Market Roundup
- Fed: Will raise rates when some further improvement in labor market seen and ‘reasonably’ confident inflation will move back to 2% target.
- Fed: Risks to economy & labor market remain nearly balanced, economic activity expanding moderately, with solid jobs & declining unemployment.
- Fed: Inflation continues to run below objective, partly reflecting earlier declines in energy prices & prices of non-energy imports.
- USD sees kneejerk dive post-statement but buyers emerge, action then choppy late in day.
- U.S. June pending home sales m/m -1.8% f/c +1.0% previous 0.9%.
- IMF’s Lagarde: Received letter from Greek authorities to invite IMF to work with Greece on proposed debt reform; Lagarde: A significant debt restructuring should take place for Greece.
- Weekly Crude stocks off 4.2mln bbls v 0.18mln draw f/c.
- Saudi Arabia to reduce oil production after summer.
- Speaker of House Boehner to declare support for repealing ban on U.S. crude oil exports-Industry sources.
Looking Ahead – Economic Data (GMT)
- 22:45 New Zealand June Building Consents no f/c previous 0.0%.
- 23:50 Japan Capital flows data
- 01:30 Australia June Building Approvals f/c -0.8% previous 2.4%
- 01:30 Australia June Private House Approvals no f/c previous -8.4%
- 01:30 Australia Q2 Export Prices f/c -4.0% previous -0.8%
- 01:30 Australia Q2 Import Prices f/c +1.5% previous -0.2%
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is supported around 1.0915 levels and currently trading at 1.0981 levels. It has made session high at 1.1077 and lows at 1.0970 levels. Euro edged lower against US dollar on Wednesday, after slightly hawkish FOMC meeting. The pair ahead of the meeting rose towards 1.1071 levels and subsequently declined to hit daily lows at 1.0970 levels. The Federal Reserve said on Wednesday, The U.S. economy and job market continue to strengthen, leaving the door open for a possible interest rate hike when central bank policymakers next meet in September. Fed officials said they felt the economy had overcome a first-quarter slowdown and was expanding moderately despite a downturn in the energy sector and headwinds from overseas. The central bank nodded in particular to solid job gains in recent months. The statement may strengthen expectations of a rate hike at the Fed’s September meeting. To the upside, immediate resistance can be seen at 1.1063. To the downside, major support level is located at 1.0915.
GBP/USD is supported around 1.5524 levels and currently trading at 1.5602 levels. It has made session high at 1.5684 and low at 1.5603 levels. Sterling edged lower against US dollar after hitting four-week high on Wednesday, after FOMC meeting. The cable was initially boosted by, signs of consumer demand in Britain picking up. Data released on Wednesday showed, mortgage approvals in the UK rebounding in June, while another report showed increased buying of sterling debt by overseas investors. In early New York session, Sterling was up 0.4 percent at $1.5685, it’s highest since July 1. The BoE’s monetary policy committee (MPC) meets next week, and for the first time will simultaneously publish its decision on interest rates, the breakdown of how its policymakers voted along with a summary of their debate, and its quarterly forecasts for Britain’s economy, including inflation. To the upside, immediate resistance can be seen at 1.5675. To the downside, major support level is located at 1.5545.
USD/JPY is supported around 123.50 levels and currently trading at 123.95 levels. It has made session high at 124.02 and low at 123.54 levels. The US dollar rose against Japanese yen on Wednesday, after slightly hawkish Fed’s statement. During the course of FOMC meeting the pair hit lows at 123.55, later it rebounded in quick succession to reach daily highs at 124.01 levels. The dollar rose against a basket of currencies on Wednesday as Federal Reserve policy-makers upgraded their assessment on the labor market, supporting some traders’ view of a rate increase in September. With no meeting scheduled in August, the Fed will have two months of data to analyze when it meets in September. There were no dissents in Wednesday’s vote to leave rates unchanged. The Fed last hiked rates in 2006. To the upside, immediate resistance can be seen at 124.15. To the downside, major support level is located at 123.50 levels. Overall trend of this pair is bullish in the long term.
USD/CAD is supported around 1.2860 levels and currently trading at 1.2945 levels. It has made session high at 1.2954 and low at 1.2858 levels. The Canadian dollar weakened against the U.S. dollar on Wednesday as crude prices fell, but traded within a narrow range. The loonie was still among the weakest against a number of major currencies, as the price of oil, a key Canadian export, marked its longest string of losses in a year on an ever-growing global supply glut. The Canadian dollar is expected to weaken further this year, particularly as the two central bank monetary policies diverge. The Bank of Canada has already cut rates by 25 basis points twice this year. The Canadian dollar traded between C$1.2860 and C$1.2968 so far in the session. To the upside, immediate resistance can be seen at 1.2975. To the downside, major support level is located at 1.2865 levels.
Equities Recap
European equities advanced on Wednesday, backed by strong U.S. and European corporate earnings. The pan-European FTSEurofirst 300 closed down, up by 1 percent at 1,560.45 pts, Germany’s DAX closed down, up by 0.3 percent, FTSE 100 closed down up by 1.1 percent, and France’s CAC 40 closed down up by 0.8 percent. Meanwhile Italy’s FTSE MIB closed down by 0.3 percent, Switzerland SMI closed at 9,382.00 pts, up by 1.15% percent and Spain’s IBEX closed down by 0.6 percent.
U.S. stocks stayed higher after the Federal Reserve offered no clear direction but said, September hike in view but not set. Nasdaq closed up 21.20 points, or 0.42 percent, at 5,110.40, S&P 500 closed up 15.13 points, or 0.72 percent, at 2,108.38, Dow Jones closed up 120.07 points, or 0.68 percent, at 17,750.34
Treasuries Recap
U.S. Treasury prices, which had already lost ground on Wednesday, had little reaction to the Federal Reserve’s assessment of an improving U.S. labor market as it kept the door open for an interest rate hike, possibly as soon as September. Shorter-dated Treasuries initially gained ground on the Fed’s statement, which highlighted that the economy had overcome a first-quarter slowdown and was now “expanding modestly.” The Fed, as expected, left in place its zero interest rate policy.After the initial trading reactions, two-year U.S. Treasuries were nearly unchanged at an interest rate of 0.699 percent. Benchmark 10-year U.S. Treasuries were down 5/32 of a point in price, pushing the yield – which moves in the opposite direction – up to 2.27 percent. Earlier, the 10-year yield hit a session high of 2.29 percent The 30-year Treasury bond lost 10/32 of a point in price with the yield up to 2.98 percent. The yield had reached a session high of 3.03 percent.
Commodities Recap
Gold moved up a shade on Wednesday, but remained near last week’s 5-1/2-year low, after a U.S. Federal Reserve statement raised uncertainty about the timing of a possible interest rate hike, leaving the door open for September.
Spot gold was up 0.14 percent at $1,096.50 an ounce at 2:41 p.m. EDT (1841 GMT).
U.S. gold for August delivery settled down 0.3 percent at $1,092.60 an ounce, prior to the statement.
U.S crude oil futures settle at $48.79/bbl, up 81 cents, 1.69 pct, U.S. crude prices were down 0.63 percent to $47.68 a barrel, while Brent crude lost 0.41 percent to $53.08.
Front-month Brent futures rose 60 cents to $53.90 a barrel. U.S. crude for September delivery last traded at $49.26, up $1.28 on the day.
The material has been provided by InstaForex Company – www.instaforex.com