Market Roundup
•US Employment Wages (QoQ) (Q2) 0.90%, 1.10% previous
•US Employment Benefits (QoQ) (Q2) 1.00%,1.10% previous
•US Employment Cost Index (QoQ) (Q2) 0.9%,1.0% forecast,1.2% previous
•Canada May GDP (MoM) 0.2%, 0.1% forecast,0.3% previous
•US Jul Chicago PMI 45.3, 44.8 forecast,47.4 previous
•US Jun Pending Home Sales Index 74.3, 70.8 previous
•US Jun Pending Home Sales (MoM) 4.8%,1.4% forecast,-2.1% previous
•US Crude Oil Inventories-3.436M, -1.600M forecast,-3.741M previous
Looking Ahead Economic Data (GMT)
• 23:50 Japan Foreign Investments in Japanese Stocks -49.0B previous
•00:30 Japan Jul Manufacturing PMI 49.2 previous
50.0 Looking Ahead Events And Other Releases(GMT)
•No Data Ahead
Currency Forecast
EUR/USD: The euro strengthened on Wednesday as the dollar weakened following the Federal Reserve's decision to hold U.S. interest rates steady while hinting at possible easing in September if inflation slows. The Fed maintained its benchmark overnight interest rate in the 5.25%-5.50% range after its two-day meeting, but suggested the possibility of rate cuts in September, just seven weeks before the U.S. elections. Chair Jerome Powell indicated that there is increasing confidence that a move could occur at the next meeting if inflation data continues to show a softening trend. Investors had anticipated that rates would remain unchanged but expected a strong signal for potential rate cuts starting in September, as the Fed has kept its policy rate in the 5.25%-5.50% range for the past year. Immediate resistance can be seen at 1.0853(Daily high), an upside break can trigger rise towards 1.0909 (23.6%fib).On the downside, immediate support is seen at 1.0800(Psychological level), a break below could take the pair towards 1.0790(Lower BB).
GBP/USD: The pound was little changed against the dollar on Wednesday as investors looked to the Bank of England's (BoE) interest rate decision later in the week and assessed the fallout of spending cuts announced by the new British finance minister Market pricing around the outcome of the BoE meeting has swung wildly in the past few days, and by Wednesday morning was showing around a 63% chance of a cut . Traders are pricing in a near 60% chance that the British central bank will cut interest rates by 25 basis points (bps) to 5.0% on August 1. Immediate resistance can be seen at 1.2906(23.6%fib), an upside break can trigger rise towards 1.2941(July 24tth high).On the downside, immediate support is seen at 1.2824(38.2%fib), a break below could take the pair towards 1.2749(50%fib).
USD/CAD: The Canadian dollar reached a one-week high against its U.S. counterpart on Wednesday, bolstered by data showing faster-than-expected growth in Canada's economy and the Federal Reserve's signal of a possible interest rate cut. Canada's gross domestic product grew by 0.2% in May, surpassing estimates of a 0.1% increase. A preliminary estimate for June indicated the economy expanded by 0.1%, resulting in a quarterly economic growth rate of 2.2%. The price of oil, one of Canada's major exports, rebounded from seven-week lows, settling 4.3% higher at $77.91 a barrel, as tensions increased in the Middle East. The loonie was trading 0.3% higher at 1.3810 per U.S. dollar , after touching its strongest intraday level since last Wednesday at 1.3788. Immediate resistance can be seen at 1.3850 (23.6% fib), an upside break can trigger rise towards 1.3878(Higher BB).On the downside, immediate support is seen at 1.3806 (38.2% fib), a break below could take the pair towards 1.3764 (50% fib).
USD/JPY: The dollar declined against the yen on Wednesday following the Bank of Japan's rate hike, which strengthened the yen. Meanwhile, the Federal Reserve kept rates steady but hinted at potential cuts as early as its September meeting. Fed Chair Jerome Powell indicated that a rate reduction could be considered in September if inflation aligns with expectations, growth remains robust, and the labor market stays healthy. The BOJ raised the overnight call rate target to 0.25% from 0-0.1%, marking the largest increase since 2007. This move comes just months after the BOJ ended eight years of negative interest rates, as the bank's current chief aims to reverse the unconventional policies of his predecessor.Strong resistance can be seen at 151.26(38.2%fib), an upside break can trigger rise towards 153.08 (50%fib). On the downside, immediate support is seen at 149.63(Daily low), a break below could take the pair towards 149.02 (23.6%fib).
Equities Recap
European shares gained on Wednesday with heavyweight ASML jumping on a report that the Dutch chip equipment manufacturer would be exempted from a new U.S. rule on foreign chip equipment exports, while a slate of positive earnings further aided gains.
UK's benchmark FTSE 100 closed up by 1.13 percent, Germany's Dax ended up by 0.53 percent, France’s CAC finished the day down by 0.76 percent.
The S&P 500 and Nasdaq scored their biggest daily percentage gains since Feb. 22 and the Dow rose on Wednesday as chip stocks rallied and the Federal Reserve kept U.S. interest rates unchanged while signaling possible easing in September if inflation cools.
Dow Jones closed up by 0.24% percent, S&P 500 closed up by 1.58 % percent, Nasdaq settled up by 2.63% percent.
Commodities Recap
Gold prices continued to rise on Wednesday after Federal Reserve Chair Jerome Powell suggested that an interest rate cut might be possible as early as September, provided inflation remains aligned with expectations.
.Spot gold was up 1.2% at $2,437.39 per ounce as of 3:21 p.m. ET (1921 GMT) and logged its biggest monthly rise since March, gaining over 4%. U.S. gold futures settled 0.9% higher at $2,473.
Oil prices surged nearly 3% on Wednesday as investors expressed concerns that the Middle East conflict could escalate following the killing of a Hamas leader in Iran.
Global benchmark Brent crude futures for September delivery , which expired on Wednesday, settled up $2.09, or 2.66%, at $80.72 a barrel. The more active October contract gained $2.77 to $80.84.
U.S. West Texas Intermediate (WTI) crude futures rose $3.18, or 4.26%, to settle at $77.91 a barrel, their biggest daily gain since October 2023.
