Market Roundup
- U.S. private sector adds 205,000 jobs in January -ADP.
- Final Markit Services PMI 53.2, -0.5-pt from prelim; lowest since Oct 13.
- ISM Jan services index slips to 53.5 vs forecast 55.1.
- Fed's Dudley: Tightening financial conditions (weak global economy/USD strength) a concern- MNSI.
- Bets against China's yuan build as traders eye G20 deal.
- UST Yields fall to one-year lows as data stokes U.S. economic fears.
- Oil bounces 8 percent as USD tumbles after U.S. data, Dudley comments.
- Bill Gross warns global markets, economies increasingly addled, distorted.
- France sees EU proposals for Britain as basis for talks, but within limits.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Foreign Bond Investment *w/e 475.3b-previous
- 23:50 Japan Foreign Invest JP Stock *w/e -189.2b- previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events.
Currency Summaries
EUR/USD is likely to find support at 1.1061 levels and currently trading at 1.1104 levels. The pair has made session high at 1.1147 and hit lows at 1.1106 levels. The dollar sharply declined against the euro on Wednesday after data showed U.S. services sector slowed to two-year low in January, indicating that US economic growth weakened further at beginning of the first quarter. The weaker-than-expected data showed the U.S. economy's services sector expanded in January, but at a modest pace than the previous month, suggesting that Fed would not hike interest rate sooner. The euro rose over 2 percent against the dollar to hit $1.11455, the euro was on track to mark its biggest single-day percentage gain since Dec. 3. The currency's strongest level of the session was $1.1147, while its weakest level was $1.1062.
GBP/USD is supported in the range of 1.4530 levels and currently trading at 1.4600 levels. It reached session high at 1.4649 and dropped to session low at 1.4522 levels. Sterling rose against US dollar on Wednesday to hit three week high as the poor U.S. data hammered the greenback lower, while data showed British services sector advanced robustly. The sterling was boosted by the release of a draft plan aimed at keeping Britain in the European Union. currency pair was supported by signs of a deal on cards in Brussels later this month that will give British Prime Minister David Cameron something to fight for in a referendum on Britain's EU membership. The pound rose 1.25 percent to $1.4591 in the early US session . Against the euro, sterling was steady at 75.76 pence.
USD/CAD is supported at 1.3750 levels and is trading at 1.3791 levels. It has made session high at 1.3930 and lows at 1.3751 levels. The Canadian dollar rallied against US dollar on Wednesday as oil prices bounced 8 percent and the dollar was broadly sold across the board after weak US data. Markets shrugged off government data which showed U.S. crude inventories rose to record levels last week. Crude soared 7.8 million barrels higher, better than analyst's expectation for a rise of 4.8 million barrels. The dollar decline started after poor US services data followed by comments from New York Fed chief William Dudley who said the weakening outlook for the global economy and any further strengthening of the dollar could have significant consequences for the health of the U.S. economy. The currency's reached its strongest level since Jan. 4 at C$1.3785, while its weakest level was C$1.4103.
USD/JPY is supported around 117.00 levels and currently trading at 117.87 levels. It hit session high at 117.87 and made session lows at 117.03 levels. The dollar declined against Japanese Yen on Wednesday after data showed U.S. services sector slowed to a near two-year low in January, suggesting that economic growth weakened further at the start of the first quarter even as the labor market remains resilient. The Institute for Supply Management (ISM) said non-manufacturing activity fell to 53.5 last month, the lowest level since February 2014, from 55.8 in December. The dollar index, which measures the greenback against a basket of six major currencies, hit 96.885, its lowest level in three months. The dollar hit 0.99890 franc, its lowest level against the franc in two and a half weeks. The dollar was last down 1.73 percent against the yen at 117.875 yen while the dollar index was last down 1.59 percent at 97.290.
Equities Recap
European shares fell sharply on Wednesday as disappointing economic data from the United States further undermined sentiment already hurt by weak earnings updates.
UK's benchmark FTSE 100 closed down by 1.41 percent, the pan-European FTSEurofirst 300 ended the day down by 1.61 percent, Germany's Dax ended down by 1.56 percent, France's CAC finished the day down by 1.34 percent.
The US stocks turned higher Wednesday, with the Dow rallying 1 percent as energy shares jumped with oil prices and financial shares cut losses to trade flat.
Dow Jones closed up by 1.13 percent, S&P 500 ended up by 0.50 percent, Nasdaq finished the day down by 0.30 percent.
Treasuries Recap
U.S. Treasury yields ended higher on Wednesday as oil prices and stocks gained, after earlier falling to one-year lows on data that showed slowing growth in the U.S. service sector, adding to concerns about the weakening U.S. economy.
The benchmark 10-year note yields plunged below technical resistance to a low of 1.7930 percent, the lowest since Feb. 5, 2015, before rising back to 1.883 percent.
Commodities Recap
Oil prices jumped 8 percent higher on Wednesday, snapping a two-day rout, after investors took advantage of a weaker U.S. dollar and shrugged off data showing an unexpected large surge in U.S. crude inventories to record highs.
U.S. crude closed with one its biggest gains in five months, rising $2.40, or 8 percent, to $32.28.
Brent futures settled up $2.32, or 7.1 percent, at $35.04 a barrel, after rising as high as $35.11.
Gold hit three-month highs on Wednesday, buoyed by a slower U.S. services sector and sinking dollar, prompting investors to seek shelter in assets perceived as safer as future Fed rate hikes appeared less likely.
Spot gold was up 0.9 percent at $1,138.60 an ounce at 2:44 p.m. EST (1944 GMT), having earlier touched its strongest since Oct. 30 at $1,145.60.
U.S. gold for April delivery settled up 1.3 percent at $1,141.30 an ounce.
