Market Roundup
• U.S. new home sales +2% on strong gains in the West (+38.5%), Northeast/Midwest fall.
• Fed’s Bullard: not a fan of dot plot, NAIRU overshoot may mean faster hikes, sees slow but good growth in ’16.
• Pimco: BOE Cut More Likely Than Hike In 2016.
• Stocks end 5-day winning streak as global rally fizzles, FX under pressure as Fed talk lifts USD.
• Spot gold hits one-week low on dollar, U.S. rate hike/path comments.
• US weekly crude stocks +9.36mn BBLS vs f/c of 3.1mn BBLS build, oil ending NorAm -4%.
Looking Ahead – Economic Data (GMT)
• 21:45 New Zealand Trade – Imports* Feb forecast 3.94b, 3.89b-previous
• 21:45 New Zealand Trade Balance * Feb forecast 50.0m, 8.0m- previous
• 21:45 New Zealand Trade Balance YY* forecast -3.57b, -3.58b- previous
• 21:45 New Zealand Trade – Exports* Feb forecast 4.05b, 3.90b- previous
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1150 levels and currently trading at 1.1176 levels. The pair has made session high at 1.1197 and hit lows at 1.1158 levels. The dollar rose to a one-week high against euro on Wednesday as dollar was boosted by hawkish comments from U.S. Federal Reserve officials. Recently several U.S. central bankers endorsed that Fed should move to raise rates. Higher rates make U.S. investments more attractive against other currencies and would be expected to support the dollar. On the data front, New U.S. single-family home sales rebounded modestly in February. The Commerce Department said on Wednesday home sales rose 2.0 percent to a seasonally adjusted annual rate of 512,000 units. January's sales pace was revised up to 502,000 units from the previously reported 494,000 units. The dollar index, which tracks the U.S. currency against six major rivals, rose about 0.4 percent to 96.044, the highest level since March 16.
GBP/USD is supported in the range of 1.4300 currently trading at 1.4379 levels. It reached session high at 1.4359 and hit low at 1.4052 levels. Sterling sank against US dollar on Wednesday as sterling came under more selling pressure on Wednesday on the view that the deadly attacks in Brussels would boost the campaign to take Britain out of the EU and with latest opinion polls showing a tight race between those who want to leave and those who want to stay in the bloc. Investors worry that a possible Brexit would affect economic growth, push back UK rate hike expectations and freeze the huge foreign investment flows Britain needs to fund its current account deficit, one of the biggest in the developed world at about 4 percent of output. British voters will decide in a referendum on June 23 whether the country stays in the EU or leaves. The currency's strongest level of the session was $1.4155, while it its weakest level was at $1.4076.
USD/CAD is supported at 1.3140 levels and is trading at 1.3212 levels. It has made session high at 1.3216 and lows at 1.3111 levels. The Canadian dollar declined against U.S. dollar on Wednesday towards levels not seen in almost one week as crude oil prices fell and the dollar was boosted by hawkish comments from US central bankers in support of rate hikes. Tuesday's federal budget had little impact on the strength of Canadian dollar, although the fiscal stimulus announced is expected to keep the Bank of Canada from moving on rates this year. Canadian dollar weakened after the U.S. government's Energy Information Administration (EIA) data showed crude stockpiles rose 9.4 million barrels last week – three times the 3.1 million barrels. The currency's strongest level of the session was C$1.3038, while it touched its weakest since March 16 at C$1.3220.
AUD/USD is supported around 0.7500 levels and currently trading at 0.7522 levels. It hit session high at 0.7545 and made session lows at 0.7518 levels. The Australian dollar declined against US dollar on Wednesday as the US rate hike comments from Federal Reserve sparked dollar demand across the board on Wednesday, putting pressure oil-linked currencies as crude futures fell about 2 percent in morning U.S. trading. Meanwhile Asian equity markets suffered only modest declines on the day. Comments from several U.S. Federal Reserve officials underpinned the dollar, which touched a one-week high, rising 0.5 percent against a basket of currencies. Volumes have been light this week, and the US bond market will be closed on Friday and with few major economic releases until durable goods orders on Thursday and fourth-quarter gross domestic product on Friday. The Australian dollar fell to $0.7530, a level not seen since March 17th.
Equities Recap
European shares closed mixed on Wednesday in thin pre-holiday trade, with miners and oil companies leading the decline on weaker commodity prices, while Credit Suisse outperformed the banking sector after saying it was cutting costs further.
Britain's blue-chip FTSE 100 index closed up by 0.12 percent, France's benchmark CAC-40 index closed down by 0.21 percent, Germany's DAX ended up 0.41 percent, meanwhile the pan-European Eurofirst 300 index was down by 0.13 percent.
Wall Street closed lower on Wednesday as energy and materials share prices dropped while investors remained cautious a day after deadly bombing attacks in Belgium.
Dow Jones closed down by 0.46 percent, S&P 500 ended down by 0.64 percent, Nasdaq finished the day down by 1.08 percent.
Treasuries Recap
U.S. Treasury yields fell on Wednesday as investors continued to evaluate when the Federal Reserve is likely to next raise interest rates, and anticipated upcoming data releases including next week's employment report for March.
U.S. benchmark 10-year Treasury notes gained 17/32 in price to yield 1.88 percent, down from 1.94 percent on Tuesday.
Commodities Recap
Oil prices tumbled 4 percent on Wednesday, with U.S crude settling below the key $40 per barrel mark after a sixth straight week of record highs in stockpiles that traders warned could cut short the market's two-month long rally.
U.S. crude futures settled down $1.66, or 4 percent, at $39.79 a barrel. It was the sharpest one-day drop for the front-month contract in U.S. crude since Feb. 11, when prices fell to a 12-year low of $26.05.
Brent crude futures finished down $1.32, or 3.2 percent, at $40.47 a barrel.
Spot gold fell about two percent on Wednesday, one of its deepest declines of the past year, as the dollar strengthened following hawkish comments by Federal Reserve officials on the path of U.S. interest rates
Spot gold fell 1.9 pct to trade at around $1,224.46 an ounce by 2:57 p.m. EDT (1857 GMT) after earlier dropping as much as 2.6 percent, also pressured by investors booking profits ahead of the Easter break, which starts on Friday.
U.S. gold futures settled down 2 percent at $1,224 an ounce.
The material has been provided by InstaForex Company – www.instaforex.com