America’s Roundup: Dollar dips as Powell testimony disappoints hawks, Wall Street ends lower, Gold steadies, Oil rallies as grain markets tighten, dollar falls on Fed Chair comments

Market Roundup

• Canada Apr Core Retail Sales (MoM) 1.3%,0.4% forecast,-0.3% previous

• Canada Retail Sales (MoM) 1.1%,0.2% forecast,-1.4% previous

• Canada May New Housing Price Index (MoM) 0.1%,0.0% forecast,-0.1% previous

• US Redbook (YoY) 0.9%, 0.4% previous

Looking Ahead Economic Data(GMT)

•03:00 New Zealand Credit Card Spending (YoY) 13.9% forecast,11.4% previous

Looking Ahead Events and Other Releases(GMT)

•01:30 Japan BoJ Board Member Noguchi Speaks

Currency Summaries

EUR/USD: The euro edged higher against dollar on Wednesday after Federal Reserve Chair Jerome Powell's comments on the central bank's ongoing fight to lower inflation failed to live up to the more hawkish market expectations. Further rate increases are “a pretty good guess” of where the central bank is heading if the economy continues in its current direction, The Fed chief said inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go. Traders are now pricing in a 79% chance of a 25-basis point Fed rate hike in July, according to the CME’s Fedwatch tool, with no rate cuts seen this year. The euro was 0.62 % higher against the dollar at $ 1.0985 .Immediate resistance can be seen at 1.0989 (23.6%fib), an upside break can trigger rise towards 1.1000(Psychological level).On the downside, immediate support is seen at 1.0904(June 20th low), a break below could take the pair towards 1.0883( (38.2%fib).

GBP/USD: The pound seesawed on Wednesday, initially jumping after data showed UK inflation accelerated more than expected in May, then reversing gains, as concerns flared over the Bank of England’s ability to protect the economy from stagnating. Official data showed consumer inflation rose by 8.7% year on year in May, showing no change from April’s 8.7% rate, but above expectations for an increase of 8.4%.But the core rate, which excludes food, energy, alcohol and tobacco, rose by 7.1%, above expectations for a reading of 6.8%,keeping the BoE under pressure to deliver a big rate rise when it meets later this week .Immediate resistance can be seen at 1.2849(23.6%fib), an upside break can trigger rise towards 1.2900 (Psychological level).On the downside, immediate support is seen at 1.2715(9DMA), a break below could take the pair towards 1.2716(38.2%fib).

USD/CAD: The Canadian dollar strengthened to a nine-month high against its U.S. counterpart on Wednesday as oil prices rose and stronger-than-expected domestic retail sales data bolstered bets for an additional Bank of Canada interest rate hike. Canadian retail sales climbed 1.1% in April, beating the median forecast for a 0.2% increase, and will likely post another gain in May, Statistics Canada data showed. Money markets see a 72% chance that the BoC will tighten further at the next policy decision on July 12, up from 64% before the data. The Canadian dollar was trading 0.6% higher at 1.3160 to the greenback. Immediate resistance can be seen at 1.3292 (5DMA), an upside break can trigger rise towards 1.3267 (38.2% fib).On the downside, immediate support is seen at 1.3152(23.6% fib), a break below could take the pair towards 1.3120 (Lower BB).

USD/JPY: The U.S. dollar eased against Japanese yen on Wednesday after Federal Reserve Chair Jerome Powell's comments on the central bank's ongoing fight to lower inflation failed to live up to the more hawkish market expectations. Powell told lawmakers the fight against inflation still has a long way to go and that despite a recent pause in interest rate hikes officials agreed borrowing costs would likely need to move higher . The dollar index , which measures the currency against six rivals, fell 0.43% to 102.07 following Powell's testimony to the House Financial Affairs Committee. Strong resistance can be seen at 142.00(Psychological level) an upside break can trigger rise towards 142.48(23.6%fb).On the downside, immediate support is seen 140.51(38.2%fib), a break below could take the pair towards 139.80(14DMA)

Equities Recap

European shares edged lower on Wednesday after the real estate sector led declines against rising euro zone bond yields, while data affirming stubborn inflation in Britain sent London stocks lower.

UK's benchmark FTSE 100 closed down by 0.13 percent, Germany's Dax ended down by 0.55 percent, France’s CAC finished the day up by 0. 46 percent.

Wall Street extended its sell-off on Wednesday as U.S. Federal Reserve Chairman Jerome Powell's congressional testimony reinforced the central bank's campaign to rein in inflation as he hinted at the likelihood of further interest rate hikes.

Dow Jones closed down by 0.30 percent, S&P 500 ended down by 0.52 percent, Nasdaq finished the day up by 1.21 percent.

Treasuries Recap

U.S. Treasury yields were flat to slightly lower on Wednesday, after posting gains earlier, partly weighed down by comments from Atlanta Federal Reserve President Raphael Bostic, who urged the Fed to wait longer for the impact of previous interest rate hikes to work through the economy before raising rates again.

U.S. 30-year bond yields rose 1.7 bps to 3.834%.On the shorter-end of the curve, the two-year yield , which typically reflects interest rate expectations, was up 2.4 bps at 4.717%.

Commodities Recap

Gold prices pared losses on Wednesday, helped by a retreat in the dollar, although an uptick in bond yields after U.S. Federal Reserve Chair Jerome Powell’s congressional testimony kept bullion near a three-month low.

Spot gold was steady at $1,936.96 per ounce by 2:32 p.m. ET (1832 GMT) after dropping as much as 0.9% earlier. U.S. gold futures settled 0.1% lower at $1,944.9.

Oil prices gained a dollar a barrel on Wednesday as U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls around the globe could lower biofuels blending and increase oil demand.

Brent futures rose $1.22, or 1.6%, to settle at $77.12 a barrel, while the U.S. West Texas Intermediate (WTI) crude futures rose $1.34, or 1.9%, to settle at $72.53 a barrel. Both contracts hit two-week highs earlier in the session.