Posted at 02 February 2023 / Categories Market Roundups
Market Roundup
•ADP employment softer than expected
•Fed hikes by 25 basis points
•Powell acknowledges disinflation process has started
• US Jan ADP Nonfarm Employment Change 106K, 178K forecast,235K previous
•Canada Jan Manufacturing PMI 51.0, 49.2 previous
•US Jan Manufacturing PMI 46.9,46.8 forecast,46.8 previous
•US Jan ISM Manufacturing New Orders Index 42.5, 45.2 previous
•US Dec Construction Spending (MoM) -0.4%, -0.1% forecast, 0.2% previous
•US Jan ISM Manufacturing Employment 50.6, 49.0 forecast, 51.4 previous
•US Jan ISM Manufacturing PMI 47.4, 48.0 forecast,48.4 previous
•US Jan ISM Manufacturing Prices 44.5, 39.5 forecast, 39.4 previous
•US Dec JOLTs Job Openings 11.012M, 10.250M forecast, 10.458M previous
•US Crude Oil Inventories 4.140M, 0.376M forecast,0.533M previous
•US Gasoline Inventories 2.576M, 1.442M forecast,1.763M previous
•US Fed Interest Rate Decision 4.75%,4.75% forecast,4.50% previous
Looking Ahead - Economic data (GMT)
• 00:30 Australia Dec Building Approvals (MoM) 1.0% forecast, -9.0% previous
• 00:30 Australia Dec Private House Approvals -2.5% previous
• 00:30 Australia NAB Quarterly Business Confidence 9 previous
•03:35 Japan 10-Year JGB Auction 0.500% previous
Looking Ahead - Economic events and other releases (GMT)
•No events ahead
Currency Summaries
EUR/USD: The euro strengthened on Wednesdays after the Federal Reserve raised its target interest rate by the expected 25 basis points but communicated more increases were on the horizon.The Fed raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise ongoing increases in borrowing costs as part of its still unresolved battle against inflation. Before the policy announcement, economic data painted a mixed picture, with a labor market that remains strong while manufacturing activity continues to weaken, showing contraction for a third straight month.The euro reached $1.10020, the highest since April 4. Immediate resistance can be seen at 1.1010(23.6%fib), an upside break can trigger rise towards 1.1056(Higher BB).On the downside, immediate support is seen at 1.0925(5DMA), a break below could take the pair towards 1.0828(38.2%fib).
GBP/USD: Sterling strengthened on Wednesday as U.S. dollar slumped after the Federal Reserve raised its target interest rate by the expected 25 basis points but comments from Chair Jerome Powell were interpreted as dovish by the market. The Fed said the U.S. economy was enjoying modest growth and robust job gains, with policymakers still "highly attentive to inflation risks" as it seeks to tighten financial conditions and reign in high prices. Markets have been pricing in the possibility of a rate cut by the Fed in the back half of the year. Sterling was last trading at $1.2371, up 0.41%. Immediate resistance can be seen at 1.2419(23.6%fib), an upside break can trigger rise towards 1.2505(Higher BB).On the downside, immediate support is seen at 1.2283(21DMA), a break below could take the pair towards 1.2180(17th jan lowA).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Wednesday as dollar attracted sellers after Federal Reserve interest rate decision. This week's major U.S. economic focus will be the government's jobs report for January on Friday, which is expected to show that employers added 185,000 jobs during the month. The price of oil, one of Canada’s major exports, was up 0.1% at $78.96 a barrel as the market looked towards a meeting of OPEC and its allies.The Canadian dollar was trading 0.15 percent higher at 1.3304 to the greenback. Immediate resistance can be seen at 1.3310(5DMA), an upside break can trigger rise towards 1.3331 (38.2% fib).On the downside, immediate support is seen at 1.3264 (23.6% fib), a break below could take the pair towards 1.3232 (Lower BB).
USD/JPY: The dollar dipped against yen on Wednesday after Federal Reserve Chair Jerome Powell spoke of making progress in bringing down inflation pressures, even as the U.S. central bank warned of further monetary policy tightening. Powell, speaking in a news conference after the Fed announced that it had hiked rates by a widely expected 25 basis points, said he is not fully sure where the central bank will stop with its increases to borrowing costs as it presses forward with its efforts to cool inflation.. The Japanese yen strengthened 0.83% versus the greenback at 129.02 per dollar. Strong resistance can be seen at 129.54(5DMA), an upside break can trigger rise towards 130.50(38.2%fib).On the downside, immediate support is seen at 127.92 (23.6% fib), a break below could take the pair towards 127.16 (Lower BB).
Equities Recap
European shares ended mixed on Wednesday after the Federal Reserve raised its target interest rate by the expected 25 basis points but comments from Chair Jerome Powell were interpreted as dovish by the market.
UK's benchmark FTSE 100 closed down by 0.14percent, Germany's Dax ended up by 0.35 percent, France’s CAC finished the day down by 0. 07 percent.
The S&P 500 and the Nasdaq rallied to higher closes on Wednesday after Federal Reserve chair Jerome Powell acknowledged that inflation was starting to ease following a quarter-point rate hike by the U.S. central bank, which issued a statement that it expects ongoing increases.
Dow Jones closed up by 0.02 percent, S&P 500 ended down by 1.05 percent, Nasdaq finished the day up by 2.00 percent.
Treasuries Recap
U.S. Treasury yields initially moved up after the Fed statement but reversed course and mostly fell after Powell's comments
Benchmark 10-year notes were down 10.5 basis points to 3.424%, from 3.529% late on Tuesday, although the two-year yield briefly turned higher after the most recent batch of economic data.
Commodities Recap
Gold prices rebounded sharply on Wednesday as the Federal Reserve chief’s surprisingly dovish remarks on the central bank’s fight to bring down inflation sank the dollar and signalled to investors that a peak in interest rates was likely approaching.
Spot gold climbed 1.2% to $1,951.43 per ounce by 3:48 p.m. ET (2048 GMT), its highest since mid-April 2022.U.S. gold futures settled 0.1% lower at $1,942.80.
Oil prices settled lower on Wednesday after sliding more than $3 a barrel in the session after U.S. government data showed big builds in crude oil, gasoline and distillate inventories and OPEC and its allies stuck to their output policy.
Brent crude futures settled down $2.62, or 3.1%, at $82.84 a barrel while West Texas Intermediate (WTI) U.S. crude futures fell $2.46, or 3.1% to settle at $76.41.