Market Roundup
• US MBA 30-yr mortgage rate 4.14%, 4.17% -previous.
• US MBA Mortgage Application 7.1%, -3.4% - previous.
• US MBA Purchase index 261.9 (7-yr high), 238.1 - previous.
• ICM Poll suggests UK Conservatives would have a majority of 96 seats in
parliament.
• Ex-FBI head Comey confirms Trump pressured him on Russia probe.
• ECB likely to nudge up growth forecasts, trim inflation on Thursday – sources.
• BOJ likely to upgrade its economic assessment as early as June 15-16 rate
review – sources.
• OECD forecasts global growth of 3.5% in 2017, 3.6% in 2018.
• EU in stronger position to handle Italy after Banco Popular rescue - EU official
Looking Ahead - Economic Data (GMT)
• --:-- China Trade Balance (USD) 46.32 bln forecast, 38.05 bln – previous
• 23:50 Japan GDP Rev QQ annualised 2.4% forecast, 2.2% – previous
• 23:50 Japan Current account NSA JPY 1698.8 bln forecast, 2907.7 bln – previous
• 01:30 Australia Trade Balance G&S (A$) 1950 mln forecast, 3107 mln - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1193 levels and currently trading at 1.1251 levels. The pair has made session high at 1.1282 and hit lows at 1.1217 levels. The euro edged slightly lower against U.S. dollar on Wednesday as euro was weighed down after a report suggested that European Central Bank would lower its inflation targets at Thursday's policy announcement. Bloomberg, citing unnamed eurozone officials, said the central bank's staff forecasts for inflation for the next three years had been cut to 1.5 percent, from 1.7 percent, 1.6 percent and 1.7 percent, respectively in March. The euro was down 0.11 percent to $1.1263, after having fallen to a low of $1.1205, its lowest since Friday. The common currency has strengthened against the dollar over the last few months, benefiting from broad greenback weakness but also on the view that rising inflation would prompt the ECB to raise interest rates in early 2018. The dollar steadied after having hit a near seven-month low on Tuesday, largely because of nerves over the pace of U.S. growth and government policy that have cut U.S. Treasury yields to the lowest since November.
GBP/USD is supported in the range of 1.2876 levels and currently trading at 1.2956 levels. It reached session high at 1.2978 and dropped to session low at 1.2906 levels. Britain's pound rose against the dollar on Wednesday as investors increasingly viewed that Prime Minister Theresa May's party will win a majority in Britain's general election on Thursday. The Pound broke out of a half-cent trading range seen for most of the US session to touch $1.2970 by 1900 GMT and was last up 0.4 percent on the day at $1.2963. The pound gained as much as 4 percent after May called a snap election seven weeks ago, as polls suggested a landslide win for her Conservative party that would give the prime minister a stronger hand in Britain's negotiations on leaving the European Union. Those talks begin later this month. But recent polls predicting outcomes ranging from a majority for the Conservatives to a 'hung' parliament have seen sterling slip from the $1.30 mark it hit last month. It has held on to most of its gains, however, with most analysts attributing its resilience to investors still being confident of a Conservative win.
USD/CAD is supported at 1.3425 levels and is trading at 1.3518 levels. It has made session high at 1.3523 and lows at 1.3434 levels. The Canadian dollar initially strengthened against its U.S. counterpart on Wednesday but reversed course as oil prices fell and investors braced three major events on Thursday. Trading was choppy in the US session ahead of key events scheduled for Thursday, when Britain will hold a national election, the U.S. Federal Bureau of Investigation's former director will testify to Congress and European Central Bank (ECB) policymakers meet to decide on policy. Oil prices slid more than 3.5 percent on Wednesday after the U.S. government reported an unexpected increase in inventories of crude and gasoline. Crude stocks in the United States grew 3.3 million barrels to 513 million barrels, according to the U.S. Energy Information Administration (EIA). That confounded forecasters who had predicted a drop of 3.5 million barrels, especially a day after preliminary data from the American Petroleum Institute indicated an even bigger drop. The Canadian dollar was trading at C$1.3511 to the greenback. The currency's weakest level of the session was C$1.3525, while it touched its strongest since May 29 at C$1.3427.
AUD/USD is supported around 0.7500 levels and currently trading at 0.7546 levels. It hit session high at 0.7565 and made session lows at 0.7541 levels. The Australian dollar rose against the dollar to hit one-month high on Wednesday as domestic growth numbers beat investors' worst fears, forcing a round of short-covering among bears. Australia's economy shrugged off a cyclone powered bad-weather hit to exports and home building in the first quarter, posting just enough growth to claim nearly 26 years without recession equalling the Netherlands' 103-quarter record. Data from the Australian Bureau of Statistics on Wednesday showed gross domestic product (GDP) grew at annual rate of 1.7 percent - the slowest since third-quarter of 2009 when it clocked 1.2 percent. The Aussie firmed to $0.7566 from $0.7500, it was last trading at $0.7549. On Tuesday the RBA conceded the economy had slowed in the first quarter but stuck by its prediction that growth would accelerate to around 3 percent over the next year or so. Analysts took that to mean the central bank would look past a weak number and keep interest rates steady at 1.5 percent, as it has done since August last year.
Equities Recap
Banks and utilities supported European stocks on Wednesday, with relief that Spain's struggling Banco Popular was being rescued by Santander lifting bank shares.
UK's benchmark FTSE 100 closed down by 0.60 percent, the pan-European FTSEurofirst 300 ended the day down by 0.04 percent, Germany's Dax ended down by 0.20 percent, France’s CAC finished the day down by 0.10 percent.
U.S. stocks edged up on Wednesday despite a sharp decline in energy shares after written testimony from former FBI director James Comey did not include any big surprise about an investigation into Russian meddling with last year's U.S. presidential election.
Dow Jones closed up by 0.17 percent, S&P 500 ended up 0.15 percent, Nasdaq finished the day up by 0.34 percent.
Treasuries Recap
U.S. Treasury debt prices dropped on Wednesday after comments from former FBI director James Comey on the bureau's investigation into Russia's alleged interference in the 2016 U.S. presidential election were viewed by investors as less damaging than they initially thought.
In late trading, U.S. 10-year Treasuries were last down 8/32 in price, with yields at 2.176 percent, from 2.147 percent late on Tuesday.
U.S. 30-year bonds fell 16/32 in price, yielding 2.835 percent, compared with Tuesday's 2.81 percent.
U.S. two-year yields were at 1.314 percent, from 1.298 percent late on Tuesday.
Commodities Recap
Gold prices fell from near seven-month highs on a stronger dollar and after a written testimony by a former FBI director to the U.S. Senate was seen as containing few surprises, but declines were limited as uncertainty from the UK election remained.
Spot gold was down 0.6 percent at $1,285.17 an ounce by 3:34 p.m. EDT (1934 GMT). On Tuesday, it gained 1.1 percent to its highest since November last year at $1,295.97. U.S. gold futures slipped to settle at $1,293.2.
Oil prices slid 5 percent on Wednesday to a one-month low, after an unexpected increase in U.S. inventories of crude and gasoline fanned fears that output cuts by major world oil producers have not done much to drain a global glut.
U.S. crude futures settled down 5 percent, or $2.47 a barrel, at $45.72 a barrel, the lowest settlement for U.S. crude since May 4. U.S. benchmark futures have slid more than 11 percent in 10 days of trading.
Brent crude prices fell $2.06, or 4 percent to settle at $48.06 a barrel. Official settlement prices were delayed due to a technical issue, according to a Nymex spokesperson
