Market Roundup
- EIA US Weekly crude stocks up 3.1m bbls v forecast- 2.2m bbls.
- Commodities/EM CCYs reverse early gains after EIA data shows large crude build.
- Stock indices reverse early rise as risk gains pared w/falling oil, lower earnings outlook.
- Canada August building permits value falls 3.7 percent, CAD weakens.
- IMF warns emerging market companies have over borrowed $3 trillion.
- UK economic growth slowed to +0.5 percent, in third quarter-NIESR.
- Brazil’s 12-month consumer inflation slows in September (9.49% in Sep vs 9.53% in Aug).
- ECB balance sheet expands by EUR 6.2 billion, to EUR 2.627 trillion in latest week.
Looking Ahead – Economic Data (GMT)
- 23:50 Japan Foreign Bond Investment w/e-1044.9b-previous
- 23:50 Japan Foreign Invest JP Stock w/e-191.8b-previous
- 23:50 Japan Current Account NSA JPY* Aug forecast- 1221.1b, 1808.6b-previous
- 23:50 Japan Machinery Orders MM* Aug forecast- 3.2%, -3.60%-previous
- 23:50 Japan Machinery Orders YY*Aug forecast 4.2%, 2.80%-previous
- 05:00 Japan Economy Watchers Poll Sep 49.3-previous
Looking Ahead – Events, Other Releases (GMT)
- 03:05 Australia- RBA Head of Econ Research John Simon speaks at the Paul Woolley Centre for the Study of Capital Market Dysfunctionality conference
Currency SummariesEUR/USD is likely to find support at 1.1220 levels and currently trading at 1.1251 levels. The pair has made session high at 1.1266 and hit lows at 1.1209 levels. Optimism about global economic growth boosted risk appetite and drove the U.S. dollar higher against the euro on Wednesday. Expectations for the first Federal Reserve rate increase since 2006 have been pushed out to 2016, analysts reiterated, while the potential for more stimulus from the European Central Bank and Bank of Japan have also contributed to a backdrop of accommodative central bank policy. Worries over a global slowdown led by China, the world’s second-biggest economy, have been a key concern for investors. The U.S. dollar benefited from the greater risk appetite and rose against the euro and Swiss franc, which traders tend to buy and hold during times of worry given their low yields and sell in times of greater risk appetite. The euro was last down 0.39 percent against the dollar at $1. the upside, immediate resistance can be seen at 1.1234. To the downside, immediate support level is located at 1.1286 levels.GBP/USD is supported in the range of 1.5250 levels and currently trading at 1.5323 levels. It reached session high at 1.5340 and dropped to session low at 1.5283 levels. Sterling rose to its highest in more than two weeks against the dollar after data on Wednesday showed industrial output had recovered better than expected from a July slump, pushing the pound back above $1.5300. The output reading added to a mixed bag of recent data and policy signals for the pound which has seen investors roll back expectations for a first rise in Bank of England interest rates far into next year. Some players said that shift had been overdone and that and the output figures contributed to a more positive mood on the pound and rises in gilt yields on Wednesday. Sterling’s gains this year on the back of expectations the BoE was one of the few central banks even considering raising interest rates have made it among the most exposed to growing worries over world growth. To the upside, immediate resistance can be seen at 1.5340. To the downside, immediate support level is located at 1.5281 levels. To the upside, immediate resistance can be seen at 120.20. To the downside, immediate support level is located at 120.60 levels.USD/JPY is supported around 119.68 levels and currently trading at 119.92 levels. It peaked to hit session high at 120.02 and made session lows at 119.73 levels. The dollar slipped slightly against the yen on Wednesday after the Bank of Japan left monetary policy steady despite talk the central bank would ease. The dollar was last down 0.2 percent against the yen at 120.005 yen. The Bank of Japan held off on expanding stimulus on Wednesday, even as slumping exports and falling oil prices threaten its rosy projection that the economy is on track to hit the bank’s ambitious 2 percent inflation target next year. But lingering fears of recession mean economists still expect the central bank to ease policy at a more crucial meeting on Oct. 30, when it is expected to cut its long-term economic and price forecasts. BOJ Governor Haruhiko Kuroda remained bullish that the bank’s massive money-printing will eventually lift the world’s third-biggest economy decisively out of nearly two decades of deflation, but some economists were unconvinced. To the upside, immediate resistance can be seen at 120.10. To the downside, immediate support level is located at 119.68levels.USD/CAD is supported at 1.2971 levels and is trading at 1.3064 levels. It has made session high at 1.3073 and lows at 1.2971 levels. The Canadian dollar firmed for the sixth straight session against the U.S. dollar on Wednesday, touching levels not seen in nearly two months as crude oil prices pushed higher on evidence supplies were falling and demand was rising. Oil, a major Canadian export, has been a significant drag on the loonie for more than a year now, with the currency plunging to multi-year lows alongside crude prices that have more than halved since June 2014. Oil prices have rallied over the last four sessions, however, with Brent closing above $50 a barrel for the first time in a month on Tuesday and U.S. light crude approaching $50. The currency, which had stumbled to an 11-year low of C$1.3457 just last week, traded between C$1.2971 and C$1.3058 in the US session. To the upside, immediate resistance can be seen at 1.3075. To the downside, immediate support level is located at 1.3030 levels.Equities RecapEuropean shares ended slightly higher on Wednesday, giving up earlier gains as a three-day rally appeared to lose momentum, but gains among miners and autos offset a decline in airline stocks.UK’s benchmark FTSE 100 closed up by 0.07 percent, the pan-European FTSEurofirst 300 ended the day down by 0.05 percent, Germany’s Dax ended up by 0.8 percent, France’s CAC finished the day up by 0.1 percent.U.S. stocks were marginally higher in volatile trading on Wednesday as investor worries about corporate earnings grew and a rally in crude oil prices ended.Dow Jones closed up by 0.72 percent, S&P 500 ended up by 0.79 percent, Nasdaq finished the day up 0.90 percent.Treasuries RecapU.S. Treasuries prices fell on Wednesday as a recovery in oil prices spread to global stock markets and a failed German debt auction encouraged investors to move into stocks from bonds, ahead of a $21 billion 10-year note auction.The Benchmark 10-year Treasuries were down 9/32 in price to yield 2.067 percent, up 3 basis points from late Tuesday.The 30-year bond was down 16/32 in price to yield 2.898 percent, up 2.5 basis points from Tuesday.Commodities RecapOil fell in volatile trading on Wednesday, snapping a three-day rally, after U.S. government data showing a large crude inventory build surprised traders the day after an industry group had reported a draw.Brent, the global crude benchmark, settled down 59 cents, or 1.1 percent, at $51.33 a barrel.The West Texas Intermediate (WTI) benchmark for U.S. crude slid 72 cents, or 1.5 percent, to settle at $47.81.Gold eased on Wednesday, falling from a two-week high on the firmer dollar while losses were capped on expectations that the U.S. Federal Reserve will delay raising interest rates until next year.Spot gold fell 0.1 percent to $1,145.86 an ounce by 2:53 p.m. EDT (1853 GMT), after touching $1,153.30, its highest level since Sept. 24.
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