Market Roundup
• Fed holds rate steady, policymakers see only 2 rate hikes in 2016.
• Fed says global economy/financial developments continue to pose risks; doesn’t assess balance of risks in statement.
• Fed repeats expects econ conditions will evolve in way that warrants only gradual increases in FF rate.
• Fed lower Jobless forecast and even Inflation forecast slightly – no sign of Phillips Curve inflation rise in forecast.
• U.S. Feb core consumer prices rise in Feb (NSA +2.3%, SA +0.3%), Real weekly earnings -0.5%.
• U.S. Feb housing starts rebound (+5.2%), single-family projects soar; building permits fall 3.1%.
• With or without Iran, oil producers to meet in April on o/p deal; Meeting to take place in Doha on April 17.
• Atlanta Fed keeps U.S. 1st qtr growth view at 1.9 pct.
• Sterling hits 2-wk low, UK stocks turns down as OBR cuts ‘16/’17 growth outlook .
• Osborne uses budget speech to appeal for UK to stay in EU.
• Brazil's ex-president Lula to be Rousseff chief of staff.
Looking Ahead – Economic Data (GMT)
• 21:45 New Zealand GDP Production QQ Q4 forecast 0.6%, 0.9%-previous
• 21:45 New Zealand GDP – Annual -Avg, Prod-Bas Q4 forecast 2.4%, 2.9%- previous
• 21:45 New Zealand GDP – Annual* Q4 forecast 2%, 2.3%- previous
• 21:45 New Zealand GDP Expenditure QQ* Q4 forecast 0.6%, 1.2%- previous
• 23:50 Japan Foreign Bond Investment w/e 1537.9b- previous
• 23:50 Japan Foreign Invest JP Stock w/e -138.5b- previous
• 23:50 Japan Exports YY*Feb forecast -3.1%, -12.9%- previous
• 23:50 Japan Imports YY* Feb forecast -15.2%, -18%- previous
• 23:50 Japan Trade Balance Total Yen* Feb forecast 388.6b, -645.9b- previous
• 00:30 Australia Employment* Feb forecast 10.0k, -7.9k- previous
• 00:30 Australia Full Time Employment* Feb -40.6k- previous
• 00:30 Australia Participation Rate* Feb forecast 65.2%, 65.2%- previous
• 00:30 Australia Unemployment Rate* Feb forecast 6%, 6%- previous
Looking Ahead – Events, Other Releases (GMT)
• 22:05 Australia RBA Asst Gov (Fin’l Mkts) Guy Debelle speaks at the FX Week Australia conference
• 06:30 Japan BOJ Kuroda make a brief remark at Settlement System Forum
Currency Summaries
EUR/USD is likely to find support at 1.1122 levels and currently trading at 1.1216 levels. The pair has made session high at 1.1239 and hit lows at 1.1057 levels. Euro rose against US dollar on Wednesday, after the Federal Reserve kept interest rates unchanged but reduced its expectations for interest rate hikes in 2016 to two from four on Wednesday. In a statement policymakers noted that moderate economic growth and strong employment growth would allow it continue tightening its monetary policy this year but said the central bank will remain cautious to uncertain global economic growth. The euro reversed earlier losses and climbed to a new session high against the dollar following the Fed's statement. It was last up 0.7 percent at $1.1191.Meanwhile data showed U.S. inflation increased more than expected in February. The Labor Department said its Consumer Price Index, excluding the volatile food and energy components, rose 0.3 percent last month after a similar gain in January.
GBP/USD is supported in the range of 1.4200 currently trading at 1.4249 levels. It reached session high at 1.4273 and hit low at 1.4052 levels. The cable fell from 1.4137 in early European session on Wednesday to hit low at 1.4050 levels before recovering towards 1.4090 levels in the mid-morning New York session. However in late New York session the pair surged higher after the Federal Reserve, as expected, held interest rates steady while revising its outlook for interest rate increases to just two by the end of the year. Fed policymakers had been expected to leave short-term interest rates unchanged while signaling that a rate hike is not too far off as long as the job market and inflation continue to improve. The dollar tumbled after the statement's release and moved further downward against major currencies during Fed Chair Janet Yellen's press conference, touching new session lows against the euro, and Sterling. The currency's strongest level of the session was $1.4270, while its weakest level was $1.4050.
USD/CAD is supported at 1.3100 levels and is trading at 1.3128 levels. It has made session high at 1.3401 and lows at 1.3112levels. The Canadian dollar surged higher against US dollar on Wednesday after the Federal Reserve cut its rate hike projections, while oil prices rose and domestic data showed strength in manufacturing. The Fed indicated moderate U.S. economic growth and strong job gains would allow it to tighten policy this year with fresh projections showing policymakers expected two quarter-point hikes by the year's end, half the number seen in December. Canadian dollar also got boost from rebound in crude oil prices strong domestic manufacturing sales which rose 2.3 percent in January, far more than expected, while sales volumes reached their highest since before the 2008-2009 recessions, data from Statistics Canada showed. The currency's strongest level of the session was C$1.3111, while its weakest level was C$1.3404.
AUD/USD is supported around 0.7486 levels and currently trading at 0.7551 levels. It hit session high at 0.7560 and made session lows at 0.7409levels. The Australian dollar traded in lower range on Wednesday’s Asian and European session after renewed weakness in iron ore and dairy prices weighed down the currency pair, sending investors to the safety of the yen. However the Australian dollar reversed course to hit daily highs at 0.7560 levels after The Federal Reserve held interest rates steady after its two-day meeting, as expected. However, fresh projections from policymakers showed they expected two quarter-point rate hikes by year's end. But the U.S. central bank noted the United States continues to face risks from an uncertain global economy. The Aussie surged to $0.7560, after briefly hitting daily lows at 0.7413.
Equities Recap
European stocks ended little changed on Wednesday, coming off session highs after a report showed U.S. inflation rose more than expected last month, with gains for energy and auto company shares offset by a weaker banking sector.
Britain's blue-chip FTSE 100 index closed up by 0.61 percent, France's benchmark CAC-40 index closed down by 0.22 percent, Germany's DAX ended up 0.5 percent, meanwhile the pan-European Eurofirst 300 index was up by 0.01 percent.
Wall Street gained on Wednesday after the U.S. Federal Reserve left interest rates unchanged and signaled fewer rate hikes for the year.
Dow Jones closed up by 0.46 percent, S&P 500 ended up by 0.56 percent, Nasdaq finished the day up by 0.76 percent.
Treasuries Recap
U.S. Treasury yields fell across the board on Wednesday after the Federal Reserve, as expected, held interest rates steady while revising its outlook for interest rate increases to just two by the end of the year.
Benchmark 10-year Treasury notes were last up 4/32 in price for a yield of 1.948 percent, down from 1.973 percent late on Tuesday.
The 30-year bond was, however, down 16/32 in price, yielding 2.746 percent, up from 2.744 percent on Tuesday.
U.S. two-year notes rose 4/32 to yield 0.895 percent, compared with 0.980 percent on Tuesday. Yields touched 1 percent, their highest since Jan. 8.
Commodities Recap
Gold rallied 2 percent to $1,260 an ounce on Wednesday, turning higher after the Federal Reserve indicated that the United States continues to face risks from an uncertain global economy, pressuring the dollar.
Spot gold jumped 2.3 percent to $1,260.61 an ounce at 3:14 p.m. EDT (1914 GMT), after trading down as much as 0.4 percent to $1,226.87 prior to the statement.
U.S. gold futures for April delivery settled down 0.1 percent at $1,229.80 an ounce prior to the statement.
U.S. oil prices jumped almost 6 percent on Wednesday, erasing losses of the past two days, after major producers firmed up plans to meet in Qatar to discuss an output freeze and U.S. crude stockpiles grew less than expected.
U.S. crude settled up $2.12, or 5.8 percent, at $38.46 a barrel. It had fallen 5 percent in the past two sessions.
Brent crude finished up $1.59, or 4 percent, at $40.33 a barrel.
The material has been provided by InstaForex Company – www.instaforex.com