Market Roundup
• U.S. MBA Purchase Index w/e, 228.00, 242.90 previous.
• U.S. Durable Goods Sep, 2.20%, 1.00% forecast, 2.00% previous.
• U.S. Durables Ex-Transport Sep, 0.70%, 0.50% forecast, 0.50% previous.
• U.S. Nondefe Cap Ex-Air Sep, 1.30%, 0.50% forecast, 1.10% previous.
• U.S. Monthly Home Price MM Aug, 0.70%, 0.20% previous.
• U.S. New Home Sales-Units Mln Sep, 0.67, 0.56 forecast, 0.56 previous.
• Canada BoC Rate Decision, 1.00%, 1.00% forecast, 1.00% previous.
• Trump unlikely to pick Cohn for Fed as he is crucial to tax reform drive –official.
• Ryan says Republican tax plan must speed through choppy waters - Rtrs interview.
• U.S. to seek 'good faith' agreements with China -Commerce Secretary.
• UK economy gains pace puts BoE rate hike firmly on track.
• Amid Brexit timetable confusion, UK aims for transition outline by early 2018.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Trade-Imports Sep, 4.92B previous
• 22:45 New Zealand Trade-Exports Sep, 3.69B previous
• 22:45 New Zealand Trade-Balance Sep, -1,235.0M previous
• 00:50 Japan Foreign Bond Investment w/e, 269.7B previous
• 00:50 Japan Foreign Invest Jp Stock w/e, 840.7B
• 01:30 Australia Export Prices Q3, -5.7%
• 01:30 Australia Import Prices Q3, -0.1%
Looking Ahead - Events, Other Releases (GMT)
• 12:30 ECB's Mario Draghi holds a press conference
• 14:30 Minneapolis Fed President Neel Kashkari speaks at a conference
• N/A ECB releases monthly data on lending and money supply
• N/A ECB Governing Council meeting, followed by interest rate announcement
Currency Summaries
EUR/USD is likely to find support at 1.1750 levels and currently trading at 1.1808 levels. The pair has made session high at 1.1817 and hit lows at 1.1759 levels. The euro rose against the greenback on Wednesday as the dollar turned lower, struggling to post further gains tied to speculation the next chair of the U.S. Federal Reserve will steer policy in a more hawkish direction. Greenback came under selling pressure on profit-taking following releases of surprisingly strong data on durable goods orders and new home sales data. New orders for U.S. capital goods rose more than forecast by 2.2 percent last month, while new home sales unexpectedly jumped to a near 10-year high in September. Despite Wednesday's pullback, the dollar index has gained 0.6 percent in the past week in the aftermath of reports that Stanford University economist John Taylor impressed U.S. President Donald Trump in his interview for the Fed's top post. Taylor favors a rule-based approach to setting interest rates and is seen as someone who may put the Fed on a path of faster interest rate increases compared with Fed Chair Janet Yellen, whose term expires next February. The euro gained 0.4 percent at $1.181 before Thursday's European Central Bank policy meeting, prompted by expectations it would announce the start of trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January.
GBP/USD is supported in the range of 1.3170 levels and currently trading at 1.3253 levels. It reached session high at 1.3270 and dropped to session low at 1.3222 levels. Sterling firmed against the dollar on Wednesday after data showed the British economy picking up speed, bolstering expectations that the Bank of England will raise interest rates next week. Data on Britain's quarterly gross domestic product growth showed the economy expanding at a faster pace than expected, unseating some of the earlier uncertainty around the likelihood of a rate hike after BoE policymakers next meet, on Nov. 2.GDP growth rose to 0.4 percent in the third quarter from 0.3 percent in the second and beat the expectations of most economists for 0.3 percent growth, a performance finance minister Philip Hammond described as solid. This pushed sterling up by over a full percentage point on the day, surging to an 8-day high of $1.3271, before easing slightly down to $1.3249 by 1940 GMT. Concerns about the progress of talks on Britain's departure from the European Union is set to continue to weigh on the pound, with businesses and investors keen to see a framework in place soon for the two-year transitional period after Britain formally leaves in March 2019.Brexit minister David Davis said on Wednesday that Britain wants an outline agreement with the EU on the transitional arrangements by the first quarter of 2018.
USD/CAD is supported at 1.2620 levels and is trading at 1.2804 levels. It has made session high at 1.2816 and lows at 1.2631 levels. The Canadian dollar slumped to a more than three-month low against its U.S. counterpart on Wednesday, after a cautious Bank of Canada dampened expectations for another interest rate hike this year. The central bank held its policy rate steady at 1 percent, as expected, saying that while fewer stimuli will be required over time, it will be cautious as it considers future moves given the risks and uncertainties facing the economy. Chances of another hike by the end of the year fell to less than 30 percent from 37 percent before the rate decision, the overnight index swaps market showed. The central bank had hiked in July and September, the first rate increases in nearly seven years, after rapid acceleration in Canada's economy in the first half of the year. But growth is expected to slow over the coming months. The price of oil, one of Canada’s major exports, pulled back from nears a four-week high. It had gained ground on Tuesday after top exporter Saudi Arabia said it was determined to end a crude glut that has been weighing on the market for three years. The Canadian dollar was trading at C$1.2774 to the greenback, or 78.28 U.S. cents, down 0.8 percent. The currency's strongest level of the session was C$1.2630, while it touched its weakest since July 12 at C$1.2782.
AUD/USD is supported around 0.7671 levels and currently trading at 0.7696 levels. It hit session high at 0.7720 and made session lows at 0.7689 levels. The Australian dollar sank to its lowest since mid-July on Wednesday after a surprisingly subdued reading on domestic inflation further diminished the chance of an increase in interest rates for months to come. The Aussie slid 0.6 percent to $0.7689, breaking psychological level of $0.7700. Australian consumer prices rose by less than expected last quarter while core inflation stayed below target for almost a second full year, leading investors to pare back the already slim chance of a rate hike for months to come. Underlying inflation averaged around 1.85 percent, again missing estimates and actually a touch slower than in the second quarter. This was the seventh straight quarter that core inflation has undershot the Reserve Bank of Australia's (RBA) long-term target band of 2 to 3 percent, reinforcing the case for keeping interest rates at current record lows of 1.5 percent. The Australian Bureau of Statistics reported its headline CPI rose 0.6 percent in the third quarter, from the second quarter when it edged up just 0.2 percent. The U.S. dollar dipped against of basket of key world currencies as the wait continued for President Trump to name the next head of the U.S. central bank.
Equities Recap
European shares fell to a near four-week low on Wednesday, with a mixed batch of company results sparking profit-taking a day before the European Central Bank decides on monetary policy.
UK's benchmark FTSE 100 closed down by 1.09percent, FTSEurofirst 300 ended the day up by 0.68 percent, Germany's Dax ended down by 0.5 percent, and France’s CAC finished the day down by 0.46 percent.
U.S. stocks slumped on Wednesday, as a round of disappointing corporate earnings and a spike in bond yields put both the Dow Industrials and S&P 500 index on track for their worst session in seven weeks.
Dow Jones closed down by 0.04 percent, S&P 500 ended up 0.17 percent, Nasdaq finished the day up by 0.47 percent.
Treasuries Recap
U.S. Treasury yields climbed on Wednesday, boosted by strong U.S. durable goods and new home sales data as well as speculation about President Donald Trump's nominee to head the Federal Reserve.
The 10-year U.S. Treasury note yields rose to 2.440 percent, up from Tuesday's 2.406 percent. Earlier, 10-year yields rose to 2.475 percent, the highest since March 21.
U.S. 30-year bond yields were up at 2.951 percent, from 2.923 percent late Tuesday. Thirty-year yields earlier climbed to a five-month high of 2.980 percent.
U.S. two-year note yields, meanwhile, were at 1.602 percent, up from 1.577 percent the previous session. Two-year yields earlier hit a fresh nine-year peak of 1.623 percent.
Commodities Recap
U.S. oil prices slipped on Wednesday after a surprising increase in U.S. crude inventories, while U.S. gasoline futures rallied 1 percent on a sharp falloff in inventories.
Brent crude futures settled up 11 cents at $58.44 a barrel. U.S. West Texas Intermediate crude dropped 29 cents to $52.18.
Gold steadied after touching a 2-1/2 week low on Wednesday on reports that Republican senators favored John Taylor to become the next head of the U.S. Federal Reserve, which drove U.S. bond yields to multi-month highs.
Spot gold was up 0.02 percent at $1,276.61 an ounce by 2:17 p.m. EDT (1817 GMT), after hitting $1,271.11, the lowest since Oct. 6.
U.S. gold futures for December delivery settled up 70 cents, or 0.05 percent, at $1,279 per ounce.
