Market Roundup
• U.S. Aug durable goods orders unchanged beats forecast -1.4%.
• OPEC reaches first deal to cut oil output since 2008 – sources.
• Iran says OPEC reached consensus to manage market – SHANA; Oil rises 6%.
• Atlanta Fed’s GDPNow -0.1% to 2.8% after durables.
• Fed’s Yellen: Job creation is well above what is sustainable.
• Fed’s Yellen: Congress could allow Fed to purchase equities as possible future monetary policy tool.
• Fed’s Evans: low-interest rates likely to last for some time; risk of overshooting inflation lower than many analysts believe.
• ECB’s Draghi: ECB will continue its measures until it has reached the objective of inflation near 2% in Mid-term.
• ECB’s Draghi: ECB not to blame for problems Deutsche Bank is facing.
• ECB’s Draghi: If there is space for fiscal expansion it should be carefully targeted.
• GBP dips after BoE's Shafik flags rate cut possibility, would rather act pre-emptively than do too little too late
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e -607.6b-previous
• 23:50 Japan Foreign Invest JP Stock w/e -479.0b- previous
• 23:50 Japan Retail Sales YY Aug forecast -1.8%, -0.20%- previous
Looking Ahead - Events, Other Releases (GMT)
• 06:35 Japan- BoJ Gov Kuroda gives brief remarks at an annual meeting
Currency Summaries
EUR/USD is supported at 1.1184 levels and currently trading at 1.1211 levels. The pair has made session high at 1.1231 and hit lows at 1.1184 levels. US Dollar inched higher against the euro on Wednesday, but gains were limited as traders awaited for more clues from upcoming US economic data on whether the Federal Reserve will hike rates this year, while reduced concerns over the European banking system limited the euro's losses. Fed Chair Janet Yellen did not comment on the outlook for the economy or monetary policy in prepared testimony for a House of Representatives Financial Services Committee hearing. The euro rose from a session low of $1.1182 touched in early trading, although the currency remained slightly lower on the day and was last down 0.2 percent against the dollar at $1.1189.The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.29 percent at 95.705.
GBP/USD is supported in the range of 1.2900 levels and currently trading at 1.3014 levels. It reached session high at 1.3035 and dropped to session low at 1.2914 levels. Sterling declined against the dollar on Wednesday as sterling was weighted down after Bank of England policymaker said she expected that central bank would at some point require to add more monetary stimulus to Britain's economy to cushion the blow dealt by Brexit. BoE Deputy Governor Minouche Shafik who will be stepping down from the bank's monetary policy committee next year said a 2016 rate cut would hinge on economic data, but that she would rather act pre-emptively than be on the back foot and do too little too late. Shafik's comments contrasted with those of fellow MPC member Kristin Forbes, who last week said she saw no case for a further rate cut. Sterling was last trading at $1.3012 down 0.1 percent in the late US session. Against the euro, it was also down 0.1 percent at 86.18 pence.
USD/CAD is likely to find support at 1.3030 levels and is trading at 1.3087 levels. It has made intraday high at 1.3269 and lows at 1.3084 levels. The Canadian dollar rose sharply to hit almost four weeks high against its U.S. counterpart on Wednesday as oil prices rebounded strongly on a deal by major oil producers to limit output. The OPEC breakthrough news boosted the commodity-linked Canadian dollar after the currency had been weighed down recently by weak domestic data and dovish comments from Bank of Canada Governor Poloz. U.S. crude oil futures settled up $2.38 at $47.05 a barrel after sources confirmed that Organization of the Petroleum Exporting Countries struck a deal to limit crude output at its policy meeting in November. The Canadian dollar last traded at C$1.3087 to the greenback, or 76.28 U.S. cents, much stronger than Tuesday's close of C$1.3203, or 75.74 U.S. cents.
AUD/USD is supported around 0.7633 levels and currently trading at 0.7684 levels. It hit session high at 0.7691 and made session lows at 0.7643 levels. The Australian dollar edged higher against US dollar on Wednesday after members of the Organization of the Petroleum Exporting Countries reached an agreement on a production-limiting deal. The Australian dollar inched higher to trade at $0.7688 after sources confirmed that OPEC agreed to reduce its oil output by about 750,000 barrels per day. Country-by-country production is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia. After weakening in August, the Aussie is on track to end this month higher. When risk appetite rises, the Aussie is favoured as a carry currency with investors borrowing at low rates in yen or euros to buy higher yielding Australian assets.
Equities Recap
European shares rose on Wednesday, helped by gains among commodity stocks, while Deutsche Bank recovered from all-time lows hit in the previous session.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.65 percent, Germany's Dax ended up by 0.8 percent, France’s CAC finished the day up by 0.8 percent.
Wall Street ended higher on Wednesday after an OPEC agreement to limit crude output fueled a rally in oil and more than offset nervousness about a tight race for the U.S. presidency.
Dow Jones closed up by 0.59 percent, S&P 500 ended up by 0.52 percent, Nasdaq finished the day up by 0.24 percent.
Treasuries Recap
U.S. long-dated Treasury debt yields edged higher on Wednesday, boosted by a report that OPEC has reached a deal to limit oil production, with the agreement to be implemented in November.
In afternoon trading, U.S. benchmark 10-year Treasury notes were down 1/32 in price for a yield of 1.561, compared with 1.556 percent late on Tuesday.
U.S. 30-year bonds slipped 3/32 in price, yielding 2.282 percent, up from Monday's 2.278 percent.
On the front end of the curve, U.S. two-year notes were flat in price for a yield of 0.750 percent.
Commodities Recap
Gold prices fell for the second straight day and hit a one-week low on Wednesday, pressured by earlier strength in the U.S. dollar and as investors assessed Federal Reserve Chair Janet Yellen's testimony before a congressional committee.
Spot gold fell 0.4 percent at $1,322.22 an ounce by 3:11 p.m. EDT (1911 GMT). It fell nearly 1 percent on Tuesday, its biggest single-day loss in a month, on stronger risk appetite.U.S. gold futures settled down 0.5 percent at $1,323.70.
Oil prices rallied on Wednesday after members of the Organization of the Petroleum Exporting Countries reached an agreement on a production-limiting deal, boosting energy sector shares.
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Brent crude settled up $2.72, or 5.9 percent, at $48.69 a barrel, hitting a more than two-week high of $48.96.
U.S. West Texas Intermediate (WTI) crude rose by $2.38, or 5.3 percent, to settle at $47.05, after a peak $47.45, its highest since Sept 8.
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