Market Roundup
• US private sector adds 154k jobs in Sep vs 166k forecast175k- previous –ADP.
• US Aug trade gap widens to USD40.73b in Aug vs -39.3b forecast, on higher imports.
• US Markit Svcs PMI Final 52.3 in Sep vs 51.9 in Aug.
• US ISM Non-Manufacturing PMI 57.1 vs forecast 53, 51.4 previous, N- Manufacturing Employment Index 57.2 v 50.7 previous, prices paid 54 v 51.8.
• Fed's Lacker: there are signs inflation is heating up; Strong case to raise rates more rapidly (DJ).
• Atlanta Fed’s GDPNow sees Q3 GDP growth ‘unchanged’ at 2.2% from Oct 3.
• IMF sees non-performing loans in European banks at about EUR900.
• UK's May says low rates and QE have bad side-effects, need change.
• Euro Zone banks tap ECB for dollars amid DB jitters, Banks borrow USD2.8b at weekly auction, access to USDs tightest since ’12.
• Oil prices hold gains after EIA data shows surprise draw in US crude stocks.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e 1178.6b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -211.7b- previous
• 00:30 Australia Trade Balance G&S (A$)* Aug f/c -2300m, -2410m- previous
• 00:30 Australia Goods/Services Imports* Aug 0.00%- previous
• 00:30 Australia Goods/Services Exports* Aug 3.00%- previous
Looking Ahead - Events, Other Releases (GMT)
•05:30 Australia RBA head of economics Christopher Kent speaks at a panel event at an economics conference.
•09:10 Japan- Japan Economy Min Nobuteru Ishihara speaks at a Bloomberg seminar on Japan's economy.
Currency Summaries
EUR/USD is supported at 1.1167 levels and currently trading at 1.1207 levels. The pair has made session high at 1.1220 and hit lows at 1.1189 levels. Euro initially declined against the greenback as encouraging data on the U.S. services sector offset a weaker-than-expected report on private-sector job growth, but euro recovered against greenback on speculation that the European Central Bank might reduce the scale of its asset purchases. U.S. services industries grew at their fastest pace in 11 months in September, reinforcing the view of a steady economic expansion which would allow the Federal Reserve to raise interest rates later this year. The Institute of Supply Management (ISM) said on Wednesday its non-manufacturing activity index surged to a reading of 57.1, the highest level since October 2015. Last month's reading followed a disappointing drop in August. The greenback was locked in a tight trading range as traders remained cautious ahead of the government's payrolls report due on Friday. The euro zone common currency rose 0.8 percent to 116.08 yen after touching its highest in three weeks at 116.14 yen, while it was little changed versus the dollar at $1.1206.
GBP/USD is supported in the range of 1.2683 levels and currently trading at 1.2747 levels. It reached session high at 1.2769 and dropped to session low at 1.2683 levels. Sterling recovered some ground against greenback on Wednesday after growing fears of a hard Brexit from the European Union briefly drove it below $1.27 for the first time since 1985. After declining rapidly for two days against the greenback, sterling recovered ground, helped by Prime Minister Theresa May's raising doubts over the side effects of ultra-low interest rates and money-printing. The currency has been buffeted for a fortnight by worries that Britain will prioritize curbing immigration over promoting trade in its divorce from the bloc, perceived as posing further risks to growth and encouraging more stimulus from the Bank of England. Sterling hit a 31-year low of $1.2683 early on Wednesday before recovering to $1.2758, 0.2 percent higher on the day. It fell as much as 0.5 percent to 88.43 pence per euro before also clawing its way back into positive territory.
USD/CAD is likely to find support at 1.3102 levels and is trading at 1.3180 levels. It has made intraday high at 1.3231 and lows at 1.3160 levels. The Canadian dollar firmed slightly against its U.S. counterpart on Wednesday as upbeat economic data and higher oil prices supported loonie. Statistics Canada said the deficit, the 24th in a row, was C$1.94 billion, down from a revised C$2.19 billion shortfall in July and less than the C$2.60 billion forecast by analysts. Exports rose by 0.6 percent on the back of a healthy performance by the consumer goods and metallic products sections. Overall volumes rose by 0.4 percent while prices edged up 0.2 percent. Oil rose on Wednesday after a surprising weekly drawdown in U.S. crude stocks drove oil prices to their highest since June. The U.S. Energy Information Administration (EIA) said crude stockpiles fell nearly 3 million barrels for the week ended Sept. 30, marking a fifth straight weekly drop. The Canadian dollar strengthened on the data, rising to C$1.3180 to the U.S. dollar, or 75.83 U.S. cents, up from C$1.3208, or 75.71 U.S. cents before the release.
AUD/USD is supported around 0.7593 levels and currently trading at 0.7617 levels. It hit session high at 0.7633 and made session lows at 0.7593 levels. The Australian dollar declined against US dollar on Wednesday as dollar strengthened on upbeat U.S. manufacturing data which boosted hiring expectations for Friday's eagerly awaited payrolls report. The Institute of Supply Management (ISM) said on Wednesday that activity in the U.S. services sector rebounded to an 11-month high in September, while its employment index came in at the highest since October 2015. The ISM report followed jobs numbers in the ADP National Employment Report that missed economists' expectations, showing that U.S. private employers added 154,000 jobs in September. Friday's employment report is expected to show 175,000 jobs were added in the month, according to the median estimate of 100 economists. Investors will also focus on whether August's weaker-than-expected gain of 151,000 jobs will be revised upward. The Australian dollar was last trading around $0.7621, having shed 0.7 percent on Thursday. It has met heavy resistance above 77 cents since August.
Equities Recap
European shares fell on Wednesday on concerns that the European Central Bank might reduce the pace of bond-buying before its asset purchase programme ends, hitting utility and property stocks hardest.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day down by 0.44 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.2 percent.
Stocks on Wall Street rose Wednesday led by the energy sector as oil prices rallied and as financials gained on the increasing likelihood of an interest rate hike after strong economic data.
Dow Jones closed up by 0.61 percent, S&P 500 ended up by 0.42 percent, Nasdaq finished the day up by 0.49 percent.
Treasuries Recap
U.S. Treasury yields rose on Wednesday after data showing that strong hiring in the services sector boosted hiring expectations for Friday's eagerly awaited payrolls report.
Benchmark 10-year notes fell 11/32 in price to yield 1.72 percent, up from 1.68 percent late on Tuesday. The yields have risen from a low of 1.53 percent on Friday.
Commodities Recap
Oil prices settled about 2 percent on Wednesday, hitting their highest since June, after the fifth unexpected weekly drawdown in U.S. crude inventories added to support on hopes that major producers will agree to cut output next month.
Brent crude settled up 99 cents, or 2 percent, at $51.86 a barrel. It rose earlier to $52.09, its highest since June 10.
U.S. West Texas Intermediate (WTI) closed up $1.14, or 2.3 percent, at $49.83. The session high was $49.97, a peak since June 29.
Gold was little changed as the dollar pared gains on Wednesday after bullion inched down to the lowest in more than three months following the previous day's sharp sell-off and a technical break well below the key $1,300-an-ounce level.
Spot gold was down 0.05 percent at $1,267.12 an ounce by 2:13 p.m. EDT (1813 GMT), after falling to $1,261.59, the lowest since June 24, when the market reacted to Britain's shock vote to leave the European Union. This followed Tuesday's 3.3 percent fall, its biggest daily loss in three years.
U.S. gold futures for December delivery settled down 0.1 percent at $1,268.60.
