Market Roundup
• German inflation turns positive in March, buoyed by early Easter; Annual inflation +0.1%, m/m +0.8%.
• US private sector adds 200k jobs in March, Feb revised to 205k from 214k –ADP.
• OPEC oil output to rise 100k bpd in March, rise led by Iran, Iraq-Reuters survey.
• Fed’s Evans: 2 hikes in ‘16 plausible, normalization still underway; risks to global econ higher since Dec (CNBC).
• BoC’s Paterson: oil shock recovery will take more than 2 years, Lower CAD helps non-commodity sector.
• US bond prices fall on supply (7-yr auction), Investors reduce bond holdings in favor of risk assets.
• Gundlach's DoubleLine trims emerging market debt exposure post-Fed rally.
Looking Ahead – Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment * w/e 2276.8b-previous
• 23:50 Japan Foreign Invest JP Stock* w/e -677.6b- previous
• 00:00 Australia HIA New Home Sales m/m * Feb 3.1%- previous
• 00:30 Australia Private Sector Credit* Feb 0.5%- previous
• 00:30 Australia Housing Credit * Feb 0.5%- previous
• 05:00 Japan Construction Orders YY*Feb -13.8%- previous
• 05:00 Japan Housing Starts YY*Feb forecast -2.4%, 0.2%- previous
Looking Ahead – Events, Other Releases (GMT)
• 07:00 UK BoE Governor Mark Carney holds a press briefing on Financial Stability Board in Tokyo
Currency Summaries
EUR/USD is likely to find support at 1.1280 levels and currently trading at 1.1333 levels. The pair has made session high at 1.1366 and hit lows at 1.1299 levels. Euro rose against US dollar on Wednesday, following Fed’s meeting on Tuesday indicated the central bank need to be cautious in raising interest rates and highlighting external risks including low oil prices and slower growth abroad. The pair initially declined in early New York session, after the release of positive US ADP Employment data. However after a short dip the pair spiked to reach 1.1364 levels in mid-morning American session. The ADP National Employment Report showed U.S. private employers added 200,000 jobs in March, above economists' expectations. The data came ahead of the U.S. Labor Department's more comprehensive March non-farm jobs report on Friday.
GBP/USD is supported in the range of 1.4335 currently trading at 1.4376 levels. It reached session high at 1.4458 and hit low at 1.4352 levels. The British pound rose against a weaker dollar on Wednesday as the dovish comments by the Fed’s yellens on Tuesday persuaded investors to take bullish bets on Pound as U.S. interest rates hike anytime soon looked unlikely which drove many to cut favourable bets on the greenback. However downside risk remained for The British pound due to Brexit fears. Investors worry that leaving the EU would hit growth and threaten the huge foreign investment flows Britain needs to fund its current account deficit, one of the biggest in the developed world at about 4 percent of national output. Sterling was up 0.4 percent at $1.4452, gaining for a third straight day and hitting its highest level in nine days.
USD/CAD is supported at 1.2900 levels and is trading at 1.2962 levels. It has made session high at 1.3017 and lows at 1.2910 levels. The Canadian dollar surged higher against its U.S. counterpart on Wednesday as crude oil prices rose and investors scaled back expectations for U.S. interest rate hikes. In a speech at the Economic Club of New York on Tuesday, Yellen highlighted risks to the global economy and said the Fed should proceed cautiously as it looks to raise rates. Meanwhile, January gross domestic product data is awaited on Thursday. Analysts expect 0.3 percent growth for the month, which would reinforce expectations that first-quarter growth will exceed the Bank of Canada's forecast of 1 percent. The currency's weakest level was C$1.3079, while it touched it’s strongest since March 18 at C$1.2910.
AUD/USD is supported around 0.7580 levels and currently trading at 0.7670 levels. It hit session high at 0.7708 and made session lows at 0.7636 levels. The Australian dollar retreated from eight-month high against dollar on Wednesday as the Aussie bulls stalled after oil prices took a short dip in the late American session on renewed worries of a supply glut. The Australian dollar eased to $0.7667, from $0.7706 early, but well within reach of $0.7700, a level last touched in June 28th. It was last at $0.6852, building on momentum from a three- cent bounce since mid-month and on track to post a 4 percent gain in March. Resistance is found at the October peak of $0.6897. The Aussie has surged 6.8 percent so far in March, which if sustained would mark the biggest monthly increase since 2011.
Equities Recap
European shares rose on Wednesday after Federal Reserve Chair Janet Yellen called for caution in raising U.S. interest rates, while German retailer Metro surged on demerger plans.
UK's benchmark FTSE 100 closed up by 1.68 percent, the pan-European FTSEurofirst 300 ended the day up by 1.29 percent, Germany's DAX ended up by 1.68 percent, France’s CAC finished the day up by 1.78 percent.
U.S. stocks plowed further into positive territory for 2016 on Wednesday, helped for a second session by comments from Federal Reserve Chair Janet Yellen that eased anxiety about potential interest rate hikes.
Dow Jones closed up by 0.47 percent, S&P 500 ended up by 0.43 percent, Nasdaq finished the day up by 0.45 percent.
Treasuries Recap
Shorter-dated U.S. Treasury yields fell on Wednesday as traders piled on bets the Federal Reserve would raise interest rates gradually in the coming months in the wake of dovish comments from Fed Chair Janet Yellen.
Benchmark 10-year Treasury notes last traded down 3/32 in price, paring losses following the seven-year auction. The 10-year yield was last 1.825 percent, up 1 basis point on the day.
Commodities Recap
Oil prices settled steady on Wednesday, erasing most of the day's gains, after U.S. government data showed crude inventories at all-time peaks again despite strong refinery runs.
U.S. crude futures' front-month contract settled up 4 cents at $38.32 a barrel. It rose almost $1.60, or 3 percent.
Brent crude's front-month settled up 12 cents at $39.26, retreating from a session peak of $40.61.
Gold fell more than 1 percent on Wednesday as a rally in assets seen as higher risk, such as equities, prompted some investors to cash in gains sparked the previous day by Fed chair Janet Yellen's cautious tone on further rate hikes.
Spot gold was at $1,227.14 an ounce by 2:48 p.m. EDT (1848 GMT), down 1.2 percent. U.S. gold futures settled down $8.90 an ounce at $1,228.60.
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