Oil Climbs on Surprise Drop in U.S. Inventories

Good morning,

- U.S. stocks higher after Fed notes improving economy..

- $USD outperformed versus its major peers on Wednesday. Strongest versus $EUR with +0.69% spot returns, weakest versus $GBP with +0.07%.

- Oil Climbs on Surprise Drop in U.S. Inventories. Oil prices turned higher after the U.S. Energy Information Administration on Wednesday reported a decline of 4.2 million barrels in crude supplies for the week ended July 24.

- U.S. stocks finished stronger on Wednesday after the U.S. Federal Reserve said the economy and job market continued to strengthen and left its key interest rate unchanged. The central bank's comments on the economy and inflation after its two-day mtng appeared to do little to drastically change wide expectations that the first rate hike will come in September or possibly December...."The statement tried to just give an update on the state of the economy, which is showing some modest improvement," said Guy Haselmann, head of U.S. interest rate strategy at Scotiabank in New York. "They were trying not to create extra volatility in a market already on edge."

- BNP Paribas on USD: The outcome of the July FOMC meeting can be seen as encouraging for USD bulls, says BNPP. "In the statement the Committee upgraded its assessment of the labour and housing markets although it did drop its reference to stabilization in energy prices. The most significant change came in the third paragraph, where the qualifier “some” was added to the sentence “the Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market…” BNPP notes. "The implies the Committee is a step closer to rate hikes compared to the June meeting, but the message remains very data dependent, with a September rate hike neither teed up nor ruled out. The Fed funds and euro$ curves a bit higher on net in reaction to the statement but continue to price less than 50% odds of a rate hike at the September meeting. Focus now shifts back to the US data," BNPP argues. "We remain patiently bullish on the USD," BNPP projects.

- Brazil raises benchmark lending rate 50 basis points to 14.25%.

- BOJ's Ishida: Must watch for any risks in financial system due to QQE...Also, Ishida pointed out that 'Must pay attention to pensioners to gauge consumption, pensioners' impact on consumption is rising.' What's more, he added that 'must watch Chinese disinflation, excessive indebtedness. No large imbalances or overheating in Japan market.' Japan's economy has continued to recover moderately, best to look at CPI gauge excluding energy for now.' Finally said that, 'Must watch Chinese disinflation, excessive indebtedness. No large imbalances or overheating in Japan market.'

- RBA's Stevens: Capital flows from China could be $400B a year.

- U.K. Mortgage Approvals Rose in June Amid Housing Revival. U.K. mortgage approvals rose more than economists forecast in June in a sign of continued momentum in the housing market. Lending to businesses fell the most on record. Home-loan approvals climbed to 66,582 from an upwardly revised 64,826 in May, the Bank of England said in London on Wednesday. Economists had forecast a figure of 66,000, according to a Bloomberg survey. The figures chime with recent surveys showing renewed strength in the housing market following the May general election as employment prospects improve, wages increase and households take advantage of record-low mortgage rates.

- China's Great Short Seller Suddenly Turns Bullish. Jon Carnes is about the last person on Earth you’d expect to turn bullish on China’s stock market. This is a man who built his career on wagers against Chinese companies, bets so successful that one researcher ranks the 41-year-old among the best short sellers worldwide...“There’s tons and tons of money in China, and that money has to go someplace,” Carnes said. “I don’t think giant bull markets like this end that quickly.”

- Watch for today: US GDP, Spanish GDP, EZ Sentiment.

Have a nice Day !