Posted at 07 March 2023 / Categories Market Roundups
Market Roundup
•Powell says Fed likely needs to raise rates higher
•US Indexes end down: Dow 1.72%, S&P 1.53%, Nasdaq 1.25%
•US Redbook (YoY) 3.0%,5.3% previous
•US IBD/TIPP Economic Optimism 46.9, 45.1 previous
•GlobalDairyTrade Price Index -0.7%,-1.5% previous
•US Jan Wholesale Inventories (MoM) -0.4%, -0.4% forecast,0.1% previous
•US Jan Wholesale Trade Sales (MoM) 1.0%,-0.3% forecast,-1.4% previous
•US 3-Year Note Auction 4.635%,4.073% previous
•US Jan Consumer Credit 14.80B,20.00B forecast, 11.56B previous
Looking Ahead Economic data (GMT)
•23:50 Japan Feb Bank Lending (YoY) 3.1% previous
•23:50 Japan Jan Adjusted Current Account 118.21T previous
•23:50 Japan Jan Current Account n.s.a -0.818T forecast,0.033T previous
•05:00 Japan Jan Leading Index (MoM) -0.5% previous
•05:00 Japan Coincident Indicator (MoM) -0.2% previous
•05:00 Japan Leading Index 96.9 forecast,97.2 previous
•06:00 Japan Feb Economy Watchers Current Index 49.1 forecast,48.5 previous
Looking ahead events and other Releases(GMT)
•No events ahead
Currency Summaries
EUR/USD: The euro declined against the dollar on Tuesday after Federal Reserve Chair Jerome Powell said the U.S. central bank is likely to raise rates more than previously expected and warned that the process of getting inflation back to 2% has "a long way to go. The Fed is also prepared to move in larger steps if the "totality" of incoming information suggests tougher measures are needed to control price increases, Powell told U.S. lawmakers on Tuesday. The Fed had slowed the pace of its tightening to 25 basis points at its last two meetings, following larger hikes last year. Immediate resistance can be seen at 1.0640 (21DMA), an upside break can trigger rise towards 1.0682 (23.6%fib).On the downside, immediate support is seen at 1.0542 (38.2%fib), a break below could take the pair towards 1.0504(Lower BB).
GBP/USD: Sterling sank to a two-month low against the U.S. dollar on Tuesday, after a Bank of England (BoE) policymaker said the pound could be vulnerable to other central banks’ outlooks, while the Federal Reserve chair said interest rates might have to increase further. Mann’s comments came just a few hours ahead of testimony before Congress by Fed Chair Jerome Powell, which pushed the U.S. dollar index more than 1% higher as he said the ultimate level of interest rates was likely to be higher than previously anticipated. The pound has slipped around 1.3% against the dollar so far in March. Immediate resistance can be seen at 1.9025(5DMA), an upside break can trigger rise towards 1.2011(23.6%fib).On the downside, immediate support is seen at 1.1790(38.2%fib), a break below could take the pair towards 1.1761(Lower BB).
USD/CAD: The Canadian dollar weakened to a four-month low against its U.S. counterpart on Tuesday as a hawkish shift by Federal Reserve Chair Jerome Powell rattled Wall Street and ahead of a Bank of Canada interest rate decision this week. The Bank of Canada is due to make a policy decision on Wednesday.The central bank will keep its key interest rate on hold at 4.50% for the rest of this year, according to economists polled , who said the bank was more likely to sound a hawkish tone than dovish as inflation remains a worry. The loonie was trading 1% lower at 1.3750 to the U.S. currency, its biggest decline since Sept. 30. The currency touched its weakest level since Nov. 3 at 1.3762. Immediate resistance can be seen at 1.3781 (Higher BB), an upside break can trigger rise towards 1.3807(Higher BB).On the downside, immediate support is seen at 1.3680(38.2%fib), a break below could take the pair towards 1.3660 (5 DMA).
USD/JPY: The dollar rose against yen on Tuesday as Federal Reserve Chair Jerome Powell's hawkish remarks sent investors scurrying for safer assets like the U.S. dollar. The dollar jumped 1.3% after Powell said the U.S.central bank will stay the course until it brings down inflation, adding the ultimate level of rates is likely to be higher than anticipated. His comments boosted expectations of a 50-basis point interest rate hike this month, with traders' bets on such a hike rising to 58%.The dollar index rose as high as 105.65, up 1.3% on the day and the highest since Dec. 6. The greenback reached 137.17 Japanese yen , up around 0.9% on the day and the highest since Dec. 20.Strong resistance can be seen at 137.39(23.6%fib), an upside break can trigger rise towards 138.40(Higher BB).On the downside, immediate support is seen at 136.56(5DMA), a break below could take the pair towards 135.45(38.2%fib).
Equities Recap
European shares logged their steepest one-day fall in two weeks on Tuesday as investors assessed the prospects of a 50-basis point rate hike by the U.S. Federal Reserve following hawkish remarks by Chair Jerome Powell.
UK's benchmark FTSE 100 closed down by 0.13 percent, Germany's Dax ended down by 0.60 percent, France’s CAC finished the day down by 0.46 percent.
U.S. stock indexes closed sharply lower on Tuesday after Federal Reserve Chair Jerome Powell told Congress the central bank will likely need to raise interest rates more than previously expected as it seeks to rein in stubbornly high inflation.
Dow Jones closed down by 1.72% percent, S&P 500 closed down by 1.53% percent, Nasdaq settled down by 1.25% percent.
Treasuries Recap
Shorter-term Treasury yields were higher on Tuesday, while a part of the yield curve saw its deepest inversion in more than 40 years, after remarks from Federal Reserve Chair Jerome Powell indicated the U.S. central bank could become more aggressive in its rate hike path.
The yield on the 30-year Treasury bond was down 3.3 basis points at 3.879%.
Commodities Recap
Oil prices fell by $3 a barrel on Tuesday after comments from U.S. Federal Reserve Chair Jerome Powell stoked rate hike fears, the dollar strengthened and top crude importer China issued weak data.
Brent crude futures shed $2.89, or 3.4%, to settle at $83.29 a barrel, while the U.S. West Texas Intermediate crude futures dropped by $2.88, or 3.6%, to close at $77.58 per barrel. Those were the biggest single day percentage declines for both contracts since Jan. 4.
Gold prices fell more than 1% on Tuesday, as the dollar jumped after Federal Reserve Chair Jerome Powell indicated rate hikes could come at a faster pace from the U.S. central bank in his testimony to a congressional committee.
Spot gold was down 1.8% at $1,813.11 per ounce by 1:54 p.m. ET (1854 GMT). U.S. gold futures fell 1.9% to settle at $1,817.70 per ounce.