Market Roundup
- ECB's Draghi says too early to decide further stimulus; Macro-Pru first line of defense. U.S.
- Markit PMI shows manufacturing stuck at near 2-yr low.
- Xi reassures on China economy, cites forceful macro measures.
- Lockhart: Post-crisis caution sways Fed, but hike would be good.
- Brazil Central Bank intervenes, but real remains under pressure.
- Brazil's Congress upholds vetoes limiting fiscal deterioration.
- S.Africa's Kganyago concerned by "rapid" rand swings.
- Bill Gross to Fed: 'Get off zero and get off quick' on rates.
Looking Ahead - Economic Data (GMT)
- 22:45 New Zealand Aug Trade Balance estimate- 850m v 649m
- 22:45 New Zealand Aug Exports estimate- 3.67b v 4.2b
- 22:45 New Zealand Aug Imports estimate- 4.4b v 4.8b
- 01:35 Japan Sep Nikkei PMI estimate- 51.2 v 51.7
- 04:30 Japan July All industry Activity estimate- 0.0% v 0.3%
- 05:00 Japan Aug Supermarket Sales; 1.9% last
Looking Ahead - Events, Other Releases (GMT)
- Japan returns from holiday
Currency Summaries
EUR/USD is likely to find support at 1.1155 levels and currently trading at 1.1181 levels. The pair has made session high at 1.1213 and hit lows at 1.1115 levels. The U.S. dollar slipped against the euro on Wednesday after the head of the European Central Bank said the ECB needed more time to assess whether to boost its stimulus program, confounding some who were expecting a more dovish tone. Draghi's comments to the European Parliament's Committee on Economic and Monetary Affairs sent the euro higher against the dollar after the shared currency earlier hit its lowest level against the greenback in two and a half weeks at $1.11050. The U.S. dollar had gained earlier this week on diverging monetary policy between the ECB, which many expect to deliver more stimulus, and the U.S. Federal Reserve, which is on a path toward tightening policy. Fed Chair Janet Yellen will speak Thursday. The move higher in the euro against the dollar also remained modest, and failed to break above Tuesday's session high of $1.1208. euro was last up 0.49 percent against the dollar at $1.1175. To the upside, immediate resistance can be seen at 1.1225. To the downside, immediate support level is located at 1.1150 levels.
GBP/USD is supported in the range of 1.5219 levels and currently trading at 1.5247 levels. It reached session high at 1.5264 and dropped to session low at 1.5222 levels. Sterling skidded over 1 percent against the euro on Wednesday after the head of the European Central Bank said it was too early to decide on further stimulus in the euro zone. The euro had hit a one-month low versus the pound the previous day on talk the ECB would beef up its 1 trillion euro plus asset-buying programme. But it gained 1.2 percent on Monday, its biggest one-day rise since late August, to trade at 73.26 pence. Against the dollar, sterling traded as low as $1.5221 lowest in over two weeks, having been hurt by data on Tuesday that showed Britain's public finances deteriorated last month, while industrial orders also declined. In contrast to the euro zone, where monetary policy is expected to remain ultra-loose and perhaps become looser, investors are betting UK interest rates will start to rise around the middle of next year. But most analysts reckon the Bank of England will wait until the U.S. Federal Reserve moves. To the upside, immediate resistance can be seen at 1.5260. To the downside, immediate support level is located at 1.5220 levels.
USD/JPY is supported around 120.00 levels and currently trading at 120.27 levels. It peaked to hit session high at 120.54 and made session lows at 120.02 levels. US dollar edged higher against Japanese yen on Wednesday, on the view that the Fed would still hike rates this year and that the U.S. economy continues to out-perform other major economies. On the data front, The Markit Composite Flash PMI for the bloc came in at 53.9 in September against predictions of 54.1, down from 54.3 last month. Markit said the PMIs point to third-quarter growth of 0.4 percent. Growth in the U.S. manufacturing sector showed no month-over-month change during September, staying at August's sluggish pace which was the weakest in almost two years, according to Markit. The preliminary U.S. Manufacturing PMI for September was 53, the same as August, which was its lowest since October 2013. The calendar is fairly hectic ahead on Thursday. The US is set to release core durable goods & new home sales on Thursday followed by Fed Chair Yellen's speech which will be closely scrutinised by traders.To the upside, immediate resistance can be seen at 120.40. To the downside, immediate support level is located at 120.10 levels.
USD/CAD is supported at 1.3256 levels and is trading at 1.3326 levels. It has made session high at 1.3357 and lows at 1.3248 levels. The Canadian dollar retreated against its U.S. counterpart on Wednesday, following domestic retail sales figures for July that came in slightly below expectations. Canadian retail sales rose for the third month in a row in July, up 0.5 percent, fueled by new car and clothing sales.The rise was in line with economists forecast, but sales were flat and below expectations when automotive figures were excluded. Volumes were also weaker than the headline, while figures from the previous month were revised lower. The currency, which firmed to C$1.3233 earlier in the session, broke through C$1.3300 to weaken to C$1.3320 following the data, within striking distance of multi-year lows. To the upside, immediate resistance can be seen at 1.3330. To the downside, immediate support level is located at 1.3310 levels.
Equities Recap
European stocks closed little changed in volatile trade on Wednesday, with a rebound in automakers led by Volkswagen and gains in travel stocks offset by weaker banks.
UK's benchmark FTSE 100 closed up by 1.69 percent, the pan-European FTSEurofirst 300 ended the day up by 0.02 percent, Germany's Dax ended up by 0.54 percent, France's CAC finished the day up by 0.24 percent.
U.S. stocks were down slightly on Wednesday after weak Chinese and U.S. factory data added to global demand worries. Dow Jones closed down by 0.30 percent, S&P 500 ended down by 0.20 percent, Nasdaq finished the day down 0.07 percent.
Treasuries Recap
U.S. Treasuries prices slipped on Wednesday as data showing an expected slight fall in euro zone manufacturing growth reduced anxiety about global growth that was briefly heightened by a dismal reading on China's economy.
Benchmark 10-year Treasuries were down 7/32 in price for a yield of 2.151 percent, up 2 basis points from Tuesday, while the 30-year bond was down 9/32 to yield 2.944 percent, up 1 basis point on the day.
Commodities Recap
Global oil markets tumbled on Wednesday, with U.S. crude futures settling down 4 percent after bullish impact from lower crude inventories was offset by large gasoline builds that raised concerns about high autumn fuel supplies.
Brent, the global benchmark for oil, settled down $1.33, or 2.7 percent, at $47.75 a barrel. U.S. crude slumped $1.88, or 4.1 percent, to settle at $44.48.
Gasoline finished down 2 percent after hitting two-week highs earlier in the day.
Gold rose after two days of losses on Wednesday as equities took a hit from weak Chinese factory data, while platinum slid to a fresh 6-1/2-year low as investors feared a drop in demand from the auto industry.
Spot gold was up 0.6 percent at $1,131.53 an ounce, while the U.S. gold futures contract for December delivery settled up 0.6 percent at $1,131.50 an ounce.
Spot platinum fell to its lowest since January 2009 at $924.50 an ounce, and was down 0.8 percent at $926.25 at 1:57 p.m. EDT (1757 GMT).
