Market Roundup
• Bank of Canada holds rates, says pace of hikes now more uncertain.
• ECB seen taking tentative step to prop up ailing euro zone.
• Global economic growth forecasts cut again by OECD.
• Tariffs, U.S. government shutdown weigh on still-growing economy –Fed.
• Fed's Williams says slower U.S. growth is a 'new normal'.
• Fed thinking about growing balance sheet again -K.C. Fed paper.
• US Dec International Trade $, -59.8 bln, -57.3 bln forecast, -49.3 bln previous, -50.3 bln revised.
• US 1 Mar, w/e MBA Mortgage Applications, -2.5%, 5.3% previous.
• CA Mar BoC Rate Decision, 1.75%, 1.75% forecast, 1.75% previous.
• CA Dec Trade Balance C$, -4.59 bln, -2.80 bln forecast, -2.06 bln previous, -1.98 bln revised.
• CA Feb Ivey PMI, 48.9, 49.5 previous.
• CA Feb Ivey PMI SA, 50.6, 54.7 previous.
• EU says "difficult" Brexit talks unlikely to yield swift deal.
• Bank of England's Saunders sees no rush to raise rates amid Brexit unknowns.
Looking Ahead - Economic Data (GMT)
• 6 Mar 21:30 Australia Feb AIG Construction Index, 43.1 previous
• 6 Mar 23:50 Japan 2 Mar, w/e Foreign Bond Investment (JPY), 1,014.9 bln previous
• 6 Mar 23:50 Japan 2 Mar, w/e Foreign Invest JP Stock (JPY), -15.2 bln previous
• 7 Mar 00:30 Australia Jan Retail Sales MM, 0.3% forecast, -0.4% previous
• 7 Mar 00:30 Japan Jan Trade Balance G&S (A$), 3,000 mln forecast, 3,681 mln previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Governing Council of the ECB holds monetary policy meeting in Frankfurt.
• 08:00 The Committee on Finance is holding an open hearing on current monetary policy; Governor Stefan Ingves and Deputy
Governor Cecilia Skingsley, will be answering questions from committee members in Stockholm
• 08:20 Andrea Enria of the European Banking Authority speaks at 4th SSM & EBF Boardroom dialogue in Frankfurt
• 08:20 The European Central Bank's top banking supervisor, Andrea Enria, to speak at the 4th SSM & EBF Boardroom dialogue in Frankfurt
• 09:30 Silvana Tenreyro, member of the monetary policy committee, speaks during regional visit to Glasgow, Scotland in Edinburgh
• 13:30 ECB President Mario Draghi holds a press conference, after the interest rate meeting in Frankfurt
• 14:00 German Finance Minister Olaf Scholz talks about preparations for Brexit at a DHL hub in Leipzig
• 17:15 Federal Reserve Governor Lael Brainard participates in a lecture series hosted by Princeton University's Julis-Rabinowitz Center for Public Policy and Finance and the Bendheim Center for Finance in Princeton
• 17:30 Participation by European Central Bank Peter Praet executive board member in a roundtable discussion at conference "L'impact économique des inégalités femmes-homes" organised by Banque de France in Paris
• 17:45 Bank of Canada's deputy governor Lynn Patterson to speak at Hamilton Chamber of Commerce in Hamilton
Currency Summaries
EUR/USD: The euro recovered from two-week lows against the U.S. dollar on Wednesday, as euro was supported by choppy equities, while a stronger dollar capped gains. European equities clung to tight ranges on Wednesday, as investors awaited fresh directional cues from U.S.-China trade negotiations, while robust U.S. economic data supported the dollar. The euro was up 0.02 percent at $1.1309. An index that tracks the dollar versus a basket of six major currencies was down 0.02 at 96.88.Immediate resistance can be seen at 1.1329 (21 DMA), an upside break can trigger rise towards 1.1379 (100 DMA).On the downside, immediate support is seen at 1.1291 (23.6% retracement level), a break below could take the pair towards 1.1229 (Feb 15th low).
GBP/USD: Sterling was little changed against the dollar on Wednesday, as a deadlock over Brexit fuelled concern that a vote on Prime Minister Theresa May's proposed deal for Britain's EU departure could be delayed. Talks with European Union negotiators aimed at winning concessions for Britain on Brexit have made no headway and no swift solution is in sight, EU officials said on Wednesday. Britain is due to leave the EU in 23 days, and the pound has dropped this week as doubts swirl over how, or possibly even if, Britain's exit will take place. Sterling was last trading at $1.3169 little changed in the late US session. Immediate resistance can be seen at 1.3198 (5 DMA), an upside break can trigger rise towards 1.3221 (61.8% retracement level).On the downside, immediate support is seen at 1.3145 (38.2% retracement level), a break below could take the pair towards 1.3097 (23.6% retracement level).
USD/CAD: The Canadian dollar weakened to a two-month low against its U.S. counterpart on Wednesday, as dovish tone from the Bank of Canada weighed on Canadian dollar. Faced with a slowing global and domestic economy, the Bank of Canada held interest rates steady as expected on Wednesday and took a slightly more dovish tone, saying there was "increased uncertainty" about the timing of future rate increases. The central bank said it now expects the Canadian economy will be weaker in the first half of 2019 than it projected in January. The Canadian dollar was last trading nearly down 0.56 percent at 1.3423 to the greenback. Immediate resistance can be seen at 1.3457 (23.6% retracement level), an upside break can trigger rise towards 1.3500 (Psychological level).On the downside, immediate support is seen at 1.3420 (38.2% retracement level), a break below could take the pair towards 1.3391 (50% retracement level).
USD/JPY: The U.S. dollar edged lower against the yen on Wednesday, as renewed worries over tensions on the Korean Peninsula on reports that North Korea is rebuilding part of a test rocket site increased demand for safe haven Japanese yen . North Korea has restored part of a rocket test site it began to dismantle after pledging to do so in a first summit with U.S. President Donald Trump last year, while Trump's national security advisor warned that new sanctions could be introduced if Pyongyang did not scrap its nuclear weapons program. The dollar was 0.10 lower versus the Japanese yen at 111.76. Strong resistance can be seen at 114.00 (Psychological level), an upside break can trigger rise towards 114.54 (Oct 3rd high).On the downside, immediate support is seen at 111.36 (9 DMA), a break below could take the pair towards 110.83 (21 DMA).
Equities Recap
European shares stalled on Wednesday as weak results from the troubled auto sector weighed and investor confidence in a rally that has sent stocks shooting up this year showed signs of fraying.
UK's benchmark FTSE 100 closed up by 0.18 percent, the pan-European FTSEurofirst 300 ended the day down by 0.12 percent, Germany's Dax ended down by 0.26 percent, France’s CAC finished the day down by 0.06 percent.
Wall Street's main indexes fell for a third session on Wednesday as healthcare and energy shares slumped and investors sought reasons to buy after the market's strong rally to start the year.
Dow Jones closed down by 0.51 percent, S&P 500 ended down by 0.65 percent, Nasdaq finished the day down by 0.92 percent.
Treasuries Recap
U.S. Treasury yields retreated on Wednesday as stocks weakened and remarks from New York Federal Reserve President John Williams about the persistence of low inflation further curtailed expectations of interest rate hikes in the near future.
U.S. 10-year note yields slipped 3.2 basis points to 2.690 percent. U.S. 30-year bond yields also fell, to 3.066 percent , 2.1 basis points lower. At the short end of the curve, two-year yields were down 3.3 basis points to 2.518 percent.
Commodities Recap
Gold steadied on Wednesday just above a five-week low touched a day earlier as the dollar retreated slightly and stocks edged lower, with investors awaiting further signals on the health of the global economy.
Spot gold was little changed at $1,287.03 per ounce as of (2053 GMT), trading in a narrow $7 range. U.S. gold futures settled up 0.2 percent at $1,287.6 per ounce.
Crude oil futures were mixed on Wednesday after U.S. government data showed an unexpectedly sharp build in crude inventories, though a third straight drop in gasoline stocks supported prices.
Brent crude futures settled at $65.99 a barrel, up 13 cents, or 0.2 percent. U.S. crude oil futures ended down 34 cents, or 0.6 percent, at $56.22 a barrel.
