Market Roundup
•Canada Apr ADP Nonfarm Employment Change 247K, 395K forecast, 455K previous
•Canada Mar Imports 61.14B, 58.11B forecast, 56.08B previous
•Canada Mar Trade Balance 2.49B, 3.90B forecast, 2.66B previous
•Canada Exports 63.63B,61.76B forecast, 58.75B previous
•US Mar Trade Balance -109.80B, -107.00B forecast, -89.20B previous
•US Imports 351.50B, 317.80B previous
•US Exports 241.70B, 228.60B previous
•US Apr Markit Composite PMI 56.0, 55.1 forecast, 57.7 previous
•US Apr Services PMI 55.6, 54.7 forecast, 58.0 previous
•US Apr ISM Non-Manufacturing New Orders 54.6, 60.1 previous
•US Apr ISM Non-Manufacturing Employment 49.5, 54.0 previous
•US Apr ISM Non-Manufacturing PMI 57.1, 58.5 forecast, 58.3 previous
•US Cushing Crude Oil Inventories 1.379M, 1.298M previous
•US Crude Oil Inventories 1.302M -0.829M forecast, 0.692M previous
Looking Ahead - Economic Data (GMT)
•Australia Mar Imports (MoM) 12% previous
•Australia Mar Private House Approvals 16.5% previous
•Australia Mar Trade Balance 8.500B forecast, 7.457B previous
Looking Ahead - Economic events and other releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro gained against the U.S. dollar Wednesday after the U.S. central bank raised interest rates by 50 basis points but sounded a less hawkish tone sending the dollar lower. The Federal Reserve raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years. Fed Chair Jerome Powell said policymakers were ready to approve half-percentage-point rate hikes at upcoming policy meetings in June and July. However, Powell also said the Fed was not actively considering a 75 basis-point rate hike, tempering some market expectations for an aggressive tightening path. The euro rose to $1.0606, up 0.82% on the day, and is up from $1.0470 on Thursday, which was the lowest since January 2017. Immediate resistance can be seen at 1.0677 (50%fib), an upside break can trigger rise towards 1.0755(61.8%fibA).On the downside, immediate support is seen at 1.0591(38.2%fib), a break below could take the pair towards 1.0483 (23.6%fib).
GBP/USD: The British strengthened against weaker dollar Wednesday as investors awaited Thursday’s Bank of England (BoE) meeting. The BoE policy announcement on Thursday will be the key event for sterling this week, with policymakers expected to raise interest rates for the fourth consecutive meeting, the first such run since 1997. The pound has weakened in recent weeks on expectations that the BoE may have to slow the pace of tightening as the central bank battles with above-target inflation and a cost-of-living crisis that is showing signs of weighing on economic activity. Immediate resistance can be seen at 1.2680(50%fib), an upside break can trigger rise towards 1.2769(61.8%fib).On the downside, immediate support is seen at 1.2576(38.2%fib), a break below could take the pair towards 1.2456 (23.6%fib).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rose and investors took in stride a half-percentage-point interest rate increase by the Federal Reserve. The Bank of Canada bank has also been hiking rates, as a strong domestic economy adds to prices pressures. Canadian data showed that exports and imports rose to record highs in March, while the trade surplus narrowed to C$2.5 billion. The price of oil, one of Canada's major exports, jumped as the European Union spelled out plans to phase out imports of Russian oil, offsetting demand worries in top importer China. The currency traded in a range of 1.2730 to 1.2853. On Monday, it touched its weakest in over four months at 1.2913.Immediate resistance can be seen at 1.2764 (38.2%fib), an upside break can trigger rise towards 1.2838 (23.6%fib).On the downside, immediate support is seen at 1.2700(50%fib), a break below could take the pair towards 1.2641(61.8%fib).
USD/JPY: The dollar declined against yen on Wednesday after Federal Reserve Chairman Jerome Powell played down the prospect of a 75 basis point rate hike, even as he said the U.S. central bank will act aggressively to stamp out inflation.Powell said in a press conference following the Fed’s policy statement that the U.S. central bank is not actively considering a 75 basis point increase, but that additional 50 basis point jumps should be on the table for the next couple of meetings. It came after the Fed raised its benchmark overnight interest rate by 50 basis points, the biggest increase in 22 years, in a widely expected decision. Strong resistance can be seen at 130.54(23.6%fib), an upside break can trigger rise towards 131.53(Higher BB).On the downside, immediate support is seen at 129.18 (5DMA), a break below could take the pair towards 128.26(38.2%fib).
Equities Recap
European stocks closed notably lower on Wednesday with traders choosing to lighten commitments ahead of the Federal Reserve's monetary policy announcement, due later in the day.
UK's benchmark FTSE 100 closed up by 0.90 percent, Germany's Dax ended down by 0.49 percent, France’s CAC finished the day down by 1.24 percent.
U.S. stocks ended sharply higher on Wednesday after the Federal Reserve delivered a widely expected interest-rate hike, and the S&P 500 recorded its biggest one-day percentage gain in nearly two years.
Dow Jones closed up by 2.81% percent, S&P 500 closed up by 2.99 % percent, Nasdaq settled up by 3.19% percent.
Treasuries Recap
U.S. Treasury yields reversed earlier gains on Wednesday in volatile trading after Federal Reserve Chairman Jerome Powell said the Fed has ruled out, for now, a rate hike of three-quarters of a percentage point at upcoming monetary policy meetings.
U.S. yields on other shorter-term maturities such as three-year and five-year notes also declined sharply by 9 bps and 7 bps to 2.855% and 2.936%, respectively.
U.S. 10-year yields slipped about 2 bps to 2.940%, after hitting 3.011%, the highest since December 2018.
Commodities’ Recap
Gold bounced higher on Wednesday as the dollar and U.S. Treasury yields slipped after Federal Reserve Chair Jerome Powell, following an expected interest rate hike, flagged risks to the economy from soaring inflation.
Spot gold was up 0.9% at $1,898.06 per ounce, as of 0102 GMT, after rising 1% earlier in the session. U.S. gold futures rose 1.4% to $1,894.20.
Oil prices jumped on Wednesday, as the European Union, the world's largest trading bloc, spelled out plans to phase out imports of Russian oil, raising concerns about further market tightness as those nations hunt for adequate supply.
Brent crude futures settled up $5.17, or 4.9%, to $110.14 a barrel. West Texas Intermediate crude futures settled at $107.81 a barrel, up $5.40, or 5.3%.
