Market Roundup
- Fed keeps rates unchanged (vote 9-1, Lacker), specifically mentions Dec (next) meeting.
- Fed: sees risks to outlook from econ activity, labor markets nearly balanced, labor slack diminished.
- U.S. advance September goods trade deficit at $58.63 billion vs -67.19 in Aug.
- ECB’s Constancio: ECB will expand balance sheet until inflation rebounds.
- Equities fall, bond yields rise after hawkish Fed statement keeps Dec rate hike in play.
- Italy business & consumer morale hit multi-year highs, govt forecast 0.9% growth in ’15, 1.6% in ’16.
- Low demand for Bunds at auction as yields hit six-month lows.
- Chile central bank: 1 or 2 more rate hikes needed to bring inflation to target over next 10-mos.
- Turkey central bank ups inflation forecasts, may follow Fed hike.
Looking Ahead – Economic Data (GMT)
- 23:50 Japan Foreign Bond Investment w/e 491.5b-previous
- 23:50 Japan Foreign Invest JP Stock w/e -29.3b-previous
- 23:50 Japan Industrial output prelim mm Sep forecast -0.5%, -1.2%-previous
- 23:50 Japan IP Forecast 1 month ahead*Sep 0.1%-previous
- 23:50 Japan IP Forecast 2 month ahead* Sep 0.4%-previous
- 00:30 Australia Export Prices*Q3 -4.4%-previous
- 00:30 Australia Import Prices* Q3 -1.4%-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.0850 levels and currently trading at 1.0924 levels. The pair has made session high at 1.1091 and hit lows at 1.0898 levels. The dollar jumped to its highest level in more than 8 weeks against the euro on Wednesday, supported by expectations that U.S. Federal Reserve could raise interest rates as early as December. At the end of the Federal Reserve’s two-day meeting, the U.S. central bank held interest rates steady, as anticipated, but kept the gates open for a rate hike in December. The Federal Reserve said raising rates at its next meeting would depend on improvement made on employment and inflation. In late American hours, the euro was down 1.2 percent at $1.0903, after falling below $1.09 to its weakest level since early August. Against the Japanese yen, the dollar touched 121 and was last at 121.16 yen, up 0.6 percent. To the upside, immediate resistance can be seen at 1.0965. To the downside, immediate support level is located at 1.0890 levels.GBP/USD is supported in the range of 1.5228 levels and currently trading at 1.5262 levels. It reached session high at 1.5338 and hit session low at 1.5248 levels. Sterling slipped to two-week lows against the dollar on Wednesday, after the Federal Reserve signaled that December interest rate hike expectation is still on the table. Sterling was trading at $1.5264, its lowest in two weeks during late American trading hours. Earlier in European session pound was trading lower hurt by data that showed British economic growth slowed more than expected in the third quarter. Data on Tuesday showed Gross domestic product growth slowed to 0.5 percent in the three months to September from 0.7 percent the previous quarter that fuelled concerns that a period of rapid expansion might be coming to an end. The Bank of England is also expected raise its interest rate if Fed takes a call on raising rates in December. That should facilitate pound to again against most of the major pair baring dollar. To the upside, immediate resistance can be seen at 1.5292. To the downside, immediate support level is located at 1.5247 levels.USD/JPY is supported around 119.50 levels and currently trading at 120.96 levels. It hit session high at 120.26 and made session lows at 120.00 levels. US dollar rose against Japanese yen on Wednesday, after Federal Reserve’s hawkish statement. The U.S. central bank downplayed concerns about the impact of a weakening global economy on U.S. growth, a factor that kept it from ending its near-zero rate policy in September. Investors had expected the Fed to remain pat on rates, but the overt reference to December came as a surprise. Investors quickly shifted their expectations of a December hike, with rates futures contracts upping the chance of a move this year to 43 percent from 34 percent prior to the statement. Against the Japanese yen, the dollar touched 121 and was last at 121.16 yen, up 0.6 percent. Meanwhile, on the data front, foreign bonds buying, industrial production, industrial production forecast are the key data to be released from Japan on Thursday. To the upside, immediate resistance can be seen at 121.20. To the downside, immediate support level is located at 120.88 levels. USD/CAD is supported at 1.3080 levels and is trading at 1.3188 levels. It has made session high at 1.3221 and lows at 1.3088 levels. The Canadian dollar gave up all the earlier gains made against its U.S. counterpart on Wednesday after the Federal Reserve rate hike plans are in place for December, offsetting the impact of a bounce in crude oil prices. The Federal Reserve kept rates steady as expected but bought a big to surprise investors with an overt reference to its December meeting. The loonie, as the Canadian currency is colloquially known, weakened to above C$1.3200 to the greenback after the central bank published its news, giving up the gains earlier made around C$1.3100 levels. The commodity-linked currency had gained ahead of the Fed as a bump in chronically weak oil prices provided support. On the data front, Canadian GDP data is due this Friday. To the upside, immediate resistance can be seen at 1.3200. To the downside, immediate support level is located at 1.3160 levels.Equities RecapEuropean shares edged higher on Wednesday as the investors sentiment was boosted by crude oil price rally.UK’s benchmark FTSE 100 was up at 1.24 percent, the pan-European FTSEurofirst 300 ended the day up 1.07 percent, Germany’s Dax ended up 1.36 percent, France’s CAC finished the day up by 0.99 percent.U.S. stocks rebounded in volatile trading on Wednesday after initially selling off following the Federal Reserve’s statement that suggested a December rate hike was still on the table.Dow Jones closed up by 1.13 percent, S&P 500 ended up by 1.18 percent, Nasdaq finished the day marginally up 1.29 percent.Treasuries RecapU.S. Treasuries prices fell on Wednesday with short- and medium-dated yields hitting their highest in a month after the Federal Reserve left the door open for a rate hike in December, surprising traders who had hoped for hints of no move this year.In late trading, two-year Treasuries yield, which is most sensitive to changes in traders’ view on Fed policy, rose to 0.707 percent, up 9 basis points for its steepest single-day yield jump since Feb. 6, according to Reuters data.Benchmark 10-year Treasuries notes fell 20/32 in price to yield 2.099 percent, up 7 basis points on the day, while the 30-year bond was down 16/32 in price to yield of 2.876 percent, up 2.5 basis points.Commodities RecapGold prices fell 1 percent on Wednesday, in the metal’s weakest session in a month, as the market turned lower after the U.S. Federal Reserve left the door open to a possible interest rate hike in December and the dollar hit a 2-1/2-month high.Spot gold was down 1.1 percent at $1,153.73 at 2:52 p.m. EDT (1852 GMT), after falling to $1,152, it’s lowest since Oct. 13. U.S. gold futures for December delivery settled up 0.9 percent at $1,176.10 an ounce prior to the Fed’s policy statement.U.S. crude oil prices rose 6 percent on Wednesday after the government reported an inventory build that reversed bearish market expectations, extending gains from an earlier rally triggered by what was described as a big algorithmic trade.U.S. crude settled up $2.74 at $45.94 a barrel, after hitting a session high at $46., the global benchmark for oil, closed up $2.24 at $49.05.
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