Market Roundup
• U.S. ADP private sector job growth slows, to 3-yr low, in April 156k vs 196k forecast.
• Markit Svcs PMI final 52.8 v 52.1 previous, Markit Comp PMI final 52.4 v 52.1 previous.
• U.S. factory orders rise (1.1% vs -1.9% in Feb) solidly; inventories pick up.
• US ISM Non-Mfg PMI rises more than forecast to 55.7 in April from 54.5 in Mar, price paid /Emp gain as well
• Canada trade deficit widens to record CAD 3.4 bln in March.
• Goldman Sachs lifts Q1 GDP estimate to 0.8 from 0.7%, Barclays to 0.9% from 0.7% after rise in US factory orders.
• Atlanta Fed’s GDPNow Q2 GDP on track to grow 1.7% down from 1.8% on Monday.
• Fed’s Potter: tools used to lift US rates from near zero have gone as well as could have been expected.
• Germany’s Merkel: G7 needs triad of structural reforms, investment & policy measures.
• Japan’s Abe: We need an expansive monetary policy; sees speculative moves in FX market, will act if necessary.
• Brazil’s Senate recommends President Rousseff be put on trial.
• Janus’s Gross: interest rates will stay low for longer asset prices will remain artificially high.
Looking Ahead - Economic Data (GMT)
• 01:00 Australia HIA New Home Sales m/m Mar -5.3%-previous
• 01:30 Australia Retail Sales MM* Mar forecast 0.3%, 0%- previous
• 01:30 Australia Retail Trade* Q1 forecast 0.7%, 0.6%- previous
• 01:30 Australia Trade Balance G&S (A$)* Mar forecast -2900m, -3410m- previous
• 01:30 Australia Goods/Services Imports* Mar 0%- previous
• 01:30 Australia Goods/Services Exports* Mar -1%- previous
• 01:45 China Caixin Services PMI Apr 52.2- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1447 levels and currently trading at 1.1489 levels. The pair has made session high at 1.1517 and hit lows at 1.1466 levels. The U.S. dollar inched higher against euro on Wednesday as investors preferred riskier assets as U.S. trade and factory orders eased some worries about the sub-1 percent growth path the world's biggest economy was stuck on in the first quarter. The U.S. services sector expanded in April as new orders and employment accelerated, bolstering views that economic growth would rebound after almost stalling in the first quarter. The Institute for Supply Management said its nonmanufacturing index rose 1.2 percentage points to a reading of 55.7 in April. These figures overshadowed news from payroll processor ADP that companies added 156,000 workers in April, the smallest monthly gain in two years. The dollar index which measures the greenback's value against the euro, yen and four other currencies, was up 0.3 percent at 93.242, rebounding from its lowest in more than 15 months on Tuesday.
GBP/USD is supported in the range of 1.4420 and currently trading at 1.4495 levels. It reached session high at 1.4542 and hit low at 1.4465 levels. Sterling fell against the dollar on Wednesday as data from Britain's construction sector added to a subdued outlook for the economy just months before the vote on Britain's future in the European Union. Construction output in Britain grew at its slowest rate in nearly three years in April, a survey showed on Wednesday, suggesting the economy was losing steam before next month's referendum. Data showed, UK Construction Purchasing Managers' Index (PMI) fell by more than expected to 52.0 from 54.2 in March. Sterling fell 0.35 percent to $1.4484, almost three U.S. cents away from the four-month high of $1.4770 it had hit on Tuesday.
USD/CAD is supported at 1.2807 levels and is trading at 1.2867 levels. It has made session high at 1.2886 and lows at 1.2698 levels. The Canadian dollar weakened sharply against US dollar on Wednesday after disappointing domestic trade data and as a wildfire threatened production in the country's oil sands region. Canada's trade deficit in March widened to a record $2.69 billion as exports sank for a second month on weak demand from the crucial U.S. market, Statistics Canada said on Wednesday. The deficit, far greater than a C$1.40 billion shortfall surprised analysts as Canada is already struggling to deal with the prolonged effects of an oil price slump. Meanwhile U.S. crude inventories data showed bigger than expected build pushing oil markets lower on Wednesday.
AUD/USD is supported around 0.7410 levels and currently trading at 0.7455 levels. It hit session high at 0.7485 and made session lows at 0.7446 levels. The Australian dollar declined to hit a seven-week low against US dollar on Wednesday after the central bank's first rate cut in a year and sliding commodity prices further weakened the currency pair. The market has recently held very long positions on the Aussie dollar as a yield play and was caught off-guard by the Reserve Bank of Australia's rate cut to a record low of 1.75 percent. Also weighing on Australian dollar was sliding commodity prices with iron ore, Australia's top export earner, slipping 4 percent on Tuesday. The Australian currency was trading at at $0.7455 levels in the late US session, having sunk as low as $0.7446, its lowest since mid-March and down two cents on the day.
Equities Recap
European stocks fell on Wednesday, with Dialog Semiconductor slumping after it cut its revenue outlook and BHP Billiton hit by news of a lawsuit filed against it in Brazil.
UK's benchmark FTSE 100 down by 1.28 percent, the pan-European FTSEurofirst 300 ended the down by 1.26 percent, Germany's Dax ended down by 1.15 percent, France’s CAC finished the day down by 1.25 percent.
U.S. stocks declined for a second day on Wednesday, weighed down by tepid data on private sector U.S. jobs and a retreat in biotech shares.
Dow Jones closed down by 0.56 percent, S&P 500 ended down by 0.59 percent, Nasdaq finished the day down by 0.79 percent.
Treasuries Recap
U.S. Treasury yields edged lower on Wednesday as a spate of economic data offered scant clarity on the health of the U.S. economy or how quickly the Federal Reserve may proceed with another interest rate increase.
The 10-year note was last up 5/32 in price to yield 1.780 percent. Yields across the curve hovered just below late Tuesday's levels.
Commodities Recap
Gold fell 1 percent on Wednesday, falling further away from a 15-month high on pressure from the strong U.S. dollar, which retreated from recent lows against the yen and euro as U.S. trade and factory order data eased some worries.
Spot gold was down 1 percent at $1,272.66 an ounce at 2:29 p.m. EDT (1829 GMT), extending losses below Monday's 15-month high above $1,300.
The U.S. futures contract for June delivery settled down 1.3 percent at $1,274.40 an ounce.
A bigger-than-expected build in U.S. crude inventories to fresh record highs pushed oil markets lower on Wednesday after an early rally over concerns about production cuts in Canada's oil sands region due to a wildfire.
U.S. crude futures settled at $43.78 a barrel, up 13 cents or 0.30 percent, while Brent crude settled down 35 cents or 0.78 percent at $44.62 a barrel.
