Market Roundup
- Fed Minutes: Most Fed officials said hike still not warranted but conditions approaching that point.
- Fed Minutes: Almost all Fed officials said needed more evidence econ growth & labor market strong enough to lift inflation, most officials saw room for additional progress reducing labor slack.
- Fed Minutes: Many Fed officials thought labor slack would be largely eliminated in near-term.
- Fed Minutes: No decision yet on phasing out reinvestments.
- Yields fall on dovish Fed minutes, inflation concerns as oil prices dive.
- Gold at 1-month high after Fed hints Sept rate hike is less likely.
- Fed’s Bullard to argue for September hike (MNI). US CPI MM, SA Jul 0.1%, f/c 0.2%, 0.3%-previous.
- US Core CPI MM, SA Jul 0.1%, f/c 0.2%, 0.2%-previous.
- US Real Weekly Earnings MM Jul 0.4%, -0.4%-previous.
- China to step up support for small firms, expand tax breaks.
- Germany backs Greek bailout as Tsipras mulls early polls.
Looking Ahead – Economic Data (GMT)
- 23:30 Japan Reuters Tankan DI Aug 14-previous
- 23:50 Japan Foreign Bond Investment w/e 124.4b-previous
- 23:50 Japan Foreign Invest JP Stock w/e 357.3b-previous
Looking Ahead – Events, Other Releases (GMT)
- 00:20 US FRB-Minneapolis President Kocherlakota speaks before the “Macroeconomic Policy and Price Measurement Issues in a Low Inflation Environment” conference in SEOUL, South Korea.
Currency Summaries
EUR/USD is likely to find support at 1.1076 levels and currently trading at 1.1122 levels. The pair has made session high at 1.1134 and hit lows at 1.1032 levels. Euro rose against US dollar on Wednesday, after Fed’s July meeting indicated the central bank continues to edge closer to a rate hike even as policymakers expressed broad concerns about lagging inflation and the weak world economy. The minutes of the July 28-29 FOMC meeting showed that participants were awaiting more evidence on the economy and inflation, but that the conditions for liftoff are approaching. Only one member was ready to raise rates, but was also willing to wait for further evidence. The pair was trading in a very choppy price action in early New York session, after the release of US CPI figures the pair spiked to reach 1.1070 levels the dovish FOMC minutes in the late American session the pair rose to hit session high at 1.1130 levels. On the data front, no major economic data are set to be released from Eurozone. From US market Housing data and Philadelphia Fed manufacturing index are set to be released which presents some volatility in tomorrow’s market. To the upside, immediate resistance can be seen at 1.1140. To the downside, immediate support level is located at 1. 1093 levels.
GBP/USD is supported in the range of 1.5663 levels and currently trading at 1.5685 levels. It reached session high at 1.5700 and dropped to session low at 1.5640 levels. GBP/USD rallied on Wednesday, as the Feds minutes provided no clues about the Fed’s preparedness to raise rates as early as the September meeting. Anticipating a clearer signal but getting none, while September remains on the table, there is little indication that officials are champing at the tightening bit. Most members believed that the conditions for tightening had not yet been achieved even if they “were approaching that point. Sterling rallied as Dovish leaning US Fed minutes initially lifted the pound back near 1.5700 levels. Cable remained relatively buoyant as traders expect the BOE to begin rate hikes in Q1 ’16. Ahead in the day Britain’s Retail sales data from European session is set to released, a stronger than expected figures will infuse fresh bullish momentum for the cable. To the upside, immediate resistance can be seen at 1.5715. To the downside, immediate support level is located at 1.5660 levels.
USD/JPY is supported around 123.67 levels and currently trading at 123.86 levels. It peaked to hit session high at 124.44 and made session lows at 123.67 levels. The dollar slipped against Japanese’s Yen on Wednesday, after dovish Fed minutes. Fresh plunge in oil prices lifts Japanese Yen against most of the major’s currency pair but remained quite weak against stronger Euro and CHF. The Japanese Yen started to gain against US dollar, after US CPI figures printed negative figures at 0.1% against the forecast of 0.2%. The Japanese’s yen was trading around 124.18, after the Fed minutes the pair slipped to hit session lows at 123.67, before recovering some ground to trade at 123.85 in the late New York session. To the upside, immediate resistance can be seen at 124.00. To the downside, immediate support level is located at 123.77 levels.
USD/CAD is supported at 1.3040 levels and is trading at 1.3055 levels. It has made session high at 1.3082 and lows at 1.3052 levels. The Canadian dollar finished weaker against the U.S. dollar on Wednesday as crude prices sank to multiyear lows, but it pared early losses after minutes from the U.S. Federal Reserve’s July policy meeting gave no clear indication of when the central bank intends to raise interest rates. The greenback slid as market participants who had anticipated a September move by the Fed pulled back those bets. A U.S. rate hike sometime this year is still widely expected, however, and would be the first increase in nearly a decade. The price of crude, a significant Canadian export, also fell, adding further pressure on the currency, though the commodity was off recent lows. The loonie swung widely between C$1.3024 and C$1.3180 during the session, weakening sharply as the price of oil, a significant Canadian export, plunged to 6-1/2 year lows. To the upside, immediate resistance can be seen at 1.3128. To the downside, immediate support level is located at 1.3110 levels.
Equities Recap
European stock markets closed lower on Wednesday, as the market awaited US Fed minutes. UK’s benchmark FTSE 100 closed down by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 1.8 percent, Germany’s Dax ended down by 2.1 percent, France’s CAC finished the day down by 1.6 percent.
U.S. stocks fell in choppy trading on Wednesday as minutes from the latest Federal Reserve meeting highlighted concern over the state of the global economy, driving markets to question the likelihood that the Fed will raise rates next month.
Dow Jones closed down by 0.91 percent, S&P 500 ended down by 0.81 percent, Nasdaq finished the day down by 0.77 percent.
Treasuries Recap
Treasury yields fell on Wednesday as plunging oil prices added to concerns about low inflation and minutes from the U.S. Federal Reserve’s July meeting noted lagging inflation and the weak world economy.
Benchmark 10-year notes were last up 14/32 in price to yield 2.15 percent, down from 2.20 percent late Tuesday.
Commodities Recap
U.S. crude oil slumped over 4 percent on Wednesday to hit a 6-1/2-year low and almost break below $40 per barrel, as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut.
The front-month futures contract in U.S. crude, which expires on Thursday, settled down $1.82, or 4.3 percent, at $40.80 a barrel. It dropped as low as $40.46 during the session, its lowest since March 2009.
The front-month in Brent, the global benchmark for oil, settled down $1.65, or 3.4 percent, at $47.16 a barrel. It extended its losses to $2 in post-settlement trade.
U.S. gasoline futures fell even more than crude, tumbling 6 percent to a six-month low, despite stockpiles of the fuel falling 2.7 million barrels.
U.S. diesel futures lost 3 percent, hitting six-year lows.
Gold prices extended gains to a one-month high on Wednesday, after minutes from last month’s U.S. Federal Reserve meeting hinted to a decreased likelihood for interest rates to be raised in September, pushing the dollar lower.
Spot gold was up 1 percent at $1,128.66 an ounce at 2:55 p.m. EDT (1855 GMT), having touched a one-month high at $1,131.90. Traders noted strong resistance at $1,135.U.S.
gold futures for December delivery settled up 1 percent at $1,127.90 an ounce.
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