•US Dec Durables Excluding Defense (MoM) 0.5%, 0.8% previous
•US Gasoline Inventories2.470M, 1.764M forecast, -0.260Mprevious
•US Crude Oil Inventories -9.910M,0.430M forecast, 4.351M previous
•US Fed Interest Rate Decision 0.25%,0.25% forecast, 0.25% previous
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Dec Retail Sales (YoY) -0.4% forecast, 0.6% previous
• 23:50 Japan Dec Foreign Investments in Japanese Stocks 169.9B previous
• 23:50 Japan Foreign Bonds Buying 272.4B previous
• 00:30 Australia Import Price Index (QoQ) (Q4) -3.5% previous
• 00:30 Australia Export Price Index (QoQ) (Q4) -5.1% previous
Looking Ahead - Economic events and other releases (GMT)
• No significant events
Currency Summaries
EUR/USD: The euro declined against dollar on Wednesday after a European Central Bank official said the ECB was monitoring the single currency closely, while the greenback rose ahead of the Federal Reserve’s meeting . ECB governing council member Klaas Knot said the central bank has room to cut its deposit rate further, should it be necessary to improve financing conditions and reach its inflation target.Knot’s comment constituted the most explicit hint to date from an ECB policymaker about the possibility of a rate cut to stem a rally in the euro. The euro was 0.48% lower on the day at $1.2101. Immediate resistance can be seen at 1.2094(38.2%fib), an upside break can trigger rise towards 1.2142(50%fib).On the downside, immediate support is seen at 1.2053(Daily low), a break below could take the pair towards 1.2000 (Psychological level).
GBP/USD: Sterling edged higher against dollar on Wednesday ahead of comments from Federal Reserve Chair Jerome Powell, while Britain’s COVID-19 vaccine rollout also offered support to the pound. Expectations of a large U.S. fiscal stimulus package has fuelled risk sentiment in markets in recent weeks, benefiting sterling and market participants are expecting Powell to renew a commitment to ultra-easy policy. Britain’s successful initial vaccine rollout has also helped the pound, although its death toll from the coronavirus pandemic passed 100,000 on Tuesday.Sterling was up 0.01% against the dollar at $1.3708 at 1240 GMT, not far off a May 2018 high of $1.3759 touched earlier . Immediate resistance can be seen at 1.3758 (23.6%fib), an upside break can trigger rise towards 1.3800 (Psychological level).On the downside, immediate support is seen at 1.3687(5DMA) , a break below could take the pair towards 1.3640 (38.2%fib).
USD/CAD: The Canadian dollar fell to its lowest in more than two weeks against its broadly stronger U.S. counterpart on Wednesday, as rising coronavirus cases weighed on investor sentiment and ahead of a Federal Reserve interest rate decision. The loonie was trading 0.8% lower at 1.2785 to the greenback, having touched its weakest since Jan. 11 at 1.2822. Global coronavirus cases surpassed 100 million as infections rise in Europe and Americas and the Asia-Pacific region scrambles to contain fresh outbreaks, while governments hurry to procure adequate vaccine supplies. Immediate resistance can be seen at 1.2821 (38.2%fib), an upside break can trigger rise towards 1.2868(23.6%fib)On the downside, immediate support is seen at 1.2775(50%fib), a break below could take the pair towards 1.2730 (61.8%fib).
USD/JPY: The dollar strengthened against the Japanese yen on Wednesday as investors turned more cautious on worries about the economic impact of the COVID-19, and after the U.S. Federal Reserve expressed concerns about the pace of the economic recovery. The Federal Reserve left its key overnight interest rate near zero and made no change to its monthly bond purchases, pledging again to keep those economic pillars in place until there is a full rebound from the pandemic-triggered recession. That has not happened, and the Fed in a policy statement flagged a potential slowing in the pace of the recovery. Strong resistance can be seen at 104.20 (Daily high), an upside break can trigger rise towards 104.44 (23.6%fib).On the downside, immediate support is seen at 104.08 (38.2%fib), a break below could take the pair towards 103.77 (50% fib).
Equities Recap
European stocks tumbled on Wednesday as extended coronavirus lockdowns drove the German government to slash its growth forecast for 2021, while talk of further interest rate cuts by the European Central Bank hit banking stocks.
The UK's benchmark FTSE 100 closed down by 1.30 percent, Germany's Dax ended down by 1.81 percent, and France’s CAC finished the day down by 1.15 percent.
U.S. stocks dropped more than 1% on Wednesday, showing little reaction to the latest Fed statement, as major indexes were weighed down in part by a slump in Boeing and hedge funds selling off long positions to cover a short squeeze.
Dow Jones ended up by 2.06 percent, S&P 500 ended up 2.57 percent, Nasdaq settled down the day up by 2.61 percent.
Treasuries Recap
Bond traders on Wednesday lowered their inflation bets as prospects for a massive stimulus package dimmed amid push back in the U.S. Congress, while increased federal borrowing could stymie another ramp up in the main market-based inflation gauge.
The 10-year Treasury Inflation-Protected Securities (TIPS) breakeven inflation rate slipped below 2% for the first time since late December and was last at 1.988%.
Commodities Recap
Oil prices were little changed on Wednesday, despite a massive drawdown in U.S. crude inventories, as ongoing concerns about the coronavirus pandemic tempered buying interest.
U.S. West Texas Intermediate (WTI) crude futures settled at $52.85 a barrel, rising 24 cents, while global benchmark Brent crude futures fell 10cents to end at $55.81 a barrel.
Gold prices fell to a more than one-week low on Wednesday, pressured by concerns over the U.S. stimulus bill.
Spot gold fell 0.3% to $1,845.61 per ounce by 1:41 p.m. EST (1841 GMT), having earlier touched its lowest since Jan. 18. U.S. gold futures settled down 0.6% at $1,844.90.
