- EUR/USD steady and plays in between 1.1025/1.1060 levels.
- Sterling steadies after marking 2-week low after soft GDP data released on Tuesday.
- European shares head higher. FTSEUROFIRST 300 up 0.4%. DAX up 0.6%. CAC up 0.6%.
- Germany September Import prices -0.7% m/m, -4.0% y/y vs prev -1.5%/-3.1%. -0.1%/-3.5% expected.
- Germany November GFK consumer sentiment 9.4 vs previous 9.6. 9.4 expected.
- Swedish CB holds interest rates, ups govt bond buys by SEK 65 bln.
- Swedish CB ready to intervene in FX if upturn in inflation threatened.
- SEK ends higher after whipsaw action on headlines.
- ECB Hansson - Don't see any convincing reason to consider further policy action in December.
- ECB Praet - Credibility of policy cannot be taken lightly, have duty to use instruments.
- (0830 ET/1230 GMT) US September goods trade balance - advance; last $67.19 bln deficit.
- (1030 ET/1430 GMT) Brazil foreign exchange flow.
- (1030 ET/1430 GMT) EIA Crude oil stock change.
Key Events Ahead
- (1400 ET/1800 GMT) FOMC policy announcement, no change in core 0.125% Fed funds rate eyed.
- (1430 ET/1830 GMT) Ex-Fed Bernanke speech at LSE.
- (1600 ET/2000 GMT) RBNZ policy announcement, no change in 2.75% OCR eyed.
FX Recap
USD/SEK: The Swedish crown recovered from an initial losses after Riksbank expanded its asset purchase programme but declined to cut interest rates, having already done so three times this year. The bank said it would expand its QE programme by 65 billion Swedish crowns to a total of 200 billion crowns, or about 21 billion euros. The crown initially fell to a 2-month low of 8.5434 crowns per dollar, before recovering to trade up 0.3 pct on the day at 8.4738 crowns. It also dipped against the euro before reversing those losses to turn positive at 9.3678 crowns, up 0.3 pct on the day.
EUR/USD: Pair trades modestly flat at 1.1062, consolidating above the daily support seen at 1.1025. The main currency pair came under renewed selling pressure as the European stocks snapped previous losses and edged higher this session, thus bringing in a sudden shift in risk-sentiment. It made intraday high at 1.1068 and low at 1.1025 levels. Initial support is seen around at 1.0972 and resistance at 1.1560 levels. Option expiries are at 1.1000 (567M), 1.1075-80 (1.6BLN).
USD/JPY: Retail sales in Japan rose at a weaker pace than markets expected last month, shedding new light on the state of consumer confidence amid soft economic times. Sales rose 0.7% month-on-month in September, according to the Ministry of Economy, Trade and Industry (METI), coming in weaker than the forecast rise of 1.1%. Pair made intraday high at 120.54 and low at 120.24 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.00 (738M), 120.15-20 (300M).
GBP/USD: Pair trades at 1.5295, testing daily lows reached at 1.5289 levels. Mixed data from the US was largely ignored as disappointing UK GDP data overshadowed American data to drive sterling lower. Britain's economy grew 0.5% on a quarter-to-quarter basis during Q3, missing estimates of 0.6% and after last quarter's 0.7%. Investor's attention will now shift to Federal Open Market Committee meeting. Pair made intraday high at 1.5315 and low at 1.5289 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.
NZD/USD: The New Zealand dollar declined on Wednesday, initially dragged lower by its Aussie counterpart, but the Reserve Bank of New Zealand's (RBNZ) likely decision to remain on hold kept the losses in check. Moreover, the Federal Reserve decision is due later today, which will provide further direction for the markets. It made intraday high at 0.6775 and low at 0.6719 levels. Initial support is seen at 0.6235 and resistance at 0.6896 levels.
AUD/USD: The Australian dollar dropped to a 3-week low as surprisingly subdued inflation data reinforced speculation the RBA will resume cutting interest rates. It fell around half a cent to $0.7120, down 1 percent on the day and closer to a six-year trough of $0.6892 hit last month. Support was found around 71 cents, the 61.8 percent retracement of the September-October climb. The Aussie also touched a five-month trough against kiwi to NZ$1.0530, bringing in view the next target of around NZ$1.0500/20. Headline inflation held at 1.5% in the September quarter, with the quarterly change in the CPI rising just 0.5%, below the 0.7% increase forecast by markets. Pair made intraday high at 0.7206 levels and low around 0.7111 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels.
Equities Recap
European shares inched higher in early deals on Wednesday, supported by better company earnings reports before a Federal Reserve policy decision later in the day.
The pan-European FTSEurofirst 300 rose 0.6 pct at 1,477.87 points, having fallen by 1 pct in the previous session, Britain's FTSE 100 climbed 0.2 pct, France's CAC 40 surged 0.3 pct and Germany's DAX was up 0.4 pct in early trades.
Tokyo's Nikkei average closed up 0.67 pct at 18,903.02, China CSI300 index slid over 2 pct, HK's Hang Seng Index ended down 0.8 pct at 22,956.57 points
while Shanghai Composite Index slipped 1.7 pct at 3,375.20 points.
Commodities Recap
Oil prices rose higher on Wednesday after inventories fell at a report in key U.S. delivery hub last week, but gains were expected to be temporary. Brent December crude futures edged up 38 cents at $47.19 a barrel. U.S. crude for December delivery was up 40 cents to $43.60 a barrel, up from Tuesday's nine-week low of $42.58.
Gold climbed back above $1,170 an ounce on Wednesday on caution ahead of the Federal Reserve's latest policy statement, though gains were capped by U.S. interest rate rise's timing uncertainity. Spot gold rose 0.4 pct at $1,171.76 an ounce, while U.S. gold futures for December delivery were up $6.20 an ounce at $1,172.00.
Treasuries Recap
10-year U.S. Treasury yield stood at 2.040 pct vs U.S. close of 2.028 pct on Tuesday.
German bund yields were little changed at 0.45 percent, near their lowest since early May. 10-year Portuguese yields were unchanged at 2.47 percent, having risen more than 20 bps from the lows hit in the aftermath of last week's ECB meeting.
JGB prices closed the day slightly higher, sending yields down 0.5bp on the day in the 9-yr and longer zone. Today, as widely expected, the BoJ purchased JPY240bn of JGBs in the 10-yr to 25-yr zone and JPY140bn of JGBs in the 25-yr to 40-yr zone, including the new 40s (re-opened #8), in addition to JPY120bn of 15-yr floating rate JGBs, after yesterday's JPY400bn 40-yr JGB auction.
UK Gilts opened 7 ticks lower than the settlement of 119.34, as expected, as core markets weighed on the market at the open. 10-year cash yields were range bound with yesterday's low acting as support at 1.759% with resistance from recent lows noted at 1.798%. Screens were last sitting at 1.782%.
New Zealand government bonds edged higher, sending yields 5 bps lower towards the longer end of the curve. Australian government bond futures powered up in a bullish steepening of the yield curve, with the 3-year bond contract up 7 ticks to 98.250. The 10-year contract edged up 4 ticks to 97.3850, while the 20-year contract gained 1.5 ticks to 96.8100.
