- EUR/NOK peaks at 9.0899 Tuesday and slides to 8.9630 today.
- Norway May labour survey in line and oil soft but NOK still lifts.
- Switzerland UBS Jun consumption index 1.68 vs a revised 1.62.
- Germany August GFK Consumer Confidence 10.1 vs 10.1 previous, 10.01 expected.
- UK BoE June consumer credit 1.22bln vs 1.001bln previous, 1.100bln expected.
- UK BoE June mortgage lending, 2.615bln vs 2.098bln previous, 2.050bln expected.
- UK June M4 money supply -0.5% vs +0.5% previous.
- UK July CBI distributive trades +21 vs 29 previous, 30 expected.
- Japan Chief CabSec Suga – Drastic wage rises needed for growth.
- RBNZ Gov Wheeler – Further monetary policy easing likely to maintain growth, but large rate cuts only consistent with recession.
- Wheeler- Further NZD depreciation necessary, risks to inflation outlook.
- (1000 ET/1400 GMT) US Jun pending home sales, +1.0% m/m; last +0.9%.
- (1030 ET/1430 GMT) EIA Weekly Petroleum Statistics.
Key Events Ahead
- (0900 ET/1300 GMT) FOMC two-day meeting resumes.
- (1400 ET/1800 GMT) FOMC Statement.
FX Recap
USD: As oil prices inched lower and traders await the outcome of a U.S. Fed’s meeting, major commodity-linked currencies were back on the defensive on Wednesday. In early deals in Europe, the dollar rose 0.2 percent against the euro at $1.1040 and 0.1 percent at 123.71 yen.EUR/USD is supported below 1.1100 levels and currently trading at 1.1062 levels. It has made intraday high at 1.1082 and low at 1.1029 levels. The euro gave up all of its overnight gains and traded lower ahead of the EU open. The European calendar is empty; hence all the bold action is set to happen in the US session with the Federal Open Market Committee (FOMC) meeting outcome in focus. With Greece talks already delayed by a week, it is highly unlikely that the third bailout agreement will be concluded in time for the August 20th European Central Bank (ECB) payment date, which will inevitably mean that the subject of further actions and bridging finance are likely to be argued over between now and then. The main focus will remain conclusion of the FOMC meeting, which is not expected to bring any changes to monetary policy, but Fed Chair Janet Yellen might suggest some further hints as to when the main rate will be hiked. The September meeting is still in play. Furthermore, US GDP for the second quarter is due on Thursday and should post growth of 2.5%, returning to strong figures after Q1’s dismal -0.2%. Initial support is seen around at 1.0789 and resistance at 1.1195 levels. Option expiries are at 1.0970 (911M), 1.1000 (881M), 1.1040-50 (600M), 1.1080 (386M), 1.1100 (682M).USD/JPY is supported below 124.00 levels and posted a high of 123.72 levels. It has made intraday low at 123.32 and currently trading at 123.57 levels. Pair reversed previous gains and fell into the negative territory in the mid-European session, as the Japanese currency enjoys stronger than expected Japanese retail sales numbers while the greenback edged lower on profit-taking after the recent strength. Retail sales in the world’s third-largest economy rose an annual 0.9% in June, beating expectations for a 0.5% rise but still slowing sharply from a 3% spike in May. Near term resistance is seen at 124.57 and support is seen at 120.63 levels. Option expiries are at 123.00 (432M), 123.15 (580M), 123.30 (330M), 123.70-80 (600M).GBP/USD is supported around $1.5600 levels. It made an intraday high at 1.5647 and low at 1.5586 levels. Pair is currently trading at 1.5640 levels. UK retail sales slowed further in July as the overall balance of those retailers who saw their sales up and those down fell to 21%, down from 29% measured a month before, and below expectations of 29%. The retail sector and overall domestic consumption in Britain has been considered one of the most fundamental pillars of the economy. Initial support is seen at 1.5413 and resistance is seen around 1.5734 levels.NZDUSD is supported below 0.6700 levels and trading at 0.6676 levels and made intraday low at 0.6656 and high at 0.6737 levels. The New Zealand dollar stalled its rise and eased-off highs versus the US dollar in early Asian morning, keeping NZD/USD near two-week highs above 0.67 handle, as the Kiwi remains underpinned by RBNZ Governor Wheeler’s latest speech on early Wednesday while a retreating US dollar across the board also supported the up moves. Reserve Bank of New Zealand Governor Graeme Wheeler said while further monetary policy easing is likely, the economy currently isn’t weak enough to warrant big reductions in interest rates. The RBNZ will review its growth and inflation forecasts in its next Monetary Policy Statement, due September 10. Initial support is seen at 0.6465 and resistance at 0.6789 levels. Option expiry is at 0.6670-80 (500M).AUD/USD is supported around 0.7300 levels and trading at 0.7308 levels. It has made intraday high at 0.7349 levels and low at 0.7299 levels. Unwinding US dollar positions ahead of the FOMC statement lifted the Aussie above the $0.73 handle. Aussie shaved-off gains and edged lower during mid-Asia as the greenback halted its descent and now trades muted against its major competitors. Initial support is seen at 0.7225 and resistance at 0.7647 levels. Option expiries are at 0.7250-60(300M), 0.7350-60 (370M).
Equity Recap
European equities rose on strong corporate earnings and gains in U.S. and Asian markets on hopes that Beijing could stem the rout in its markets without damage to the world’s second biggest economy.The pan-European FTSEurofirst 300 index rose 0.8 percent after carmaker Peugeot reported first-half net income for the first time in four years. Germany’s DAX rose 0.7 pct. Britain’s FTSE was up 0.5 pct, while France’s CAC climbed 0.5 pct.Tokyo’s Nikkei average closed down 0.13 pct at 20,302.91. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.4 percent. China’s CSI300 Index ended up 3.1 pct at 3,930.38 points, while Shanghai Composite Index closed up 3.4 pct at 3,789.17 points.
Commodity Recap
Oil prices dropped as concerns over global oversupply outweighed the impact of a what is likely to be a larger-than-expected draw on U.S. crude stocks. Front-month Brent futures were down 42 cents at $52.88 a barrel by 0850 GMT, set for their sixth consecutive daily decline, the longest such run since July last year. U.S. crude for September delivery last traded at $47.65 a barrel, down 33 cents.Gold was steady at just below $1,100 an ounce on Wednesday, trading not far from a 5-1/2-year low, as investors awaited the outcome of the U.S. Federal Reserve’s meeting for more signs on the timing of this year’s interest rate increase. Spot gold was up 0.3 percent at $1,098 an ounce by 0630 GMT. U.S. gold for August delivery was little changed at $1,097.40 an ounce.
Treasuries Recap
European and U.S. government bond yields were broadly steady.UK Gilts opened 5 ticks higher than the settlement of 116.70 as core markets go risk off ahead of tonight’s FOMC decision. Dealers are seeing some support in the belly of the curve against swapped issuance, but so far, screens are holding within recent ranges. Buyers are so far respecting lows on 10-year cash from earlier in the week at 1.93%.JGB prices ended the day narrowly mixed, with the 7-yr to 9-yr zone modestly firmer. Unlike yesterday, trading volume in both cash and futures markets was limited, except for the BoJ’s massive purchase of JGBs. Today, the BoJ offered to buy JPY375bn in the 1-yr to 3-yr zone, JPY425bn in the 3-yr to 5-yr zone, JPY240bn in the 10-yr to 25-yr zone, and JPY140bn in the over 25-yr zone under its massive JGB purchase program after yesterday’s monthly JPY2.5tn 2-yr JGB auction.Australian government bond futures fell, with the 3-year bond contract off 4 ticks at 98.070. The 10-year contract was down 4.5 ticks to 97.1600. NZ bond yields were higher as much as 6 basis points.
The material has been provided by InstaForex Company – www.instaforex.com