Market Roundup
• Fed raises rates by 75 bps, as expected,flags more hikes
•US indexes down: Dow 1.7%, S&P 1.71%, Nasdaq 1.79%
•US Aug Existing Home Sales (MoM) -0.4%,-5.9% previous
•US Aug Existing Home Sales 4.80M,4.70M forecast, 4.81M previous
•US EIA Weekly Distillates Stocks 1.142M, 0.420M forecast, 4.219M previous
•US Gasoline Inventories 1.569M,-0.431M forecast, -1.767M previous
•US Gasoline Production 0.006M,-0.399M previous
•US Cushing Crude Oil Inventories 0.343M,-0.135M previous
•US Crude Oil Inventories 1.142M,2.161M forecast, 2.442M previous
•US Fed Interest Rate Decision 3.25%,3.25% forecast, 2.50% previous
Looking Ahead - Economic Data (GMT)
•23:30 Japan Foreign Investments in Japanese Stocks -609.7B previous
•23:30 Japan Foreign Bonds Buying -140.7B previous
•02:30 Japan BoJ Interest Rate Decision -0.10% forecast, -0.10% previous
•05:00 Japan BoJ Core CPI (YoY) 1.9% forecast, 1.8% previous
Looking Ahead - Economic events and other releases (GMT)
• 03:00 Japan BoJ Monetary Policy Statement
•06:30 Japan BoJ Press Conference
Currency Summaries
EUR/USD: The euro declined on Wednesday as dollar strengthened after the Federal Reserve raised interest rates by another 75 basis points and signalled more large increases at its upcoming meetings. The U.S. central bank’s target interest rate was increased to a range of 3.00%-3.25% and new projections showing its policy rate rising to 4.40% by the end of this year before topping out at 4.60% in 2023.It comes as the Fed battles persistent inflation that is running near 40-year highs. The euro, the largest component in the dollar index, dropped to a 20-year low, hitting $0.9810 . Europe's single currency last changed hands at $0.9852, down 1.2%. Immediate resistance can be seen at 0.9900(Psychological level), an upside break can trigger rise towards 0.9935 (5DMA).On the downside, immediate support is seen at 0.9829(23.6%fib), a break below could take the pair towards 0.9816(Lower BB).
GBP/USD: The pound touched a new 37-year low against the dollar on Wednesday after the U.S. Federal Reserve hiked interest rates by an expected 75 basis points. The Federal Reserve raised its target interest rate by three-quarters of a percentage point, and signalled more increases. Federal Reserve Chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would keep at their battle to beat down inflation, as the U.S. central bank hiked interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year. Sterling fell to a new 37-year low of $1.1237 and last traded at $1.1272, down nearly 1%. Immediate resistance can be seen at 1.1357(9DMA), an upside break can trigger rise towards 1.1430 (38.2%fib).On the downside, immediate support is seen at 1.1240 (23.6%fib), a break below could take the pair towards 1.1207(Lower BB).
USD/CAD: The Canadian dollar slumped to a two-year low against its U.S. counterpart on Wednesday before paring its decline, as investors weighed the Federal Reserve’s plans to continue raising interest rates to tackle inflation. The U.S. dollar extended recent gains against a basket of major currencies as the Fed raised its target interest rate by three-quarters of a percentage point to a range of 3.00% to 3.25%. The price of oil, one of Canada’s major exports, settled 1.2% lower at $82.94 a barrel as the Fed’s hawkish signal offset concerns of tighter oil and gas supply after an escalation of the war in Ukraine.The Canadian dollar was trading 0.3% lower at 1.34 to the greenback, or 74.63 U.S. cents, after touching its weakest since August 2020 at 1.3445.. 13 at 1.3192. Immediate resistance can be seen at 1.3484(Higher BB), an upside break can trigger rise towards 1.3513 (23.6%fib).On the downside, immediate support is seen at 1.3438 (38.2%fib), a break below could take the pair towards 1.3371 (50%fib).
USD/JPY: The dollar strengthened against the Japanese yen on Wednesday after the U.S. Federal Reserve delivered another hefty rate hike to contain inflation.At the end of its two-day meeting, the Fed lifted its policy rate by 75 basis points for the third time to a 3.00-3.25% range. Most market participants had expected such an increase, with only a 21% chance of a 100 bps rate hike seen prior to the announcement. The dollar posted minor gains against the yen compared to other currencies, rising as high as 144.695 yen. The greenback last traded at 143.98 yen, up 0.2% on the day. Traders remained wary of pushing the dollar higher given the threat of Japan intervention to boost the yen. Strong resistance can be seen at 144.71 (Daily high), an upside break can trigger rise towards 145.00(Psychological level). On the downside, immediate support is seen at 143.53 (5DMA), a break below could take the pair towards 142.56(38.2%fib).
Equities Recap
Despite concerns about economic slowdown, rising interest rates and geopolitical tensions, European stocks moved higher on Wednesday.
The UK's benchmark FTSE 100 closed upby 0.63 percent, Germany's Dax ended up by 0.76 percent, and France’s CAC finished the day up by 0.87 percent.
Wall Street's main indexes see-sawed before slumping in the final 30 minutes of trading to end Wednesday lower, as investors digested another supersized Federal Reserve hike and its commitment to keep up increases into 2023 to fight inflation.
Dow Jones closed down by 1.70 percent, S&P 500 ended down 1.71 percent, Nasdaq finished the day down by 1.79 percent.
Treasuries Recap
Benchmark 10-year U.S. Treasury yields briefly rose to 11-year highs on Wednesday, and two-year yields were the highest since 2007 as the yield curve continued to invert after the Federal Reserve hiked rates by 75 basis points and signaled more increases are to come.
Benchmark 10-year notes rose to 3.64%, the highest since February 2011, before tracing the increase to be little changed. The yield curve between two-year and 10-year notes inverted further to minus 51 basis points
Commodities Recap
Oil prices fell about 1% to a near two-week low in volatile trade on Wednesday after the U.S. Federal Reserve delivered another hefty rate hike to quell inflation that could reduce economic activity and demand for oil.
Brent crude futures settled 79 cents, or 0.9%, lower at $89.83 a barrel, its lowest close since Sept. 8, while U.S. West Texas Intermediate (WTI) crude fell $1.00, or 1.2%, to $82.94, its lowest close since Sept. 7.
Gold prices rebounded on Wednesday as Treasury yields retreated after the U.S. Federal Reserve hiked interest rates by an expected 75 basis points.
Spot gold was 0.7% higher at $1,673.86 per ounce by 4:12 p.m. EDT (2011 GMT), rising over 1% earlier. U.S. gold futures settled up 0.3% at $1,675.70.
