Market Roundup
• In warning for Trump, Democrats claim win in Pennsylvania.
• Kudlow says he has accepted job as Trump's top economic adviser.
• Atlanta Fed's U.S. Q1 GDP growth view drops below 2 pct.
• U.S. pressing China to cut trade surplus by $100 bln -White House.
• Britain expels 23 Russian diplomats over nerve attack on ex-spy.
• U.S. Feb PPI Final Demand YY, 2.8%, 2.8% forecast, 2.7% previous.
• U.S. Feb PPI Final Demand MM, 0.2%, 0.1% forecast, 0.4% previous.
• U.S. Feb PPI exFood/Energy YY, 2.5%, 2.5% forecast, 2.2% previous.
• U.S. Feb PPI exFood/Energy MM, 0.2%, 0.2% forecast, 0.4% previous.
• U.S. Feb Retail Sales MM, -0.1%, 0.3% forecast, -0.3% previous -0.1% revised.
• U.S. Jan Business Inventories MM, 0.6%, 0.6% forecast, 0.4% previous 0.6% Japan.
• U.S. MBA Mortgage Applications w/e, 0.9%, 0.3% previous.
• CA Mar TR IPSOS PCSI, 53.64, 55.72 previous.
• Canada home prices dip in Feb, Toronto pulls back.
• Japan leaves door open for PM Abe-Kim Jung Un summit.
• ECB to end bond buys when inflation is on sustainable path: Draghi
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Q4 GDP Production QQ, 0.7% forecast, 0.6% previous
• 21:45 New Zealand Q4 GDP - Annl-Avg, Prod-Bas, 2.9% forecast, 3.0% previous
• 21:45 New Zealand Q4 GDP - Annual, 3.1% forecast, 2.7% previous
• 21:45 New Zealand Q4 GDP Expenditure QQ, 0.7% forecast, 0.9% previous
• 23:50 Japan Foreign Bond Investment w/e JPY, -1,188.5 bln previous
• 23:50 Japan Foreign Invest JP Stock w/e JPY, -463.4 bln previous
Looking Ahead - Events, Other Releases (GMT)
• 08:30 Swiss National Bank monetary policy assessment – Bern
• 09:00 Norway Central Bank announces interest rate decision and Monetary Policy Report - Oslo
• 09:30 Norway Central Bank holds press conference in Oslo
• 15:45 ECB's Sabine Lautenschlaeger speaks at Florence School of Banking and Finance - Florence, Italy
Currency Summaries
EUR/USD is likely to find support at 1.2272 levels and currently trading at 1.2365 levels. The pair has made session high at 1.2395 and hit lows at 1.2345 levels. The euro dipped against US dollar on Wednesday as greenback edged higher after three straight days of losses, as investors booked profits on their short currency bets, but the outlook remained murky amid political uncertainty in the Trump administration and renewed worries about trade wars.U.S. President Donald Trump's firing of U.S. Secretary of State Rex Tillerson on Tuesday, a week after the resignation of U.S. economic adviser Gary Cohn, has underscored an uncertain environment in the administration that is sure to scare away top-level talent. Tillerson was replaced by Central Intelligence Agency Director Mike Pompeo, who is said to mirror Trump's hard-line stance on international political issues. On the economic front, U.S. retail sales data on Wednesday did not really help the dollar. Retail sales fell, offsetting a stronger-than-forecast rise in domestic producer prices last month. That should further prompt the Federal Reserve to raise interest rates at a gradual pace. The market still expects the Fed to raise rates three times this year, starting at next week's monetary policy meeting. The dollar index rose 0.06 percent, with the euro down 0.14 percent to $1.2374.
GBP/USD is supported in the range of 1.3877 levels and currently trading at 1.3964 levels. It reached session high at 1.3992 and dropped to session low at 1.3921 levels. Sterling pulled back from a three-week high on Wednesday after the dollar rebounded, and traders said investors were cautious about pushing the pound much higher until there was clarity on the terms of a Brexit transition deal. The pound had risen to its highest level since Feb. 27 earlier on Wednesday when it hit $1.3996 against the dollar, before slipping back. It traded at $1.3965, down 0.1 percent, at 2015 GMT, while it was flat versus the euro. The dismissal of U.S. Secretary of State Rex Tillerson had undermined the dollar on Tuesday and into Wednesday, but the greenback recovered slightly as U.S. markets opened, even as data showed U.S. retail sales fell for a third straight month. There were no economic data to drive the pound on Wednesday, and traders remained focused on the Bank of England policy meeting next week and a European Union leaders summit where Britain has said it will announce a deal on its relations with the bloc immediately after Brexit.Sterling hit $1.4346 on Jan. 25, its highest level against the U.S. dollar since Britain voted to leave the European Union in June 2016.
USD/CAD is supported at 1.2844 levels and is trading at 1.2954 levels. It has made session high at 1.2976 and lows at 1.2915 levels. The Canadian dollar strengthened against the greenback on Wednesday, boosted by a rise in oil prices after strong Chinese factory activity lifted investor enthusiasm for commodities. With little in the way of domestic drivers to influence the loonie, the currency followed oil around in a choppy session, while traders were also consolidating positions the day after dovish comments from the Bank of Canada. The loonie was able to recover some of Tuesday's nearly 1 percent decline after the head of the central bank Stephen Poloz said a degree of untapped potential remains in the Canadian labor market, reinforcing expectations the central bank will take its time raising interest rates further. The central bank has raised rates three times since July 2017 and has said it will be cautious in considering further moves. Markets see an 80 percent likelihood that the bank hikes again in July. Data showed China's industrial output grew 7.2 percent in the first two months of the year compared with the year before, topping expectations and boosting optimism over the outlook for commodities. The Canadian dollar was trading up 0.1 percent at C$1.2954 to the greenback, or 77.24 U.S. cents.
USD/JPY is supported around 105.78 levels and currently trading at 106.28 levels. It peaked to hit session high at 106.35 and made session lows at 106.03 levels. The U.S. dollar dipped against the Japanese yen on Wednesday as U.S. President Donald Trump contemplated broad tariffs against China, adding fuel to fears of a global trade war. Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors. That sent dollar lower and demand for safe-haven increased fearing that the move may sow further turmoil in the already tumultuous Trump administration. It was also stung by inflation data that matched low expectations, affirming the possibility of only three Fed rate hikes for the year. Yen is seen as a safe haven during times of political and financial uncertainty and benefited on Tuesday when President Donald Trump fired Tillerson after a series of public rifts over policy, replacing him with loyalist CIA Director Mike Pompeo. Meanwhile, data on Tuesday showed U.S. consumer prices cooled in February amid a decline in gasoline prices and a moderation in the cost of rental accommodation, the latest indication that an anticipated pick-up in inflation probably will be gradual.
Equities Recap
European shares dipped on Wednesday as strong results from Adidas and robust mining stocks were more than offset by weak banks and a drop in Italian stocks over fresh political jitters.
UK's benchmark FTSE 100 closed up by 0.06 percent, the pan-European FTSEurofirst 300 ended the day down by 0.07 percent, Germany's Dax ended up by 0.05 percent, France’s CAC finished the day down by 0.07 percent.
U.S. stocks fell on Wednesday after President Donald Trump sought to impose fresh tariffs on China, intensifying fears of a trade war that could raise costs and hurt overseas sales for U.S. companies.
Dow Jones closed down by 0. 98 percent, S&P 500 ended down 0. 0.56 percent, Nasdaq finished the day down by 0.18 percent.
Treasuries Recap
The U.S. Treasury yield curve flattened on Wednesday as the market turned cautious over rising diplomatic tension between Britain and Russia, weak U.S. economic data and concerns over U.S. political and trade issues.
The yield on the 10-year U.S. Treasury was down 2.9 basis points at 2.819 percent, the 30-year yield down 3.9 basis points at 3.062 percent. Three-year yields were down 1.8 basis points at 2.405 percent, two-year yields were down half a basis point at 2.258 percent.
Commodities Recap
Gold prices edged lower on Wednesday, pressured by a recovering dollar and an expectation of higher interest rates, but supported by safe-haven buying after the sudden dismissal of U.S. Secretary of State Rex Tillerson.
Spot gold declined 0.1 percent at $1,324.40 per ounce by 1:36 p.m. EST (1736 GMT), earlier touching $1,330.02, its highest since March 7.U.S. gold futures for April delivery settled down $1.50, 0.1 percent, at $1,325.60 per ounce.
Oil prices gained 0.4 percent in choppy trade on Wednesday, after a report showing a bigger-than-expected U.S. crude stock build was offset by large distillate and gasoline inventory draws.
Brent crude oil futures were up 25 cents, or 0.4 percent, to settle at $64.89 per barrel. U.S. West Texas Intermediate (WTI) futures also gained 25 cents, to settle at $60.96 per barrel.
