Market Roundup
•GfK Jul German Consumer Climate -21.8,-19.4 forecast,-20.9 previous
•French Jun Consumer Confidence 89,89 forecast,90 previous
•Swiss Jun ZEW Expectations 17.5,18.2 previous
•France May Jobseekers Total 2,816.3K ,2,775.4K previous
Looking Ahead Economic Data(GMT)
•14:00 US May New Home Sales (MoM) -11.3% forecast,-4.7% previous
•14:00 US New Home Sales 619K, 636K forecast, 634K previous
•14:30 US EIA Refinery Crude Runs (WoW) -0.282M previous
•14:30 US EIA Weekly Refinery Utilization Rates (WoW) -1.5% previous
•14:30 US Distillate Fuel Production -0.272M previous
•14:30 US Crude Oil Inventories -2.600M forecast,-2.547M previous
Currency Forecast
EUR/USD: The euro slipped lower on Wednesday after a European Central Bank policymaker talked up the chances of further rate cuts this year, a notably different stance from the Fed's Michelle Bowman.ECB governing council member Olli Rehn told Bloomberg that two more cuts this year seemed reasonable . That contrasted with Fed Governor Bowman, who said she did not expect any U.S. rate cuts this year. Euro zone inflation may be bumpy but that was always expected and data continues to suggest that price growth will settle at the European Central Bank's 2% target, Finnish policymaker Olli Rehn said on Wednesday. The dollar index , which tracks the currency against six peers, rose 0.3% to 105.99, its highest since May 1.The euro slipped 0.3% to $1.0683. Immediate resistance can be seen at 1.0720(Daily high), an upside break can trigger rise towards 1.0746(38.2% fib).On the downside, immediate support is seen at 1.0680(23.6% fib), a break below could take the pair towards 1.0634(Lower BB).
GBP/USD: The pound dipped on Wednesday as the dollar strengthened while investors waited for the release of the Federal Reserve's preferred gauge of inflation on Friday. U.S. personal consumption expenditure inflation data, due on Friday, will guide Fed policy and could lead to swings in currency markets.Britain's relatively high services and wage inflation means traders expect the Bank of England to cut rates just once or twice this year. That has kept upward pressure on bond yields, making them attractive to many investors and thereby supporting the pound.Expectations that the Labour party will win a huge majority in the July 4 general election and bring some long-absent stability to British policymaking has also been supporting sterling.Yet economists and investors say there are risks to British financial markets from a Labour party that has been coy about its exact plans for taxing and spending. Immediate resistance can be seen at 1.2685(38.2%fib), an upside break can trigger rise towards 1.2775(23.6%fib).On the downside, immediate support is seen at 1.2637(50%fib), a break below could take the pair towards 1.2586(61.8% fib).
USD/CHF: The dollar strengthened against the Swiss franc on Wednesday as investors looked forward to a report on the Federal Reserve's preferred inflation measure, which is expected later this week, to gain insights into the central bank's potential rate cut decisions. The Fed's preferred inflation measure, with economists polled by Reuters expecting the annual growth to ease to 2.6% in May. On the U.S. monetary policy front, Federal Reserve officials have urged patience on interest rate cuts, with governor Lisa Cook declining to say when the Fed would be able to act.Fed Governor Michelle Bowman reiterated her view that holding the policy rate steady "for some time" would probably be enough to bring inflation under control.The comments, along with data showing a stable housing market, kept expectations in check over when and by how much the Fed would cut rates. Immediate resistance can be seen at 0.8980 (38.2% fib), an upside break can trigger rise towards 0.9035 (23.6%fib).On the downside, immediate support is seen at 0.8936 (50% fib), a break below could take the pair towards 0.88894 (61.8% fib).
USD/JPY: The dollar rose on Wednesday as yen dropped to its lowest level since 1986 against the dollar , keeping currency markets alert for any signs of intervention from Japanese authorities to boost the beleaguered currency. The U.S. dollar was trading at 160.39 yen, a level last seen in December 1986, as the yawning interest rate gap between the two countries continued to hammer Japan's currency.Analysts said traders were testing the resolve of Japan's Ministry of Finance and central bank, who spent $62 billion in late April and early May to support the currency when it fell past 160. The latest slide in the yen has come in the wake of the Bank of Japan's (BOJ) decision this month to hold off on reducing bond-buying stimulus until its July meeting.The BOJ, though, is dropping signals that its quantitative tightening plan in July could be bigger than markets think, and may even be accompanied by an interest rate hike. Strong resistance can be seen at 160.83(23.6%fib), an upside break can trigger rise towards 161.00(Psychological level).On the downside, immediate support is seen at 159.41 (38.2% fib), a break below could take the pair towards 158.02(50%fib).
Equities Recap
European stock markets turned lower on Wednesday as the market braced for a French election and a key U.S. inflation reading, while the yen tumbled to its lowest since 1986, keeping traders on alert for possible intervention by Japan's central bank.
UK's benchmark FTSE 100 was last down by 0.34 percent, Germany's Dax was last down by 0.13 percent, France’s CAC was last down by 0.77 percent.
Commodities Recap
Gold prices fell to their lowest in nearly two weeks on Wednesday as the dollar firmed, while investors awaited a report on the Federal Reserve's preferred inflation gauge due later this week for the latest clues on the central bank's rate cut prospects.
Spot gold fell 0.5% to $2,308.00 per ounce by 1059 GMT, hitting its lowest since June 14. U.S. gold futures also fell 0.5% to $2,319.50.
Oil prices were stable on Wednesday at around $85 a barrel for Brent crude, amid forecasts for an eventual inventory drawdown during the third quarter peak summer demand season and geopolitical risks from the Middle East conflict.
Brent crude oil futures slipped 9 cents, or 0.11%, to $84.92 a barrel by 1315 GMT. U.S. West Texas Intermediate crude futures shed 7 cents, or 0.09%, to $80.76 a barrel.
