Market Roundup
• US ADP National Employment Jul 178.0k, 185k forecast, 191.0k previous.
• US MBA Purchase Index w/e 235.4, 240.1 previous.
• US MBA Mortgage Application w/e -2.8%, 0.4% previous.
• US Mortgage Market Index w/e 406.6, 418.5 previous.
• US Mortgage Refinance Index 1361.0, 1414.3 previous.
• US MBA 30-Yr Mortgage Rate w/e 4.17%, 4.17% previous.
• US ISM-New York Index Jul, 745.5, 739.1 previous.
• US ISM NY Biz Conditions Jul, 62.8, 55.5 previous.
• Fed's Williams says he supports trimming Fed portfolio 'this fall'.
• Inflation data before Fed's Sept meet to shed more light –Mester.
• Fed watching easy financial conditions, but not directly responding to it with policy -Mester.
• Fed's Bullard opposes more US rate hikes -Market News International.
• US Treasury looks to offset future drop in Fed bond purchases.
• Trump signs Russia sanctions bill, but slams it as 'flawed'.
• Russia PM: new US sanctions amount to "full-scale trade war".
• Trump and US senators seek to slash legal immigration.
• Zimbabwe central bank warms up 'bond note' printing presses.
• Nigeria to exit recession this year, but the risk remains, IMF says.
Looking Ahead - Economic Data (GMT)
• 01:30 Australia Trade Balance G&S (A$) Jun 1800m, 1711.8m forecast, 2471m previous
• 01:45 China Caixin Services PMI Jul 51.6 previous
• 23:50 Japan Foreign Bond Investment w/e 1178.6b previous
• 23:50 Japan Foreign Invest JP Stock w/e 292.4b
Looking Ahead - Events, Other Releases (GMT)
• 11:00 BOE to release Inflation Report -London
• 11:00 BoE announces rate decision and publishes the minutes of the meeting -London
Currency Summaries
EUR/USD is likely to find support at 1.1778 levels and currently trading at 1.1859 levels. The pair has made session high at 1.1908 and hit lows at 1.1820 levels. Euro rose to hit 2-1/2 years high against the dollar on Wednesday as the dollar declined on doubts about another Federal Reserve interest rate increase this year and expectations for European Central Bank hawkishness. The euro hit $1.1868, haveits highest level against the dollar since January 2015. In contrast to the political risks and monetary policy uncertainty that asplagued the dollar, the common currency has drawn support from expectations that the ECB would eventually begin phasing out its easy policy. Euro zone economic data has encouraged the view that the ECB is on a path toward tightening its monetary policy, which is considered a favorable scenario for the euro. The dollar's weakness this year has been fuelled by a steady unwinding of expectations of optimism about U.S. President Donald Trump's stimulus plans and falling hopes to the extent of a Federal Reserve policy increase in the coming months. The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.2 percent at 92.857.
GBP/USD is supported in the range of 1.3156 levels and currently trading at 1.3227 levels. It reached session high at 1.3250 and dropped to session low at 1.3255 levels. The British pound strengthened against the greenback on Wednesday to traded close to 11-month highs as investors focused on a two-day Bank of England meeting that should provide clues on whether interest rates could be hiked in coming months. A purchasing managers' index (PMI) survey showing growth in Britain's construction industry tumbled to an 11-month low in July had little impact on the currency. The pound briefly touched Tuesday's high of $1.3245 after the data, the strongest since mid-September, which it had hit after the equivalent survey for the manufacturing sector came in stronger than expected. It eased back to around $1.3224 by 1900 GMT, up around a quarter of a percent on the day. Investors await for Thursday's PMI for Britain's dominant services sector, followed by BoE policy decision, the quarterly Inflation Report, and then a press conference with Governor Mark Carney, in what has been dubbed "Super Thursday".
USD/CAD is supported at 1.2500 levels and is trading at 1.2569 levels. It has made session high at 1.2594 and lows at 1.2536 levels. The Canadian dollar declined against its U.S. counterpart on Wednesday as Canadian dollar was pressured by gap between U.S. and Canadian yields widened after having narrowed sharply in recent months. Canada's two-year yield fell 1.8 basis points further below its U.S. counterpart to a spread of -9.9 basis points. The spread last week hit its narrowest since May 2015 at -2.4 basis points, after the Bank of Canada raised interest rates earlier in July for the first time in nearly seven years. Oil, one of Canada's major exports, shook off bearish headlines as investors and traders took advantage of earlier losses and pushed crude prices back towards this week's eight-week highs. The Canadian dollar was trading at C$1.2569 to the greenback, or 79.59 U.S. cents, down 0.2 percent. The currency's strongest level of the session was C$1.2533, while it touched its weakest since July 21 at C$1.2589.Still, the loonie has rallied nearly 10 percent since early May. It touched on Thursday its strongest in more than two years at C$1.2414.
NZD/USD is supported around 0.7400 levels and currently trading at 0.7435 levels. It hit session high at 0.7457 and made session lows at 0.7411 levels. The New Zealand dollar declined against US dollar on Wednesday after data showed surprisingly weaker employment and wage growth in the second quarter. The New Zealand dollar fell 0.6 percent to $0.7425, in its third straight day of losses. Its session low of $0.7416 was its lowest since July 26. New Zealand's employment unexpectedly contracted in the second quarter for the first time in 1-1/2 years and wage growth slackened, reinforcing the central bank's recent signal it could keep its policy rate at record lows at least until 2020. Employment rolls shrank 0.2 percent in the second quarter, with 4,000 fewer people employed, after six consecutive quarters of gains. That translated into a 0.4 percentage point quarter-on-quarter drop in the employment rate. Market expectations were centered on employment rising 0.7 percent in the June quarter. The Reserve Bank of New Zealand (RBNZ) is due to meet on Aug. 10 for a monetary policy decision. It slashed rates throughout 2016 to record lows of 1.75 percent and has signalled it will keep rates on hold, possibly until 2020.
Equities Recap
Miners and banks led a sell-off among cyclical sectors weighing on the European market on Wednesday, while semiconductor firms' shares were up.
UK's benchmark FTSE 100 closed down by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.46 percent, Germany's Dax ended down by 0.6 percent, France’s CAC finished the day down by 0.4 percent.
The Dow peaked above the 22,000 mark for the first time on Wednesday, powered by Apple's healthy quarterly iPhone sales, while weakness in other tech stocks pulled the Nasdaq and S&P 500 lower.
Dow Jones closed up by 0.23 percent, S&P 500 ended up 0.03 percent, Nasdaq finished the day down by 0.01 percent.
Treasuries Recap
Long-dated debt yields fell on Wednesday, and the yield curve flattened to its lowest levels in a week, after the U.S. Treasury Department said it was still considering an ultra long bond, but didn't announce a new issue.
Thirty-year Treasury bonds gained 2/32 in price to yield 2.85 percent, down from 2.88 percent before the announcement.
The yield curve between five-year notes and 30-year bonds flattened to 103 basis points, the lowest level since July 26.
Commodities Recap
Gold rose on Wednesday, nearing seven-week highs as the dollar fell to a 15-month low and U.S. data showed fewer-than-expected new jobs in July, bringing into question chances of the Federal Reserve raising interest rates in the coming months.
Spot gold was up 0.2 percent at $1,270.43 an ounce by 1:50 p.m. EDT (1750 GMT), just below Tuesday's high of $1,273.97, the highest since June 14.U.S. gold futures settled down 0.08 percent at $1,278.40.
Oil prices edged higher on Wednesday, as surging U.S. fuel demand and strong refinery runs offset data from the Energy Department that showed crude inventories did not fall as much as expected last week.
Brent crude futures ended the session up 1.1 percent, or 58 cents, at $52.36 a barrel after hitting a session low of $51.18.
U.S. West Texas Intermediate crude rose 0.9 percent to settle at $49.59 a barrel, after falling to a low of $48.55 earlier in the session.
FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest
