Market Roundup
- U.S. January housing starts fall 3.8 percent, producer prices rise 0.1 percent.
- U.S. January industrial output rises 0.9 percent.
- Fed Minutes (Jan): discussed altering the appropriate path for the Fed Funds rate.
- Fed Minutes (Jan): number of members viewed risk to inflation outlook as being to downside, were concerned about drag on economy from possible greater-than-expected in China, other Ems.
- Mexico hikes key rate 50bps, peso surges after surprise fx intervention; Banxico moves to discretionary intervention program.
- Fed's Kashkari: need to keep accommodative monetary policy, productivity appears to be slowing down.
- BAML pares U.S. rate hike outlook for 2016 eyes June/Dec hikes drops f/c for Sept hike.
- Oil up 5.3 percent as Iran welcomes output freeze without word on cuts.
- UK wage growth (1.9%) slows to lowest since Feb, unemployment rate unchanged (5.1% vs 5% forecast
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Foreign Bond Buying *w/e 1454.0b-previous
- 23:50 Japan Foreign Invest JP Stock* w/e -610.4b- previous
- 23:50 Japan Exports YY*Jan forecast -11.3%, -8%- previous
- 23:50 Japan Imports YY*Jan forecast -16%, -18%- previous
- 23:50 Japan Trade balance Total Yen*Jan forecast -680.2b, 140.2b- previous
- 00:30 Australia Employment* Jan forecast 15.0K, -1.0K- previous
- 00:30 Australia Full Time Employment* Jan 17.6K- previous
- 00:30 Australia Participation Rate* Jan forecast 65.2%, 65.1%- previous
- 00:30 Australia Unemployment Rate*Jan forecast 5.8%, 5.8%- previous
- 01:30 China PPI YY* Jan forecast -5.4%, -5.9%- previous
- 01:30 China CPI YY*Jan forecast 1.9%, 1.6%- previous
- 01:30 China CPI MM* Jan forecast 0.5%, 0.5%- previous
Currency Summary
EUR/USD is likely to find support at 1.1200 levels and currently trading at 1.1257 levels. The pair has made session high at 1.1275 and hit lows at 1.1214 levels. The dollar rose against euro on Wednesday after data showed U.S. industrial production appeared to have regained its strength in January, supporting the view the Federal Reserve may still raise interest rate. Industrial production jumped 0.9 percent last month, largest gain since November 2014. The increase followed a 0.7 percent decline in December and was boosted by 0.5 percent advance. U.S. housing starts, meanwhile, unexpectedly fell in January likely as bad weather disrupted building activity in some parts of the country. The markets, however, largely shrugged off this report. Meanwhile, the low-yielding euro was down 0.1 percent at $1.1040 while sterling edged up from a two-week low against the dollar after mixed data from the UK labor market showed wage growth slowing but the number of people in employment reaching a record high.
GBP/USD is supported in the range of 1.4225 and currently trading at 1.4293 levels. It reached session high at 1.4338 and hit low at 1.4233 levels. British pound edged up from a two-week low against the dollar on Wednesday, as a bounce in oil prices pushed investors 'towards for riskier currencies after mixed data from Britain's labour market. The pound had fallen to $1.4235 in afternoon trading in Europe, its weakest since Feb 1, after strong U.S. industrial data pushed the dollar higher across the board. But with oil prices rising more than 5 percent to above $34 a barrel after Iran voiced its support for a plan to freeze production, sterling edged up to hit high at 1.4336 level. It was trading up 0.1 percent on the day at $1.4310. Against the euro, the pound was up 0.2 percent at 77.815 pence.
USD/CAD is supported at 1.3630 levels and is trading at 1.3677 levels. It has made session high at 1.3727 and lows at 1.3663 levels. The Canadian dollar strengthened against its U.S. counterpart on Wednesday as crude oil prices surged higher on output talks, while domestic data pointed to a shift toward manufacturing as a driver of growth. Oil prices rose as efforts led by Russia and Saudi Arabia to broker a deal to freeze production levels and ease a global glut turned to Iran. Its oil minister was to speak later Wednesday morning about the producers' meeting. On the data front, Commercial borrowing by small businesses in Canada picked up in December on strength in sectors such as manufacturing and agriculture. PayNet's Canadian small business lending index rose to 138.3, from 132.6 in November. The currency's strongest level of the session was C$1.3784, while its weakest was C$1.3899.
AUD/USD is supported around 0.71125 levels and currently trading at 0.7184 levels. It hit session high at 0.7190 and made session lows at 0.7164 levels. The Australian dollars edged higher against dollar on Wednesday after oil prices rose 7 percent after Iran supported a Russia-Saudi-led move to freeze production to deal with oversupply of crude oil that had pressured crude prices to their lowest in a dozen years. The Australian dollar rose to hit Fridays high at 0.7182 levels. Analysts cited buyers around $0.7200 and a break above would target $0.7250. Support was found at $0.7130. The Aussie remained vulnerable to more swings in sentiment as the market awaits to see the latest balance of opinion among policy makers on the prospect of further rate hikes by the Fed.
Equities Recap
European stocks rallied on Wednesday, boosted by optimism over a deal to freeze oil output, with French bank Credit Agricole and miner Glencore leading the bounce.
UK's benchmark FTSE 100 closed up by 2.71 percent, the pan-European FTSEurofirst 300 ended the day up by 2.58 percent, Germany's Dax closed up at 2.68 percent, and France's CAC finished the day up by 2.93 percent.
Wall Street steamed toward a third straight session of gains on Wednesday, led by energy shares as oil prices jumped.
Dow Jones closed up by 1.57 percent, S&P 500 ended the day up by 1.63 percent, Nasdaq finished the day up by 2.19 percent.
Treasuries Recap
U.S. Treasury prices fell on Wednesday, with benchmark yields rising to their highest in 1-1/2 weeks, as gains in U.S. stocks and encouraging data on producer prices and factory production reduced the appeal of low-yielding bonds.
Benchmark 10-year Treasury notes were down 11/32 in price to yield 1.816 percent, up 4 basis points from Tuesday.
The 30-year bond last traded 25/32 lower in price, yielding 2.680 percent, up 4 basis points on the day.
Commodities recap
Oil prices rose 7 percent on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production to deal with the market glut that had pressured crude prices to their lowest in a dozen years.
Brent settled up $2.32, or 7.2 percent, at $34.50 a barrel. Options expiry in U.S. crude also fed the rebound, some traders said. U.S. crude closed up $1.62, or 5.6 percent, at $30.66 a barrel.
Gold held onto earlier gains and snapped three days of losses on Wednesday, after minutes of the U.S. Federal Reserve's latest meeting showed policymakers considered changing their planned path of interest rate hikes in 2016.
Spot gold was up 0.6 percent at $1,207.46 an ounce at 2:48 p.m. EST (1948 GMT), while U.S. gold futures for April delivery settled up 0.3 percent at $1,211.40.
