Market Roundup
• Fed leaves rates steady, says will be 'patient' on future hikes
• U.S., China launch high-level trade talks amid deep differences
• EU negotiator and council chief tell Britain's May: No to renegotiation
• Moderate inflation, upbeat shoppers bode well for German consumption
• US Jan ADP National Employment, 213k, 178k forecast, 271k previous, 263k revised
• US 25 Jan w/e, MBA 30-Yr Mortgage Rate, 4.76%, 4.75% previous
• US Dec Pending Home Sales Change MM, -2.2%, 0.5% forecast, -0.7% previous
• Oil gains on tighter U.S. supply, Venezuela sanctions
Looking Ahead - Economic Data (GMT)
• Jan 30 23:50 Japan Dec Industrial Output Prelim MM SA, -0.4% forecast, -1.0% previous
• Jan 31 00:30 Australia Q4 Export Prices, 3.7% previous
• Jan 31 00:30 Australia Q4 Import Prices, 1.9% previous
• Jan 31 01:00 China Jan NBS Manufacturing PMI, 49.3 forecast, 49.4 previous
• Jan 31 01:00 China Jan NBS Non-Mfg PMI, 53.8 previous
• Jan 31 05:00 Japan Dec Housing Starts YY, 2.2% forecast, -0.6% previous
Looking Ahead - Events, Other Releases (GMT)
• Jan 30 23:50 BOJ to release summary of opinions from board members at its Jan. 22-23 policy meeting in Tokyo
• Jan 31 01:30 BOJ Deputy Governor Masayoshi Amamiya delivers a speech and hold a news conference in Shimonoseki, Japan
• Jan 31 10:15 Keynote speech by ECB executive board member Yves Mersch in Luxembourg
• Jan 31 16:00 Bundesbank president Jens Weidmann speaks about the future of the European Monetary Union in Frankfurt
• Jan 31 17:30 Bank of Canada Senior Deputy Governor Carolyn A. Wilkins delivers speech at Toronto
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Wednesday, as single currency was buoyed, after the Federal Reserve held interest rates steady, as expected, and struck a cautious tone on its outlook for the economy and future interest rate increases. The greenback hit session lows versus the euro and gave up gains versus the yen immediately after the Fed statement. Prior to the Fed comments, the dollar traded higher across the board.The Fed said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the U.S. economic outlook.The euro rose 0.4 percent to $1.1479., recovering from earlier losses. Immediate resistance can be seen at 1.1526 (Higher Bollinger Band), an upside break can trigger rise towards 1.1570 (Jan 10th high).On the downside, immediate support is seen at 1.1448 (100 DMA), a break below could take the pair towards 1.1407 (Daily Low).
GBP/USD: Sterling firmed against the dollar on Wednesday, as weaker dollar across the board and growing expectations that Britain can avoid a no-deal Brexit boosted sterling. The pound fell 0.7 percent on Tuesday after lawmakers voted to demand Prime Minister Theresa May renegotiate the terms of Brexit but rejected an amendment that would have postponed Britain's scheduled March 29 departure. At 2040 GMT, sterling was last trading 0.39 percent higher at $1.3116. It had fallen by about a cent on Tuesday after the vote.Strong resistance can be seen at 1.3198 (23.6% retracement level), an upside break can trigger rise towards 1.3224 (Higher Bollinger Band).On the downside, immediate support is seen at 1.3040 (10 DMA), a break below could take the pair towards 1.3000 (Psychological level).
USD/CAD: The Canadian dollar strengthened to hit 2-month high against its U.S. counterpart on Wednesday, as weaker dollar and higher oil prices boosted Canadian dollar. Dollar dipped after U.S. central bank held interest rates steady, but struck a cautious tone on further rate hike. Oil prices rose, paring gains of more than 1 percent, as the potential for supply disruptions following U.S. sanctions on Venezuela's oil industry lifted prices. The Canadian dollar was last trading 0.92% higher at 1.3146 to the greenback. Immediate resistance can be seen at 1.3197 (100 DMA), an upside break can trigger rise towards 1.3298 (21 DMA).On the downside, immediate support is seen at 1.3119 (38.2% retracement level), a break below could take the pair towards 1.300 (Lower Bollinger Band).
USD/JPY: The dollar weakened against the Japanese yen on Wednesday, after the Federal Reserve pledged to be patient with future interest rate hikes. The Fed held interest rates steady at the end of a two-day meeting in which it struck language in a December policy statement that projected "some further" rate hikes would be appropriate in 2019.The dollar index fell 0.50 percent to 95.343. Against the yen, the dollar fell 0.44 percent to 108.90. Immediate resistance can be seen at 108.93 (21 DMA), an upside break can trigger rise towards 109.76 (Daily High).On the downside, immediate support is seen at 108.80(Daily Low), a break below could take the pair towards 107.80 (Lower Bollinger Bands).
Equities Recap
Luxury stocks were a silver lining for European markets on Wednesday after strong results from LVMH reassured investors, while looming U.S.-China trade talks kept trading muted and some earnings disappointments weighed.
UK's benchmark FTSE 100 closed up by 1.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.30 percent, Germany's Dax ended down by 0.5 percent, France’s CAC finished the day up by 0.8 percent.
U.S. stocks surged on Wednesday after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy.
Dow Jones closed up by 1.77 percent, S&P 500 ended up 1.57 percent, Nasdaq finished the day up by 2.18 percent.
Treasuries Recap
U.S. government bond yields fell on Wednesday, with the biggest losses in shorter-dated maturities, after Federal Reserve held interest rates steady but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the U.S. economic outlook.
Two-year yields, which reflect traders' expectations of interest rate hikes, fell to a two-week low of 2.52 percent. The benchmark 10-year yield fell slower, steepening the yield curve. The spread between the two- and 10-year yields rose to 16.9 basis points, its highest in a week.
Commodities Recap
Oil prices rose on Wednesday, as U.S. government data that showed signs of tightening supply and investors remained concerned about supply disruptions following U.S. sanctions on Venezuela's oil industry.
U.S. crude futures rose 92 cents to settle at $54.23 a barrel, a 1.73 percent gain. Brent crude futures gained 33 cents, or 0.54 percent, to $61.65 a barrel.
Gold strengthened on Wednesday, as dollar slipped on expectations that the U.S. Federal Reserve might be patient in lifting borrowing costs.
Spot gold was up 0.66 percent at $1,319.49 per ounce at 2130 GMT, after touching $1,315.93. U.S. gold futures rose 0.5 percent to $1,314.10.
