Market Roundup
- US Fed keeps rates unchanged, sees inflation low in near-term, closely monitoring global economic & financial developments.
- Wall Street reverses early gains moves to negative after Fed statement.
- U.S. Dec single-family home sales rise 10.8 percent vs 2% forecast, 1.9% in Nov, to new 10-mos high.
- ECB’s Coeure urges better fiscal controls in EZ, better management may lead to more leeway in future.
- RBNZ keeps OCR steady at 2.5%, says may take longer for inflation to reach target range.
- Fonterra reduces 2015/16 forecast milk price to NZ$4.15 per kgms, says there is still imbalance in market.
- Oil rallies after U.S. data shows spike in product demand. Russia’s Transneft says Moscow, OPEC to discuss output cuts -agencies.
Looking Ahead – Economic Data (GMT)
- 21:45 New Zealand Trade – Imports* Dec forecast 4.55b, 4.86b-previous
- 21:45 New Zealand Trade Balance* Dec forecast -131.0m, -779.0m- previous
- 21:45 New Zealand Trade Balance YY* Dec forecast -3.59b, -3.68b- previous
- 21:45 New Zealand Trade – Exports*Dec forecast 4.35b, 4.08b- previous
- 23:50 Japan Foreign Bond Investment* w/e -375.2b- previous
- 23:50 Japan Foreign Invest JP Stock*w/e -358.3b- previous
- 23:50 Japan Retail Sales YY*Dec forecast -0.1%, -1.00%- previous
Looking Ahead – Events, Other Releases (GMT)
- TOKYO – Bank of Japan’s Monetary Policy Meeting (to Jan. 29)
Currency SummariesEUR/USD is likely to find support at 1.0840 levels and currently trading at 1.0892 levels. The pair has made session high at 1.0917 and hit lows at 1.0860 levels. The dollar lost ground against euro on Wednesday as the Federal Reserve kept interest rates unchanged and said it was closely monitoring global economic and financial developments, but maintained an otherwise upbeat view of the U.S. economy. The central bank’s decision was widely expected after a month-long plunge in U.S. and world equities raised concerns that an abrupt global slowdown could act as a drag on U.S. economic growth. The dollar index fell 0.4 percent to 98.57, off nearly a cent from a seven-week high of 99.799 set on Thursday. The euro jumped to 1 week high against the dollar, reaching session high at 1.0915 after the statement was released by Federal Reserve.GBP/USD is supported in the range of 1.4225 levels and currently trading at 1.4235 levels. It reached session high at 1.4280 and dropped to session low at 1.4229 levels. Sterling declined sharply against US dollar Wednesday as decline in European and U.S. stock markets put bearish pressure sterling. Investors remain cautious before the fourth-quarter reading of UK gross domestic product, likely to show annual growth slowing. Gross domestic product data, due on Thursday, is forecast to have expanded 1.9 percent in the fourth quarter, year-on-year, down from 2.1 percent in the previous quarter, a result that could push back interest rate hike expectations towards the end of 2016. Sterling was down 0.8 percent against both the dollar and euro on Wednesday, trading at $1.4233 and 76.40 pence respectively. The currency had hit a seven-year low of $1.4080 last week and a one-year trough of 77.56 pence last Wednesday.USD/CAD is supported at 1.4000 levels and is trading at 1.4098 levels. It has made session high at 1.4144 and lows at 1.4026 levels. The Canadian dollar declined modestly against US dollar on Wednesday, down from a three-week high reached earlier in the session, as crude oil prices fell. Oil futures fell more than 1 percent after a surprise rise in U.S. inventories wiped out optimism that had built up on Tuesday over the potential for a deal to address a global crude supply glut. Nonetheless, the Canadian dollar traded at its strongest level since the Bank of Canada surprised many traders last week and left its policy rate on hold at 0.50 percent. The currency reached its strongest level since Jan. 6 at C$1.4041, while its weakest was C$1.4156. Investors are awaiting Friday’s Canadian gross domestic product data for November, which is expected to show a rebound in growth after a contraction in October.NZD/USD is supported around 0.6400 levels and currently trading at 0.6433 levels. It hit session high at 0.6528 and made session lows at 0.6414 levels. The New Zealand dollar slipped more than half a U.S. cent on Wednesday after the Reserve Bank of New Zealand said further policy easing may now be required, having previously flagged that it would not cut rates further. New Zealand’s central bank kept interest rates steady as expected on Thursday but said some further easing may be needed due to low inflation. The Reserve Bank of New Zealand left the Official Cash Rate unchanged at 2.50 percent after cutting four times last year. Meanwhile Federal Reserve kept its overnight interest rate unchanged and released a statement suggesting it was re-evaluating the pace of future hike. The statement highlighted the concerns about global economy saying the US central bank would be closely monitoring economic as well as financial developments. The currency reached its strongest level of the session was $0.6530, while its weakest was $0.6415.Equities RecapEuropean shares recovered to finish slightly higher on Wednesday as a late surge in oil prices helped offset pressure on the broader market from a spate of weak earnings updates.UK’s benchmark FTSE 100 closed up by 0.9 percent, the pan-European FTSEurofirst 300 ended the day up by 0.9 percent, Germany’s Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.3 percent.Wall Street dropped on Wednesday after the U.S. Federal Reserve frustrated investors hoping for a strong sign it might scale back future interest rate hikes because of recent financial and economic turmoil.Dow Jones closed down by 1.37 percent, S&P 500 ended down by 1.07 percent, Nasdaq finished the day down by 2.17 percent.Treasuries RecapU.S. Treasury yields fell on Wednesday after the Federal Reserve struck a dovish tone in acknowledging recent market volatility, but maintained an otherwise upbeat view of the U.S. economy.U.S. benchmark 10-year Treasury note yields fell to 2.00 percent, from 2.05 percent before the statement. The yield curve between five-year notes and 30-year bonds steepened to 138 basis points from 134 basis points.Commodities RecapGold rose to a 12-week high on Wednesday, after the U.S. Federal Reserve said it was closely monitoring global economic and financial developments, and held interest rates steady as expected. Immediately after the release of economic data gold jumped to hit session high at 1128 before retreating back towards 1124levels.Spot gold was up 0.6 percent at $1,126.70 an ounce at 2:55 p.m. EST (1955 GMT), the highest since Nov. 3, after trading down 0.5 prior to the Fed statement.U.S. gold for February delivery settled down 0.4 percent at $1,115.80 per ounce, before the Fed statement.Oil futures surged on Wednesday after Russia indicated there was a possibility of co-operation with OPEC, fanning hopes for a deal to reduce a global oversupply that sent prices to the lowest levels in over a dozen years last week.Brent crude rose $1.30, or 4.1 percent, to settle at $33.10 a barrel, after touching a session high of $33.49.U.S. crude settled up 85 cents at $32.30 per barrel, a 2.7 percent gain, having topped out at $32.84.
The material has been provided by InstaForex Company – www.instaforex.com