- Japan Chief CabSec Suga - Drastic wage rises needed for growth.
- German GFK consumer sentiment index steady at 10.1 heading into august vs 10.1 in July (forecast 10.1).
- Japan June retail sales +0.9% y/y, strong, +0.5% eyed.
- Japan Kawasaki heavy to pour money into aircraft production, R&D, Boeing to Benefit.
- Japan ORIX to boost aircraft leasing operations via GE unit deal.
- TPP talks- Japan ready to slash duties on US beef, pork.
- TPP talks- Emerging economies to open up public works for foreign companies.
- NZ envoy - Dairy trade impasse holding up Pacific trade deal.
- RBNZ Gov Wheeler - Further monetary policy easing likely to maintain growth but large rate cuts only consistent with recession, further NZD depreciation necessary, risks to inflation outlook, potential for further downward pressure on global dairy prices.
- UBS Consumption indicator for Switzerland is at 1.68 in June after 1.62 in previous month.
- (0245 ET/0645 GMT) France July consumer confidence index, 94.0 eyed; last 94.0.
- (0300 ET/0700 GMT) Sweden July consumer confidence index, 98.8 eyed; last 97.9.
- (0300 ET/0700 GMT) Sweden manufacturing confidence index, 101.5 eyed; last 101.3.
- (0300 ET/0700 GMT) Spain June retail sales, +3.3% y/y eyed; last +3.4%.
- (0400 ET/0800 GMT) Norway May labour force survey unemployment, 4.3% eyed; last 4.2%.
- (0430 ET/0830 GMT) UK June mortgage approvals, 66k eyed; last 64.43k.
- (0430 ET/0830 GMT) UK June mortgage lending, bln eyed; last GBP2.1 bln.
- (0430 ET/0830 GMT) UK June consumer credit, GBP1.1 bln eyed; last GBP1.0 bln.
- (0430 ET/0830 GMT) UK June money supply M4; last +0.5%.
- (0600 ET/1000 GMT) UK July CBI distributive trade retail sales index, +30 eyed; last +29.
- (1000 ET/1400 GMT) US Jun pending home sales, +1.0% m/m; last +0.9%.
Key Events Ahead
- N/A Italy E6.5 bln 6-month BOT bill auction.
- (0530 ET/0930 GMT) ECB 91-day refinance, E20 bln allotment eyed, bln maturing.
- (0830 ET/1230 GMT) US TsySec Lew speech at Washington, DC event.
- (1400 ET/1800 GMT) FOMC policy announcement, no change in policy eyed.
FX Recap
EUR/USD is supported below 1.1100 levels and currently trading at 1.1060 levels. It has made intraday high at 1.1082 and low at 1.1057 levels. European currency bounced versus its American counterpart as traders continued to digest the unexpected dive in the US consumer confidence, awaiting the outcome of the two-day Fed meeting due later in the US session. The main focus will remain conclusion of the FOMC meeting, which is not expected to bring any changes to monetary policy, but Fed Chair Janet Yellen might suggest some further hints as to when the main rate will be hiked. The September meeting is still in play. Furthermore, US GDP for the second quarter is due on Thursday and should post growth of 2.5%, returning to strong figures after Q1's dismal -0.2%. Initial support is seen around at 1.0789 and resistance at 1.1195 levels.
USD/JPY is supported below 124.00 levels and posted a high of 123.62 levels. It has made intraday low at 123.32 and currently trading at 123.45 levels. Pair reversed previous gains and fell into the negative territory in the mid-Asian session, as the Japanese currency enjoys stronger than expected Japanese retail sales numbers while the greenback edged lower on profit-taking after the recent strength. Retail sales in the world's third-largest economy rose an annual 0.9% in June, beating expectations for a 0.5% rise but still slowing sharply from a 3% spike in May. Near term resistance is seen at 124.57 and support is seen at 120.63 levels.
GBP/USD is supported around $1.5600 levels. It made an intraday high at 1.5618 and low at 1.5598 levels. Pair is currently trading at 1.5602 levels. Pair stayed in a moderate rebound in July, increasing from the six-week bottom at $1.5328 seen July 8. However, sterling gave up most of its bullish momentum as the trading activity has been locked in a relatively narrow range for the last two weeks. Yesterday UK economic growth in the second quarter accelerated in line with expectations, with an increase in services and the mining and quarrying sectors acting as the main upward drivers. The UK economy sped up to 0.7% in the second quarter, up from 0.4% a quarter before, and in line with expectations. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.
NZDUSD is supported around 0.6700 levels and trading at 0.6702 levels and made intraday low at 0.6656 and high at 0.6737 levels. The New Zealand dollar stalled its rise and eased-off highs versus the US dollar in early Asian morning, keeping NZD/USD near two-week highs above 0.67 handle, as the Kiwi remains underpinned by RBNZ Governor Wheeler's latest speech on early Wednesday while a retreating US dollar across the board also supported the up moves. Reserve Bank of New Zealand Governor Graeme Wheeler said while further monetary policy easing is likely, the economy currently isn't weak enough to warrant big reductions in interest rates. The RBNZ will review its growth and inflation forecasts in its next Monetary Policy Statement, due September 10. Initial support is seen at 0.6465 and resistance at 0.6789 levels.
AUD/USD is supported above 0.7300 levels and trading at 0.7320 levels. It has made intraday high at 0.7349 levels and low at 0.7317 levels. Unwinding US dollar positions ahead of the FOMC statement lifted the Aussie above the $0.73 handle. Aussie shaved-off gains and edged lower during mid-Asia as the greenback halted its descent and now trades muted against its major competitors. Initial support is seen at 0.7225 and resistance at 0.7647 levels.
Equity Recap
Asian stock markets mostly made unpretentious gains today as the recent plunge in Chinese shares kept investors on edge and attention turned to a Federal Reserve meeting that might give clues about the timing of a U.S. interest rate hike.
China's Shanghai Composite Index was up 0.5 percent to 3,680.91 and Hong Kong's Hang Seng added 0.2 percent to 24,549.21. Japan's Nikkei 225 edged down 0.6 percent to 20,210.96. South Korea's Kospi rose 0.5 percent to 2,049.77. Benchmarks in Singapore and Taiwan fell while Australia, Philippines and Indonesia rose.
Taiwan stocks close down 0.2 pct at 8,563.48 points.
Australia's S&P/ASX 200 index closes up 0.83 pct at 5,631.30 points.
Tokyo's Nikkei average unofficially closes down 0.13 pct at 20,302.91.
Treasury Recap
China's five-year Treasury bond futures opened flat on Wednesday, with contract for settlement in September 2015 opening flat at 97.4 Yuan (15.97 U.S. dollars). China's Ministry of Finance auctioned 30 billion Yuan ($4.83 billion) of 3-year bonds in the interbank market on Wednesday at an average yield of 2.7941 percent, in line with market expectations, traders said.
Indian government bonds are likely to edge higher for a third day amid optimism a pickup in monsoon and slumping crude oil prices would help cool inflation and prompt the central bank to further ease interest rates. The yield on the benchmark 7.72% bond maturing in 2025 is likely to trade in a 7.77%-7.83% range.
Australian government bond futures fell, with the 3-year bond contract off 4 ticks at 98.070. The 10-year contract was down 4.5 ticks to 97.1600.
NZ bond yields were higher as much as 6 basis points
Commodity Recap
Benchmark U.S. crude was down 14 cents to $47.84 a barrel in electronic trading on the New York Mercantile Exchange. It rose 59 cents to close at $47.98 a barrel in New York on Tuesday. Brent crude was down 16 cents at $53.14 a barrel in on ICE futures exchange in London.
Gold steadied at just below $1,100 an ounce on Wednesday, trading not far from a 5-1/2-year low, as investors awaited the outcome of the U.S. Federal Reserve's meeting for more clues on the timing of this year's interest rate increase. Gold has been stuck in narrow ranges this week ahead of the onclusion of the Fed's policy meeting later in the day. Policymakers are expected to send more signals to the market that a U.S. interest rate increase is certain this year as the economy recovers. Spot gold was up 0.1 percent at $1,096.40 an ounce by 0232 GMT.
