Market Roundup
• Federal Reserve to keep low rates at least through 2022
• Nasdaq hits fresh highs on low rate environment outlook
• Oil rebounds even as inventories rise
• US May Real Earnings (MoM) 0.5%, 5.8% previous
• US May CPI Index, s.a 255.77, 255.90 previous
• US May CPI, n.s.a (MoM) 0.00%, -0.67% previous
• US May Core CPI Index 265.44, 265.60 previous
• US May CPI (YoY) 0.1%, 0.2% forecast, 0.3% previous
• US May Core CPI (MoM) 0.1%,-0.1% forecast, -0.4% previous
• US May CPI Index, n.s.a. 256.39, 256.84 forecast, 256.39 previous
• US May CPI (MoM) -0.1%, -0.1% forecast,-0.8% previous
• US May Core CPI (YoY) 1.2%, 1.3% forecast, 1.4% previous
• Brazil May CPI (MoM) -0.38%, -0.46% forecast, -0.31% previous
• Brazil May CPI (YoY) 1.88%, 1.80% forecast, 2.40% previous
• US Cushing Crude Oil Inventories 5.720M-1.739M previous
• US May Federal Budget Balance -625.0B forecast, -738.0B previous
• US Fed Interest Rate Decision 0.25% forecast, 0.25% previous
Looking Ahead Economic Data (GMT)
• 22:45 New Zealand May Electronic Card Retail Sales (MoM) -46.8% previous
• 22:45 New Zealand May Electronic Card Retail Sales (YoY -47.5% previous
• 23:50 Japan BSI Large Manufacturing Conditions (Q2) -17.2 previous
• 23:50 Japan Foreign Investments in Japanese Stocks -38.0B previous
• 23:50 Japan Foreign Bonds Buying -499.3B previous
• 01:30 Australia MI Inflation Expectations
Looking Ahead - Events, Other Releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro strengthened against dollar on Wednesday after the Federal Reserve made no policy changes, as expected, and pledged to continue its asset purchases aimed at stabilizing a U.S. economy that has been ravaged by the novel coronavirus. The Fed also did not announce any measures to cap the rise of bond yields, as some has speculated. The greenback fell to three-month troughs against the euro, sterling and Swiss franc after the Fed statement. Immediate resistance can be seen at 1.1391 (Daily high), an upside break can trigger rise towards 1.1420 (Higher BB).On the downside, immediate support is seen at 1.1324 (5 DMA), a break below could take the pair towards 1.1250 (9 DMA).
GBP/USD: Sterling rose against the weaker dollar on Wednesday after the Federal Reserve projected a more sluggish recovery than the market expected. The greenback fell to three-month troughs against the euro, sterling and Swiss franc after the end of a two-day meeting of the Fed’s policy-setting committee, in which it repeated its promise of continued extraordinary support for the economy. Policymakers projected a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year’s end. Immediate resistance can be seen at 1.2778 (5 DMA), an upside break can trigger rise towards 1.2816 (Higher BB).On the downside, immediate support is seen at 1.2785 (5 DMA), a break below could take the pair towards 1.2605 (9 DMA).
USD/CAD The Canadian dollar strengthened to a three-month high against its U.S. counterpart on Wednesday as investors bet that a lengthy period of loose monetary policy from the Federal Reserve could be supportive of commodity-linked currencies. Fed policymakers projected a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year's end, while they see the key overnight interest rate remaining near zero this year and next. The Canadian dollar was up 0.2% at 1.3391 to the greenback, or 74.68 U.S. cents. The currency touched its strongest intraday level since March 4 at 1.3315 but gave up much of its gains as stocks on Wall Street lost ground in volatile trade. Immediate resistance can be seen at 1.3506 (11 DMA), an upside break can trigger rise towards 1.4170 (Daily high).On the downside, immediate support is seen at 1.3316 (June 10th low), a break below could take the pair towards 1.3601 (23.6% fib).
USD/JPY: The dollar declined against the Japanese yen on Wednesday after the Federal Reserve projected a more sluggish recovery than the market expected. Policymakers projected a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year's end. The Fed also said it would maintain bond purchases at "the current pace" of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage backed securities. Strong resistance can be seen at 107.48 (50%fib), an upside break can trigger rise towards 108.29 (9 DMA).On the downside, immediate support is seen at 106.71 (50% fib), a break below could take the pair towards 106.50 (Lower BB).
Equities Recap
European stocks swung both ways before settling lower on Wednesday as investors awaited the U.S. Federal Reserve’s first economic projections since the COVID-19 pandemic set off a recession in February.
UK's benchmark FTSE 100 closed down by 0.10 percent, Germany's Dax ended down by 0.70 percent, France’s CAC finished the day down by 0.82 percent.
The S&P 500 was down slightly in choppy trading on Wednesday after the Federal Reserve repeated its promise of support for the economy but projected a 6.5% decline in gross domestic product this year.
Dow Jones closed down by 1.04% percent, S&P 500 closed down by 0.53% percent, Nasdaq settled up by 0.67% percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday after the Federal Reserve repeated its promise of continued extraordinary support for the economy and kept the size of its bond purchase program unchanged.
Benchmark 10-year Treasury yields fell 9 basis points to 0.744%. Two-year yields, which are the most sensitive to interest rate changes, fell 3 basis points to 0.177%.
Commodities Recap
Gold prices rose to a one-week high on Wednesday on expectations that the U.S. Federal Reserve would roll out further measures to aid an economic recovery.
Spot gold rose 0.18 % to $1,717.41 per ounce by 12:26 p.m. ET (1626 GMT), paring some gains from earlier in the session when it hit its highest since June 3 at $1,726.22 as traders booked profits.
Oil fell more than 2% to below $41 a barrel on Wednesday after U.S. data showed crude inventories rose to a record high, reviving worries of a persistent glut due to weak demand during the lingering coronavirus crisis.
Brent crude fell 82 cents, or 2%, to $40.36 a barrel at 10:55 EST (1455 GMT). U.S. West Texas Intermediate (WTI) dropped 96 cents, or 2.5%, to $37.98.
