Market Roundup
• UK ministers quit over Brexit draft, pound and bank stocks tumble, May vows to fight.
• USTR says next tranche of U.S. tariffs on imports from China on hold –FT.
• Fed plans major review of how it pursues inflation, employment goals.
• Atlanta Fed trims U.S. Q4 GDP growth view to 2.8 pct .
• Fed's Bostic wants to proceed cautiously on rate hikes.
• US 10 Nov w/e Initial Jobless Claims, 216k, 212k forecast, 214k previous.
• US 3 Nov w/e Continued Jobless Claims, 1.676 mln, 1.630 mln forecast, 1.623 mln previous, 1.630 mln revised.
• US Nov NY Fed Manufacturing, 23.30, 20.00 forecast, 21.10 previous.
• US Oct Import Prices MM, 0.5%, 0.1% forecast, 0.5% previous, 0.2% revised.
• US Oct Export Prices MM, 0.4%, 0.1% forecast, 0.0% previous.
• US Nov Philly Fed Business Index, 12.9, 20.0 forecast, 22.2 previous.
• US Oct Retail Sales MM, 0.8%, 0.5% forecast, 0.1% previous, -0.1% revised.
• US Sep Business Inventories MM, 0.3%, 0.3% forecast, 0.5% previous.
• Upset by Trump's Iran waivers, Saudis push for deep oil output cut.
Looking Ahead - Economic Data (GMT)
• 15 Nov 21:30 New Zealand Oct Manufacturing PMI, 51.7 previous
• 16 Nov 02:00 New Zealand Oct RBNZ Offshore Holdings, 55.4% previous
• 16 Nov 02:00 Australia Nov TR IPSOS PCSI, 54.38 previous
• 16 Nov 02:00 Japan Nov TR IPSOS PCSI, 43.54 previous
• 16 Nov 02:00 China Nov TR IPSOS PCSI, 76.01 previous
Looking Ahead - Events, Other Releases (GMT)
• 15 Nov 21:00 Ontario Finance Minister Vic Fedeli presents fall economic statement of Canada's biggest province - Ontario
• 16 Nov 08:30 ECB's Mario Draghi speaks at Frankfurt European Banking Congress during Euro Finance Week - Frankfurt
• 16 Nov 12:00 Riksbank General Council meeting – Stockholm
• 16 Nov 13:00 Bundesbank's Jens Weidmann speaks at a conference - Frankfurt
• 16 Nov 14:15 German Finance Minister Olaf Scholz speaks at a conference - Frankfurt
• 16 Nov 16:30 Fed Chicago's Charles Evans participates in Q&A session before Fixed Income Forum Roundtable - Chicago
• 16 Nov N/A BoE's Deputy Governor Sam Woods takes part in online Q&A session as part of 'The Future of Money' event - London
Currency Summaries
EUR/USD is likely to find support at 1.1260 levels and currently trading at 1.1330 levels. The pair has made session high at 1.1361 and hit lows at 1.1285 levels. The euro strenthened against dollar on Thursday as investors cautiously welcomed Britain's draft Brexit deal with the European Union and concerns about the Italian budget stand-off eased. Most currencies traded in tight ranges at the start of European trading, with the Australian dollar the stand out - it added more than 0.8 percent after a strong jobs report. British Prime Minister Theresa May won the backing of her senior ministers for an EU divorce deal on Wednesday, pushing the euro and sterling up against the dollar. The deal struck on Tuesday would allow Britain to leave the EU with a deal that avoids a chaotic departure. But EU chief negotiator Michel Barnier cautioned that the road to ensuring a smooth UK exit was still long and potentially difficult. The euro added another 0.3 percent on Thursday, hitting $1.1352, a four-day high. The dollar index, a gauge of the currency's performance against six peers, was flat at 96.788, off a 16-month high hit on Monday.
GBP/USD is supported in the range of 1.2691 levels and currently trading at 1.2776 levels. It reached session high at 1.2814 and dropped to session low at 1.2723 levels. Britain's pound declined sharply against the dollar on Thursday after a series of resignations rocked British Prime Minister Theresa May's government and threw into doubt her long-awaited Brexit agreement just hours after it was unveiled.The pound slumped nearly 2 percent against the dollar and euro and was set for its biggest daily drop this year after Brexit minister Dominic Raab resigned to protest at the draft deal with the European Union. Three other ministers followed suit. Fears that May's hard-fought Brexit deal could collapse sent British financial markets into gyrations not seen since the sell-off following the June 2016 referendum on EU membership. The darkening outlook for Britain's economy was also reflected in the money markets, where investors have all but priced out a rate hike by the Bank of England next year. Sterling trimmed some of its losses when May vowed in a press conference on Thursday to fight for her draft divorce deal with the EU. In volatile trading, the pound sank 1.9 percent to $1.2730, its biggest daily drop this year. Sterling was down 1.7 percent against the euro at 88.85 pence.
USD/CAD is supported at 1.13134 levels and is trading at 1.3178 levels. It has made session high at 1.3249 and lows at 1.3153 levels. The Canadian dollar firmed against its broadly stronger U.S. counterpart on Thursday as oil prices stabilized and signs emerged that the United States and China were working to resolve a trade war. China has delivered a written response to U.S. demands for wide-ranging trade reforms, three U.S. government sources said, a move that could trigger more formal negotiations to resolve a trade war between the world's top economies. Canada is a major exporter of commodities, including oil, and runs a current account deficit, so its economy could benefit if prospects improve for the flow of trade or capital. The price of oil stabilized after losing nearly 7 percent over the previous three days, though concern over the prospect of an oversupplied market next year continued to weigh on prices despite OPEC's message that it may cut crude output. The Canadian dollar was last trading 0.1 percent higher at 1.3178 to the greenback.The loonie traded in a narrow range of 1.3153 to 1.3249. On Wednesday, the currency matched Tuesday's intraday low of 1.3264, which was its weakest in nearly four months.
USD/JPY is supported around 113.00 levels and currently trading at 113.55 levels. It peaked to hit session high at 113.68 and made session lows at 113.21 levels. The U.S. dollar declined against the yen on Thursday as traders bought into the safe-haven yen after Britain's Brexit deal with the European Union was plunged into uncertainty, spooking investors. Days after drafting a divorce deal, Britain's exit from the EU took a turn for the worse after Prime Minister Theresa May's Brexit secretary and other ministers quit in protest as euro-skeptic lawmakers stepped up efforts to oust her.Global factors overshadowed Thursday's slew of U.S. economic data, which came out mixed, but should keep the Federal Reserve on track to raise interest rates multiple times starting in December.U.S. retail sales were up 0.8 percent in October, but excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3 percent last month, lower than expected. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. The other economic numbers such as U.S. jobless claims were weaker than expected, while import prices rose more than forecast, but underlying imported inflation pressures remained tame amid a strong dollar.
Equities Recap
European shares reversed early morning gains and fell to two-week lows on Thursday in a broad-based selloff as British Prime Minister Theresa May's government was plunged into crisis over Brexit.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day down by 0.94 percent, Germany's Dax ended down by 0.5 percent, France’s CAC finished the day down by 0.7 percent.
U.S. stocks reversed course to trade higher on Thursday after a Financial Times report that further U.S. tariffs on Chinese imports would be paused spurred optimism that the two countries could resolve their trade dispute.
Dow Jones closed up by 0.85 percent, S&P 500 ended up by 1.07 percent, Nasdaq finished the day up by 1.73 percent.
Treasuries Recap
U.S. Treasury prices rose on Thursday, sending yields to two-week lows across the curve, as concerns about a weak stock market and Britain's exit from the European Union prompted investors to seek the safety of government bonds.
The benchmark 10-year Treasury note yields fell to 3.092 percent, from 3.12 percent late on Wednesday.
U.S. 30-year yields dropped to 3.341 percent, compared with Wednesday's 3.355 percent.
On the short end of the curve, U.S. two-year yields declined to 2.837 percent, from 2.862 percent on Wednesday.
Commodities Recap
Gold hit a near one-week peak on Thursday as investors sought cover from market turmoil after Britain's long-awaited draft agreement to leave the European Union was thrown into chaos, helping the metal hold its ground against a rising dollar.
Spot gold was up 0.3 percent at $1,214.79 per ounce at 13:35 p.m. EST (1835 GMT) after touching its highest since Nov. 9 at $1,216.27 earlier in the session and moving away from a one-month low of $1,195.90 hit on Tuesday.
U.S. gold futures settled up $4.90, or 0.40 percent, at $1,215 per ounce.
Oil futures rose on Thursday, steadying after this week's steep losses as fuel stockpile declines in the United States helped offset concerns about a potentially oversupplied market next year.
Brent crude futures gained 70 cents to $66.82 a barrel by 12:44 p.m. EST (1744 GMT). U.S. West Texas Intermediate (WTI) crude futures rose 39 cents to $56.64 a barrel.
