Market Roundup
- Tokyo holiday
- RBNZ stands pat but keeps door open to easing
- China to promote development by opening economy 'even wider' –Li
- Australia c.bank upbeat on economy but keeps door open for more easing – Reuters
- RBA's Lowe says rate cuts, lower A$ helping economy – Reuters
- Lowe said it was "possible" that interest rates could fall further, depending upon inflation, the job market, housing and global factors
Economic Data Ahead
- (0600 ET/1000 GMT) Great Britain CBI Industrial Trends Survey
- (1000 ET/1400 GMT)Eurozone Flash Consumer Confidence for Sept; minus 8.20 Exp; last minus 8.50.
Key Events Ahead
- (0900 ET/1300 GMT) European Central Bank President Mario Draghi's speech.
- (0930 ET/1330 GMT) Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe's speech.
- (1300 ET/1700 GMT) Bank of England Governor Mark Carney's speech.
FX Beat
DXY: The dollar index against a basket of currencies trades 0.2 percent lower at 95.34, pulling away from a 6-week high of 96.33 hit in the previous session.
EUR/USD: The euro rose, extending previous session gains, as the dollar weakened across the broad after the Federal Reserve kept interest rate unchanged and forecasted a less aggressive path for rates hikes in coming years. The Fed adopted a cautious approach and revised economic projections lower, which helped the major to rise as high as 1.1196 from an early low of 1.1123 on Wednesday. The European currency trades 0.1 percent up at 1.1198, attempting to extend gains above the 1.1200 handle. Markets focus now shifts towards series of U.S. economic data and ECB president Draghi's speech due later in the day for further cues on the pair. Immediate resistance is located at 1.1220, break above could take it till 1.1250. On the downside, support is seen at 1.1171 (5-DMA), break below could drag it till 1.1150.
USD/JPY: The Japanese yen rose to a near 4-week high against the dollar after the U.S. Federal Reserve kept monetary policy steady and adopted a more cautious approach on interest rates hikes in coming years. The yen also gained as investors remained skeptical on BoJ's ability to achieve 2 percent inflation target through the new measures. However, the major has stalled its downside, attempting to recover from post FOMC decision lows. The dollar trades 0.1 percent lower at 100.24 yen, having touched a low of 100.09, its weakest level since Aug. 26. Trading in the pair is likely to remain subdued as the Japanese markets are off on a national holiday. Meanwhile, traders will continue to assess the BoJ and Fed policy outcomes, ahead of U.S. unemployment claim and existing home sales data. Immediate resistance is located at 100.60, break above targets 101.00. On the downside, support is seen at 100.00, break below could take it near 99.60.
GBP/USD: Sterling steadied, after declining to a 5-week low below the 1.3000 handle in the previous session, as the dollar continued to weaken across the broad post-Fed policy outcome. On Wednesday, the major rebounded from a low of 1.2945 to close out at 1.3046 following Fed's decision to keep rates unchanged and revised economic forecasts lower. Sterling trades 0.2 percent up at 1.3053, attempting to sustain gains above the 1.3000 level. Traders now await UK's CBI industrial trend survey, MPC member Cunliffe and BoE Gov Carney's speech for further cues on the pair. Immediate resistance is located at 1.3090, break above could take it over1.3100. On the downside, support is seen at 1.2990, break below targets 1.2940. Against the euro, the pound trades flat at 85.82 pence.
AUD/USD: The Australian dollar climbed to a 2-week high as the greenback weakened following the Fed meeting and following comments from Reserve Bank of Australia Governor Lowe. The major extended gains for the fourth consecutive session after RBA’s Governor Lowe indicated that the central bank was comfortable with the current policy and provided an upbeat assessment of the economy. The Aussie trades 0.2 percent higher at 0.7641, after rising as high as 0.7649, it loftiest since September 9. Markets will continue to digest RBA Governor's comments, ahead of U.S. economic data. Immediate resistance is located at 0.7670, break above targets 0.7700. On the downside, support is seen at 0.7604, break below could drag it till 0.7580.
NZD/USD: The New Zealand dollar tumbled from a 2-week high after the Reserve Bank of New Zealand held interest rates steady and signaled for another cut this year. However, the Kiwi trimmed losses to trade flat at 0.7335 after advancing to a high of 0.7369, its highest since Sept.9, touched following U.S. Federal Reserve's decision. Investors will continue to track broad market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.7380 (Aug 26 High), break above targets 0.7400. On the downside, support is seen at 0.7306 (10-DMA), break below could drag it lower 0.7300.
Equities Recap
Asian shares rallied following overnight gains on the Wall Street, after the Federal Reserve held U.S. interest rates steady and slowed the pace of interest rate hike path.
MSCI's broadest index of Asia-Pacific shares outside Japan rose, extending gains to 1.3 percent in its sixth straight session of increases.
Japanese markets will be closed in observance of Autumnal Equinox Day.
Australia's S&P/ASX 200 index climbed 0.80 percent at 5,382.20 points and South Korea's KOSPI advanced 1.06 percent at 2,057.05 points.
Shanghai composite index rose 0.58 percent at 3,043.74 points, while CSI300 index was trading 0.78 percent higher at 3,292.87 points.
Hong Kong’s Hang Seng was trading 0.7 percent up at 23,702.54 points. Taiwan shares added 0.1 percent at 9,235.26 points.
Commodities Recap
Crude oil prices rose, extending gains for the third consecutive day after an industry report showed an unexpected 6.2 million-barrel decline in U.S. crude inventory last week to 504.6 million barrels. International benchmark Brent crude was trading 0.3 percent higher at $47.20 per barrel at 0359 GMT, pulling away from a low of $45.07 hit on Tuesday. U.S. West Texas Intermediate crude rose 0.26 percent at $45.72 a barrel.
Gold prices declined, after gaining more than 1.5 percent in the previous session, as investors rushed towards riskier assets following the Federal Reserve's decision to leave U.S. interest rates unchanged. Spot gold dropped 0.3 percent at $1,332.61 an ounce by 0404 GMT, having touched a high of $1336.61 in the previous session, its highest since September 9. U.S. gold futures rose 0.5 percent to $1,338.40 an ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 1.6546 percent, while 5-year was at 1.1887 percent.
The Australian government bonds rallied after the United States Federal Reserve downgraded its economic outlook and the FOMC left fed funds rate unchanged in a 0.25-0.50% range, in line with market expectations. The yield on the benchmark 10-year Treasury note fell 9-1/2 basis points to 2.098 percent, the yield on long-term 15-year note dipped 9 basis points to 2.466 percent and the yield on short-term 2-year slid 2-1/2 basis points to 1.605 percent.
New Zealand government bonds closed higher after the Reserve Bank of New Zealand left its official cash rate unchanged at a record low of 2.00 percent. The yield on the benchmark 10-year bond fell 15 basis points to 2.480 percent, the yield on 7-year note ended 11 basis points lower at 2.185 percent and the yield on short-term 2-year note slid 9 basis points to 1.915 percent.
Canadian government bond prices were mixed across the yield curve, with the 2-year bond down 1 Canadian cent to yield 0.576 percent and the benchmark 10-year rising 13 Canadian cents to yield 1.149 percent.
