Market Roundup
•US Feb ADP Nonfarm Employment Change 475K,378K forecast, -301K previous
•Canada BoC Interest Rate Decision 0.50%, 0.50% forecast,0.25% previous
•US Crude Oil Inventories -2.597M,2.748M forecast,4.515M previous
Looking Ahead Economic Data
• 23:50 Japan Foreign Bonds Buying 40.7B previous
• 23:50 Japan Foreign Investments in Japanese Stocks -261.9B previous
• 00:30 Australia Jan Private House Approvals -1.8% previous
• 00:30 Japan Services PMI 42.7 forecast,47.6 previous
• 00:30 Japan Jan Exports (MoM) 1% previous
• 00:30 Japan Jan Trade Balance 9.000B forecast,8.356B previous
• 00:30 Japan Jan Building Approvals (MoM) -2.9% forecast,8.2% previous
Looking Ahead - Events, Other Releases (GMT)
•No events ahead
Currency Summaries
EUR/USD: The euro dipped to lowest level since May 2020 on Wednesday as investors worried about the impact of an escalating conflict in Ukraine on the region’s economic prospects. The U.S. Dollar Currency Index, which tracks its performance against six major currencies, was up 0.3% at 97.604. The index climbed as high as 97.834, its strongest since June 2020, earlier in the session. Data on Wednesday showed U.S. private employers hired more workers than expected in February and data for the prior month was revised sharply higher as the labor market recovery gathers steam. The common currency fell half a percent to as low as $1.1058 before recovering to trade last at 1.1116 Immediate resistance can be seen at 1.1119(38.2%fib), an upside break can trigger rise towards 1.1169(50%fib).On the downside, immediate support is seen at 1.1060(23.6%fib), a break below could take the pair towards 1.1000 (Psychological level).
GBP/USD: Sterling strengthened against the dollar on Wednesday as investors focus shifted to bets on UK and euro zone rate hikes amid concerns about the economic impact of the war in Ukraine. Money markets are currently pricing in 108 basis points (bps) of UK rate hikes this year compared with around 130 bps before the Russian invasion, while discounting just about 20 bps of rate hikes from the European Central bank by December 2022. Immediate resistance can be seen at 1.3411(50%fib), an upside break can trigger rise towards 1.3476(61.8%fib).On the downside, immediate support is seen at 1.3346(38.2%fib), a break below could take the pair towards 1.3272(23.6%fib).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices surged and the Bank of Canada hiked interest rates as expected for the first time since October 2018 despite the crisis in Ukraine. Canada’s central bank hiked its key interest rate by 25 basis points to 0.50% to help fight inflation and said it would continue with the reinvestment phase of its bond buying program. The Canadian dollar was trading 0.5% higher at 1.2625 to the greenback , the biggest gain among G10 currencies. It traded in a range of 1.2665 to 1.2744.Immediate resistance can be seen at 1.2673(38.2%fib), an upside break can trigger rise towards 1.2718 (50%fib).On the downside, immediate support is seen at 1.2628 (38.2%fib), a break below could take the pair towards 1.2564(23.6%fib).
USD/JPY: The dollar strengthened against yen on Wednesday after Federal Reserve backed quarter point March rate hike, open to bigger moves later. The Fed will move forward with plans to raise rates this month to try to tame high inflation, but the war in Ukraine has made the outlook highly uncertain for U.S. policymakers as they plan ahead, Fed Chair Jerome Powell said. Powell told a congressional committee that he was inclined to propose and support a 25 basis-point rate hike when policymakers meet in two weeks. The remarks eased widely held expectations before the invasion of a 50 basis-point hike. The dollar index rose 0.026% .The Japanese yen weakened 0.53% at 115.52 per dollar .Strong resistance can be seen at 115.75(23.6%fib), an upside break can trigger rise towards 116.00(Psychological level).On the downside, immediate support is seen at 115.39(50%fib), a break below could take the pair towards 115.27(5DMA).
Equities Recap
Despite lingering geopolitical tensions between Russia and Ukraine, worries about rising inflation and the economic impact of sanctions on Russia, European stocks closed on a firm note on Wednesday with investors indulging in some bargain hunting after recent losses.
UK's benchmark FTSE 100 closed up by 1.36 percent, Germany's Dax ended up by 0.69 percent, France’s CAC finished the day up by 1.59 percent.
Wall Street ended sharply higher on Wednesday after Federal Reserve Chair Jerome Powell signaled the central bank would likely raise interest rates less than some investors had feared.
Dow Jones ended up by 1.79 percent, S&P 500 ended higher by 1.86 percent, Nasdaq was ended up by 1.62 percent.
Treasuries Recap
U.S. Treasury yields rose from eight-week lows on Wednesday as Federal Reserve Chairman Jerome Powell supported the U.S. central bank raising rates this month, while being flexible in response to the Russia-Ukraine war's impact on the economy.
The benchmark 10-year yield rose 14 basis points to 1.854% and is on track for the largest one-day rise since February 2021. The yield fell to 1.682% on Tuesday, the lowest since Jan. 5.
Commodities Recap
Gold slipped on Wednesday due to an uptick in risk appetite and U.S. bond yields, while concerns over a supply crunch that may follow sanctions on Russia kept the price of auto-catalyst metal palladium near a seven-month peak.
Spot gold was down 1.1% at $1,921.56 per ounce by 02:01 p.m. EST (1901 GMT).U.S. gold futures settled 1.1% lower at $1,922.30.
Oil surged relentlessly beyond $110 a barrel on Wednesday, extending its rally since Russia invaded Ukraine seven days ago, on expectations that the market will remain short of supply for months to come following sanctions on Moscow and a flood of divestment from Russian oil assets by major companies.
Brent crude futures peaked at $113.94 a barrel during the session, before settling at $112.93, up $7.96, or 7.6%.
U.S. West Texas Intermediate (WTI) crude futures hit a high of $112.51 a barrel, and closed $7.19, or 7%, higher at $110.60.
