Market Roundup
• US May Personal Spending 0.4% as forecast, prior 1.1%.
• US May Core PCE Price index m/m 0.2% as forecast, prior 0.2%
• US May pending home sales index 3.7% vs. -1.1% forecast.
• Germany June preliminary HICP 0.1% m/m, 0.2% y/y vs. forecast of 0.1% m/m & 0.2% y/y.
• Brazil May Primary budget balance -18.125bln reais – Central Bank.
• EU tells UK single market access requires full free movement.
• EU’s Junker: Scotland has won the right to be heard in Brussels, but no EU intention to interfere in British process.
• Spain’s PM Rajoy: Opposes any negotiation by Scotland with EU, says if “UK leaves, Scotland leaves.
• US bank JP Morgan: Scottish independence & a new Scottish currency are now its ‘base case’ forecast.
• Schaeuble: Danger that Brexit will start domino effect in EU can’t be ruled out.
• British PM Cameron says hard times ahead but will not abandon fiscal rules.
• Hollande: If Britain wants in single market must play by EU rules, contribute to budget.
Looking Ahead – Economic Data (GMT)
• 22:45 New Zealand May Building Consents, no forecast, prior 6.6%
• 23:50 Japan May Industrial Production, forecast -0.1% prior +0.5%
• 23:50 Japan Foreign Bond & Stock investments w/e June 24
• 01:30 Australia May Private Sector Credit, no forecast, prior 0.5%
• 01:30 Australia May Housing Credit ,no forecast, prior 0.4%
Looking Ahead – Events, Other Releases (GMT)
• Japan PM meeting with key officials
Currency Summaries
EUR/USD is likely to find support at 1.1035 levels and currently trading at 1.1120 levels. The pair has made session high at 1.1128 and hit lows at 1.1071 levels. Euro edged higher against US dollar on Wednesday as fears about last week's Brexit vote eased and investors wagered central banks would ultimately ride to the rescue with more stimulus. Economists have warned that Britain's decision to leave the European Union could further dampen growth and inflation across the euro zone, raising expectations that the ECB may beef up its monetary stimulus. German annual inflation hit a five-month high in June while Spanish consumer prices fell slightly less than expected, in encouraging signs for the European Central Bank as it frets over persistently low inflation across the euro zone. The euro was last up 0.4 percent against the dollar at $1.1105, rebounding further from a 3-1/2-month low of $1.0909 on Friday. Analysts said traders were relieved by the prospect of prolonged negotiations among European policymakers before the UK's divorce from the EU.
GBP/USD is supported in the range of 1.3270 levels and currently trading at 1.3436 levels. It reached session high at 1.3533 and hit low at 1.3415 levels. Sterling rose against US dollar on Wednesday, helped by rising stock markets and a revival in risk appetite, with Brexit-related concerns over UK growth and investment moving into the background for the time being. Investors were drawing some reassurance from the fact that British politicians were not rushing to trigger the Article 50 mechanism for a state to leave the EU, despite European leaders telling Britain to act quickly after last week's referendum. The pound rose 1.4 percent to $1.3534, having risen 0.8 percent on Tuesday, with recent bets against the currency being cut. Sterling tends to move in sync with stock markets and riskier assets given that Britain runs a substantial current account deficit, leaving the economy vulnerable to short-term capital flows. European stock markets continued to recover after last week's hefty losses. Investors looked for bargains among beaten-down stocks, pushing up markets for the second day after the “Brexit” verdict wiped out about $3 trillion globally in a two-day selloff.
USD/CAD is supported at 1.2955 levels and is trading at 1.2943 levels. It has made session high at 1.3020 and lows at 1.2966 levels. The Canadian dollar rose against U.S. dollar on Wednesday as global financial markets stabilized for a second straight day following volatility triggered by Britain's vote to leave the European Union. Oil prices jumped more than 3 percent on Wednesday after a larger-than-expected drawdown in U.S. crude inventories. Fading concerns over Britain's exit from the European Union, potential for an oil workers' strike in Norway and a crisis in Venezuela's energy sector added support to crude futures. The U.S. Energy Information Administration reported that crude stockpiles fell 4.1 million barrels in the week to June 24, the sixth consecutive week of drawdowns. Expectations for the next Bank of Canada interest rate hike have been pushed back to the first quarter of 2018, according to a Reuters poll of primary dealers, who expect Britain's vote to leave the European Union to weigh on Canada's economy. Canadian gross domestic product data for April is due on Thursday.
AUD/USD is supported around 0.7380 levels and currently trading at 0.7446 levels. It hit session high at 0.7455 and made session lows at 0.7416 levels. The Australian dollar edged up against its U.S. counterpart on Wednesday as some semblance of calm returned to global markets after the havoc of the Brexit vote, while bond yields held near record lows on expectations of further cuts in interest rates. Banking shares, which were among the most affected by Britain's decision, extended their rebound on Wednesday. Traders bet global central banks would be quick to offer fresh stimulus if market turmoil threatens the economic outlook. The Australian dollar inched ahead to $0.7453 and further away from Friday's trough at $0.7305, though it remained well short of the recent $0.7617 peak. Wednesday's U.S. data suggested the economy has not improved much since an anemic first quarter. A private report showed pending homes fell 3.7 percent in May, which was more severe than forecast, while consumer spending managed to rise for a second month.
Equities Recap
European shares rose on Wednesday, as jitters over Britain's vote to leave the European Union eased, with higher oil prices and the chance of more monetary stimulus also helping markets.
UK's benchmark FTSE 100 closed up by 3.2 percent, the pan-European FTSEurofirst 300 ended the day up by 2.83 percent, Germany's Dax ended up by 1.6 percent, France’s CAC finished the day up by 2.5 percent.
US stocks posted big gains for a second day on Wednesday as investors continued to scour for bargains and digest the fallout from Britain's stunning vote to leave the European Union.
Dow Jones closed up by 1.62 percent, S&P 500 ended up by 1.69 percent, Nasdaq finished the day up by 1.85 percent.
Treasuries Recap
U.S. Treasury debt prices fell on Wednesday, with the 30-year yield flirting with all-time lows, as investors reduced bond holdings on a further rebound in stocks and commodities following a rout triggered by Britain's vote to leave the European Union.
Benchmark 10-year Treasuries were down 12/32 in price with a yield of 1.495 percent, up 3 basis points.
Commodities Recap
Gold rose on Wednesday as the dollar retreated and investor appetite for safe assets remained strong because of longer-term financial uncertainty after Britain's surprise vote to leave the European Union.
Spot gold was up 1 percent at $1,324.90 an ounce by 2:30 p.m. EDT (1830 GMT), while U.S. gold settled up 0.7 percent at $1,326.90.
Oil prices jumped more than 3 percent on Wednesday, with Brent crude rising above the psychological $50 a barrel mark, after a larger-than-expected drawdown in U.S. crude inventories.
Brent crude futures settled up $2.03, or 4.2 percent, at $50.61 per barrel. It hit a near one-week high of $50.74 during the session.
U.S. crude's West Texas Intermediate (WTI) futures also closed up $2.03, or 4.2 percent, at $49.88. WTI's session high was $50.
The material has been provided by InstaForex Company – www.instaforex.com