Market Roundup
• Fed policymakers closer to rate hike, but inflation doubts remain-minutes.
• Voting Fed policymakers generally agreed case for hikes had strengthened.
• Some voters said cautious approach to hikes could help labor market heal more.
• Fed can be 'gentle' in hiking rates, Dudley says.
• Dudley: don't want to push employment too high for fear of overshooting.
• Dudley: not sure US at full employment given discouraged workers are returning.
• U.S. JOLTS job openings fall to eight-month low in August.
• JOLTS job openings 5.443 million below forecast 5.724 million, previous 5.831 million.
• UK PM May says wants maximum possible access to EU market post-Brexit.
• Foreigners cut down on EM Asia bonds on belief US rate hike coming.
• Norway's central bank governor says currency rally quicker than expected.
Looking Ahead - Economic Data (GMT)
• N/A China Exports YY Sep -3.00% forecast, -2.80% -previous
• N/A China Imports YY Sep 1.00% forecast, 1.50% - previous
• N/A China Trade Balance USD Sep 53.00b forecast, 52.05b – previous
Looking Ahead - Events, Other Releases (GMT)
• 1000 -- New Zealand Treasury publishes government's financial statement for the 2015-16 year. Finance Minister Bill English will give a presentation
Currency Summaries
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1007 levels. The pair has made session high at 1.1046 and hit lows at 1.1132 levels. The euro declined against US dollar on Wednesday after Federal Reserve meeting minutes reinforced expectations that the central bank would hike rates in December. Several voting members of the Federal Reserve policy committee judged a rate hike would be warranted "relatively soon" if the U.S. economy continued to strengthen, according to the minutes of the Fed's September meeting. Among voting and nonvoting policymakers, several said it was a "close call" whether to hike last month. The dollar index which measures the greenback against a basket of six major currencies initially slipped after the minutes but retraced gains to stand little changed. The index was last up 0.21 percent at 97.900, near a seven-month high of 98.043 touched ahead of the minutes.
GBP/USD is supported in the range of 1.2150 and currently trading at 1.2210 levels. It reached session high at 1.2256 and hit low at 1.2153 levels. The Sterling initially slipped against the greenback to hit daily lows at 1.2153, but recovered amid indications Britain may avoid an aggressive and potentially damaging exit from the European Union. Fears that Britain would give up full access to the EU's single market pushed sterling to 31-year lows last week and led the currency to plunge 10 percent within minutes on Friday. British Prime Minister Theresa May's offer to give lawmakers some scrutiny of the process to leave the European Union calmed market fears of a "hard Brexit”. Sterling was last up 0.63 percent against the dollar at $1.2199.
USD/CAD is supported at 1.3210 levels and is trading at 1.3267 levels. It has made session high at 1.3288 and lows at 1.3217 levels. The Canadian dollar weakened against its U.S. counterpart on Wednesday as the dollar was boosted after the release of minutes from the last U.S. Federal Reserve meeting left the door open for December interest rate hike and crude oil prices fell. Oil prices fell more than 1 percent after the Organization of the Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group's pledge to bring a global crude glut under control. The Canadian currency is trading near its weakest level in more than six months as investors focus on monetary policy divergence between Canada and the United States. The Canadian dollar was last trading at C$1.3266 to the greenback, or 75.42 U.S. cents, weaker than Tuesday's close of C$1.3241, or 75.52 U.S. cents.
AUD/USD is supported around 0.7528 levels and currently trading at 0.7562 levels. It hit session high at 0.7587 and made session lows at 0.7550 levels. The Australian dollar initially firmed against US dollar in the early US session but reversed course as the dollar firmed across the board after minutes from a meeting of Federal Reserve policymakers last month indicated raising U.S. interest rates was warranted if the economy continued to strengthen. The Australian dollar edged 0.1 percent lower to $0.7565, near two-week lows as the greenback gained after a Federal Reserve minutes. Domestic data last week showed a rosy picture of Australia's economy, boosting expectations for gross domestic product growth of more than 3 percent for the year. However, a resilient Aussie, up about 4 percent this year, could spoil the party. It fell nearly 11 percent in 2015 and more than 8 percent the year before.
Equities Recap
European stock markets fell slightly on Wednesday with Sweden's Ericsson slumping to eight-year lows after issuing a profit warning.
UK's benchmark FTSE 100 closed down by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.47 percent, Germany's Dax ended down by 0.6 percent, France’s CAC finished the day down by 0.5 percent.
The S&P 500 and the Dow Jones industrial average indexes ended Wednesday's session with slight gains as expectations for timing on a rate hike timing were largely unchanged after minutes from the most recent meeting of the U.S. Federal Reserve.
Dow Jones closed down by 0.10 percent, S&P 500 ended up by 0.13 percent, Nasdaq finished the day down by 0.14 percent.
Treasuries Recap
U.S. Treasury yields rose to their highest levels in four months on Wednesday, pressured by incoming supply and growing expectations of an interest rate increase from the Federal Reserve later this year.
The 10-year note was last down 8/32 in price to yield 1.785 percent.
The 30-year bond was last down 15/32 in price to yield 2.512 percent. Yields rose as high as 2.529 percent, the highest since June 23, the day of Britain's surprise vote to exit the European Union.
Commodities Recap
Oil prices settled 1 percent lower on Wednesday after OPEC reported its September oil output hit eight-year highs, offsetting optimism over the group's pledge to bring a global crude glut under control.
Brent crude settled down 60 cents, or 1.1 percent, at $51.81 a barrel. U.S. West Texas Intermediate (WTI) crude slipped 61 cents, or 1.2 percent, to settle at $50.18.
Gold held modest gains on Wednesday, after minutes from the Federal Reserve's September meeting showed several voting policymakers judged an interest rate hike would be warranted "relatively soon" if the U.S. economy continued to improve.
Spot gold was up 0.2 percent at $1,255.42 an ounce by 2:51 p.m. EDT (1851 GMT), hovering above last week's four-month low at $1,241.20.
U.S. gold futures settled down 0.2 percent at $1,253.80, prior to the release of the minutes.
