Market Roundup
• Australia Building Approvals (MoM) (Aug) -6.0%, -6.0% forecast, -8.2% previous
• Australia Private House Approvals (Aug) -2.6%,-2.6% forecast, 1.1% previous
•New Zealand RBNZ Interest Rate Decision 2.50%, 2.75% forecast, 3.00% previous
•German Industrial Production (MoM) (Aug) -4.3%,-1.0% forecast, 1.3% previous
•German Industrial Production (YoY) (Aug) -4.20%,1.53% previous
Looking Ahead Economic Data (GMT)
• 09:30 UK 5-Year Treasury Gilt Auction 4.095% previous
Looking Ahead Events and Other Releases(GMT)
• 09:30 UK BoE FPC Meeting Minutes
• 10:30 ECB's Elderson Speaks
Currency Forecast
EUR/USD : The euro slipped against the U.S. dollar on Wednesday as markets braced for further political upheaval in France. France’s President Emmanuel Macron faced growing pressure to resign or hold a snap parliamentary election to end political chaos that has forced the resignation of five prime ministers in less than two years. On Tuesday, as Macron's outgoing Prime Minister Sebastien Lecornu held last-ditch talks to form a new government, his first premier in 2017 . Markets have taken fright, with investors keeping a close eye on France's ability to cut a yawning budget deficit. ECB President Christine Lagarde highlighted the importance of France submitting a budget on time, signaling that eurozone fiscal discipline remains a priority amid market jitters. Immediate resistance can be seen at 1.16662(Daily high), an upside break can trigger rise towards 1.1733(38.2%fib).On the downside, immediate support is seen at 1.1599(50%fib), a break below could take the pair towards 1.1565(Lower BB)
GBP/USD: The pound dipped on Wednesday as risks around the U.S. government shutdown intensified and traders tried to gauge the extent offresh fiscal stimulus from Japan, boosting demand for assets considered to be safer havens. With the shutdown entering its second week, the probability of an end to the standoffwithin the next week stands at 25%, according to the betting site Polymarket. The Federal Reserve is still widely expected to lower interest rates later this month, with Fed funds futures implying a 94.6% probability of a 25-bps cut, according to the CME Group's FedWatch tool. Sterling was down 0.11% to $1.3470. Immediate resistance can be seen at 1.3500(SMA 20), an upside break can trigger rise towards 1.3530(38.2%fib).On the downside, immediate support is seen at 1.3344(50%fib), a break below could take the pair towards 1.3309(Lower BB).
NZD/USD: New Zealand dollar slipped to six month low on Wednesday after the Reserve Bank of New Zealand surprised the market with a larger-than-expected interest rate cut. New Zealand’s central bank delivered a surprise 50 bps rate cut on Wednesday, citing concerns over the fragile economy. The central bank has cut rates by 300 basis points since August 2024, and with inflation within its target band of 1% to 3%, policymakers have leeway to lower borrowing costs further.The dovish stance offers some relief to the New Zealand government and Prime Minister Christopher Luxon, whose popularity has slumped in recent months as the promised economic recovery has yet to materialize. Immediate resistance can be seen at 0.5800(38.2%fib), an upside break can trigger rise towards 0.5856(50%fib).On the downside, immediate support is seen at 0.05734 (23.6%fib), a break below could take the pair towards 0.5708(Lower BB).
USD/JPY: The U.S. dollar climbed above 152.00 level on Wednesday as investors looked for fiscal policy signals from Japan’s prime minister-designate Takaichi, who surprised markets by winning the ruling party's leadership election over the weekend to become Japan's next prime minister, has left investors wondering whether the protégé of the late Shinzo Abe could usher in similar stimulus policies that may boost stocks but leave the yen fragile.Former Bank of Japan executive Kazuo Momma said on Wednesday that the yen’s recent sharp declines could prompt the central bank to raise interest rates as early as this month. The yen is down over 3% for the week against dollar, on pace for steepest weekly decline in a year. Immediate resistance can be seen at 152.72(38.2%fib) an upside break can trigger rise towards 153.00 (Psychological level) .On the downside, immediate support is seen at 151.80 (Daily low) a break below could take the pair towards 150.75 (50%fib).
Equities Recap
Asian equities eased on Wednesday as renewed strength in the U.S. dollar and concerns over economic growth turned investors cautious.
Hang Seng was down 0.86% ,China’sA50 traded up 0.31% ,Japan’s Nikkei 225 was down 0.34 %
Commodities Recap
Gold surged past $4,000 an ounce on Wednesday, setting a record as investors sought refuge from growing economic and geopolitical uncertainty, amid expectations of further U.S. Federal Reserve rate cuts.
Spot gold was up 0.9% at $4,017.16 per ounce by 0442 GMT. U.S. gold futures for December delivery gained 0.9% to $4,040 per ounce.
Oil prices rose around 1% on Wednesday as investors shrugged off oversupply concerns, following OPEC+’s earlier decision to limit production increases next month.
Brent crude futures rose 63 cents, or 0.96%, to $66.08 a barrel by 0715 GMT. U.S. West Texas Intermediate crude climbed 66 cents, or 1.07%, to $62.39.
