Market Roundup
- US private hiring solid (+182k vs 180k forecast); trade deficit at 7-month low (-40.8b).
- US service sector growth accelerates in October; new orders, Mfg & employment all rise.
- Fed would consider negative rates if economy soured – Yellen.
- Fed’s Yellen: Fed would consider negative rates if economy soured.
- Fed’s Yellen: Economy “performing well,” December “live” for rate hike.
- Fed’s Dudley: completely agrees Yellen that December is a live possibility for rates liftoff.
- Fed’s Brainard (dove): Fed policy “very dependent” on incoming data, USD appreciation a drag.
- ECB sees bigger indirect impact from Chinese slowdown.
- Gold slides to 4-week low on dollar strength, Fed talk. U.S. sells 2-year debt at highest yield since 2010.
- US crude stocks rose even as imports plunged – EIA.
Looking Ahead – Economic Data (GMT)
- 22:30 Japan AIG Construction Index Oct 51.9-previous
Looking Ahead – Events, Other Releases (GMT)
- 22:15 Australia-RBA Governor Glenn Stevens speaks at the Melbourne Institute 2015 Economic and Social Outlook Conference “Rebuilding Foundations for Reform”
- 23:50 Japan- Bank of Japan will publish the minutes of October policy meeting
Currency SummariesEUR/USD is likely to find support at 1.0800 levels and currently trading at 1.0864 levels. The pair has made session high at 1.0894 and hit lows at 1.0843 levels. The dollar rose sharply against euro on Wednesday as comments from Federal Reserve Chair Janet Yellen intensified bets the Federal Reserve may raise interest rates in December if the overall economy improves further. The dollar climbed more than 1 percent against the euro, notching a 3-month high, while it jumped to a 2-month high against the yen. As of 12:26 EST, the euro was down 0.99 percent at 1.0857. The dollar rose against a basket of currencies on Wednesday, getting an additional boost from Yellen’s comments. U.S. stocks and prices for Treasury debt fell. Meanwhile, Euro zone business growth remained tepid last month, with the European Central Bank’s massive stimulus programme having little apparent impact on economic activity or price pressures, a survey showed on Wednesday. Compiler Markit said the surveys pointed to quarterly economic growth of around 0.4 percent, in line with the forecast published in October. To the upside, immediate resistance can be seen at 1.0895. To the downside, immediate support level is located at 1.0840 levels.GBP/USD is supported in the range of 1.5340 and currently trading at 1.5384 levels. It reached session high at 1.5389 and dropped to session low at 1.5360 levels. Sterling slipped lower against US dollar on Wednesday, after the host of economic data lifted the dollar across the board. U.S. private employers maintained a steady pace of hiring in October and a jump in new orders buoyed activity in the services sector, suggesting the economy was strong enough to support an interest rate hike from the Federal Reserve in December. The ADP National Employment Report showed private payrolls increased 182,000 last month on top of the 190,000 jobs added in September. Job gains last month were broad-based, though manufacturing lost 2,000 positions. Meanwhile, the main event for sterling this week is Super Thursday when the BoE releases its quarterly Inflation Report as well as an interest rate decision and the minutes from its latest Monetary Policy Committee (MPC) meeting. The central bank is expected to keep interest rates at their historic lows, with most economists expecting only MPC hawk Ian McCafferty to continue to vote for an immediate hike. But some reckon another of the nine MPC members could join him, with Kristin Forbes and Martin Weale seen as most likely. To the upside, immediate resistance can be seen at 1.5400. To the downside, immediate support level is located at 1.5360 levels.USD/JPY is supported around 121.00 levels and currently trading at 120.53 levels. It peaked to hit session high at 121.70 and made session lows at 121.50 levels. US dollar edged higher against Japanese after, A raft of data on Wednesday suggested the economy was strong enough to support ending an era of near-zero interest rates. The ADP National Employment Report showed the private sector added more jobs than expected last month. The report comes ahead of the crucial nonfarm payrolls data on Friday. The ADP National Employment Report showed private payrolls increased 182,000 last month on top of the 190,000 jobs added in September. Job gains last month were broad-based, though manufacturing lost 2,000 positions. In a separate report, the Institute for Supply Management said its non-manufacturing index rose to 59.1 last month from a reading of 56.9 in September. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of the U.S. economy. The dollar jumped to a 2-month high against the yen. To the upside, immediate resistance can be seen at 121.77. To the downside, immediate support level is located at 121.40 levels. USD/CAD is supported at 1.3104 levels and is trading at 1.3148 levels. It has made session high at 1.3190 and lows at 1.3145 levels. The Canadian dollar weakened against the U.S. dollar on Wednesday, as the greenback broadly rose after data showed the U.S. trade deficit narrowed to its lowest level in seven months in September. Meanwhile, Canada’s trade deficit narrowed more than expected in September, helped by a modest pickup in exports and reinforcing economists’ views that the country pulled out of recession in the third quarter. The trade gap declined to a deficit of C$1.73 billion ($1.32 billion), data from Statistics Canada showed on Wednesday. That topped analysts’ expectations for a deficit of C$1.90 billion. Momentum in the export sector is key to the Bank of Canada’s outlook for the economy. After cutting interest rates twice this year to offset the impact of cheaper oil prices, the bank is widely expected to hold rates at 0.50 percent when it next meets in December. The Canadian dollar was last trading at C$1.3148 to the greenback, weaker than Tuesday’s official close of C$1.3052. To the upside, immediate resistance can be seen at 1.3170. To the downside, immediate support level is located at 1.3120 levels.Equities RecapEuropean shares closed off their highs on Wednesday after Federal Reserve Chair Janet Yellen said a rate hike in December was a live possibility, while Germany’s blue-chip index underperformed after a scandal at carmaker Volkswagen widened.UK’s benchmark FTSE 100 closed up by 0.43 percent, the pan-European FTSEurofirst 300 ended the day up by 0.42 percent, Germany’s Dax ended down by 0.99 percent, France’s CAC finished the day up by 0.25 percent.U.S. stocks edged lower on Wednesday, pulling back after recent strong gains along with energy shares, while Federal Reserve Chair Janet Yellen said a rate hike in December was a possibility, but not a certainty. Dow Jones closed down by 0.27 percent, S&P 500 ended down by 0.34 percent, Nasdaq finished the day down 0.05 percent.Treasuries RecapU.S. two-year Treasury yields hit their highest in four and a half years on Wednesday after Federal Reserve Chair Janet Yellen said the U.S. economy was “performing well” and could justify an interest rate hike in December.U.S. benchmark 10-year Treasury notes were last down 3/32 in price to yield 2.2322 percent after ending Tuesday at 2.2200 percent.U.S. 30-year Treasury bonds were last up 3/32 to yield 2.9960 percent, compared to 3.0010 percent late Tuesday.U.S. two-year notes were last down 2/32 in price to yield 0.8158 percent after ending Tuesday at 0.7700 percent.Commodities RecapGold fell to a one-month low on Wednesday, dropping for the sixth straight session as the dollar shot to a three-month high after U.S. Federal Reserve Chair Janet Yellen raised expectations for a December interest rate increase.Spot gold fell as much as 1 percent to $1,106 an ounce, the lowest since Oct. 2, and was down 0.8 percent at $1,108.10 an ounce at 3:20 p.m. EST (2020 GMT).U.S. gold futures for December delivery settled down 0.7 percent at $1,106.20 an ounce.Crude oil futures fell nearly 4 percent on Wednesday, almost wiping out gains from the previous day, as a strong dollar, tumbling gasoline prices and rising U.S. crude inventories bore down on the market.Brent crude futures settled down $1.96, or3.9 percent, at $ 48.58 a barrel had raised to $ 1.75 on Thursday.US crude closed down $ 1.58,or 3.3 percent, at $ 46.32.it gained $1.76 in the previous session.
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