Market Roundup
• Canada's GDP grows 0.2% in May
• Chicago PMI hits lowest level since December 2015
• U.S. oil prices increase 1%
• U.S. to sell $84 bln in debt next week at refunding
• US ADP Nonfarm Employment Change 156K, 150k forecast, 112k previous
• US Employment Benefits QoQ 0.50%, 0.50% previous
• US Employment Cost Index QoQ Q2 0.06%,0.7% forecast, 0.7% previous
• US Employment Wages QoQ Q2 0.70%, 0.70% previous
• Canada GDP YoY 1.40%, 1.30% forecast, 1.50% previous
• Canada May GDP MoM 0.2%,0.1% forecast 0.3% previous
• US July Chicago PMI -8.496M,-2.588M forecast, -10.835M previous
• Brazil Foreign Exchange Flows 0.365B,-2.925B previous
• Fed Interest Rate Decision 2.25%, 2.25% forecast,2.50% previous
• Brazil Interest Rate Decision 6.25%, 6.50% forecast,6.50% previous
Looking Ahead - Economic Data (GMT)
• 22:30 Australia Jul AIG Manufacturing Index 49.6 previous
• 23:00 Australia Manufacturing PMI 51.4 forecast, 51.4 previous
•23:50 Japan Foreign Bonds Buying 1,027.8B previous
• 23:50 Japan Foreign Investments in Japanese Stocks -110.0B
• 23:50 Japan Foreign Reserves (USD) 1,322.3B
• 00:30 Japan Jul Manufacturing PMI 49.6 forecast, 49.6 previous
• 01:30 Australia Export Price Index QoQ Q2 2.8% forecast,4.5% previous
• 01:30 Australia Import Price Index QoQ Q2 1.8% forecast,-0.5% previous
• 01:45 China Jul Caixin Manufacturing PMI 49.6 forecast, 49.4 previous
• 11:00 UK BoE Interest Rate Decision 0.75% forecast, 0.75% previous
Looking Ahead - Events, Other Releases (GMT)
01:30 Bank of Japan (BOJ) Deputy Governor (March 2018 - March 2023) Masayoshi Amamiya is to speak. His comments will be closely watched for clues regarding future monetary policy.
11:30 Bank of England (BOE) Governor Mark Carney (July 2013 - June 2021) is scheduled to speak.
Currency Summaries
EUR/USD: The euro declined against the U.S. dollar on Wednesday, after after the Federal Reserve cut interest rates by 25 basis points as expected. The Fed decision follows the European Central Bank's pledge last week to ease policy further and data on Wednesday showing euro zone economic growth halved in the second quarter and inflation slowed sharply in July made the case for aggressive action. The euro was down 0.75 percent at $1.1070.The dollar index, which measures the greenback against six major currencies, was 0.53 percent higher at 99.58. Immediate resistance can be seen at 1.1130 (5 DMA), an upside break can trigger rise towards 1.1168 (11 DMA).On the downside, immediate support is seen at 1.1064 (Daily low), a break below could take the pair towards 1.1000 (Psychological level).
GBP/USD: The British pound gave up earlier ground against the dollar on Wednesday, as stronger dollar across the board weighed on British pound. The U.S. currency was bolstered after the U.S. Federal Reserve cut interest rates for the first time since 2008 crisis. Fed said it was cutting interest rates, as expected, citing concerns about the global economy and muted U.S. inflation, and signaled a readiness to lower borrowing costs further if needed.The British currency slid to as low as $1.2153, down 0.01 percent on the day. Immediate resistance can be seen at 1.2267 (5 DMA), an upside break can trigger rise towards 1.2380 (10 DMA).On the downside, immediate support is seen at 1.2120 (Daily low), a break below could take the pair towards 1.2100 (Psychological level).
USD/CAD: The Canadian dollar weakened against the greenback on Wednesday, as dollar rose, offsetting data showing stronger than expected growth in the domestic economy. The loonie lost ground even as domestic data showed that gross domestic product grew more than expected in May. Canada's economy grew by 0.2% in May, beating estimates for 0.1% growth, thanks to a rebound in manufacturing, according to data from Statistics Canada.The data supported investor expectations that the Bank of Canada will leave its benchmark interest rate unchanged at 1.75% this year, after the central bank made clear earlier this month it had no intention of easing monetary policy, diverging from some other major central banks. At (1313 GMT), the Canadian dollar was last trading 0.3% lower at 1.3199 to the greenback .Immediate resistance can be seen at 1.3213 (21 DMA), an upside break can trigger rise towards 1.3227 (50 DMA).On the downside, immediate support is seen at 1.3166 (5 DMA), a break below could take the pair towards 1.3099 (21DMA).
USD/JPY: The dollar strengthened against the Japanese yen on Wednesday, after as the Federal Reserve cut interest rates after Fed Chairman Jerome Powell said the 25-basis-point cut was not the same as the beginning of a lengthy rate cutting cycle. In a statement at the end of its latest two-day policy meeting, the Fed said it had decided to cut rates in light of the implications of global developments for the economic outlook as well as muted inflation pressures. The central bank also said it will continue to monitor how incoming information will affect the economy and “will act as appropriate to sustain” a record-long U.S. economic expansion. The Japanese yen weakened 0.12% versus the greenback at 108.76 per dollar. Strong resistance can be seen at 109.00 (Psychological level), an upside break can trigger rise towards 109.69 (100 DMA).On the downside, immediate support is seen at 108.31 (50 DMA), a break below could take the pair towards 108.23 (21 DMA).
Equities Recap
A slew of positive corporate earnings and optimistic signs from U.S.-China trade talks propped up European shares on Wednesday as investors braced for what wouldbe the U.S. Federal Reserve's first interest rate cut in morethan a decade.
UK's benchmark FTSE 100 closed down by -0.78 percent, Germany's Dax ended up by 0.34 percent, France’s CAC finished the day up by 0.14 percent.
Wall Street turned negative after Federal Reserve Chairman Jerome Powell in a press conference after the Fed announced its first rate cut since 2008 characterized it as a mid-cycle policy adjustment, adding that the decision was different from the beginning of a lengthy cutting cycle.
Dow Jones closed down by 1.23 percent, S&P 500 ended down by 1.08 percent, Nasdaq finished the day down by 1.19 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday as the Federal Reserve's cut first interest rate in a decade to combat risk from trade disputes and softening global demand.
At (1546 GMT), benchmark 10-year Treasury yields were down 2.80 basis points at 2.034%.Two-year yields, which are sensitive to traders' view on changes in Fed policy, were 2.80 basis points lower at1.820%.
Commodities Recap
Gold prices fell on Wednesday after the U.S. Federal Reserve cut interest rates for the first time since 2008, as markets priced in the move and a lack of dovish outlook failed to cheer investors.
Spot gold was down 0.8% at $1,417 an ounce at 2:38 p.m. EDT (1838 GMT), while U.S. gold futures were also down 0.8% at $1,418.30.
US crude oil futures rose for the fifth straight day, buoyed by a bigger-than-expected drop in U.S. inventories, but the stronger dollar helped bring prices down from session highs.
U.S. crude rose 0.05% to $58.08 per barrel and Brent was last at $64.49, down 0.22% on the day.
