Market Roundup
• US w/e Initial Jobless Claims, 222k, 230k forecast, 230k previous, 229k revised.
• US w/e Jobless Claims 4-Wk Avg, 226.00k, 228.50k previous, 228.25k previous.
• US w/e Continued Jobless Claims, 1.875M, 1.930M forecast, 1.942 previous, 1.948 previous.
• US Jan Leading Index Change MM, 1.0%, 0.7% forecast, 0.6% previous.
• US Feb KC Fed Manufacturing, 21, 16 previous.
• US Feb KC Fed Composite Index, 17, 16 previous.
• Treasury sells $29 bln seven-year notes to tepid demand in the final sale of $258 billion in debt this week, the second-largest ever over a three-day period.
• Pence rallies conservatives with call to fight hard at 2018 elections.
• ECB rejected even token change in policy message at Jan meeting –minutes.
• German business morale falls as exporters fret about strong euro.
• Merkel eyes overhaul of EU finances for post-Brexit bloc.
• EU rejects three-pronged British approach to new ties after Brexit.
• CA Dec Retail Sales MM, -0.8%, 0.2% forecast, 0.2% previous, 0.3% revised.
• CA Dec Retail Sales Ex-Autos MM, -1.8%, 0.3% forecast, 1.6% previous, 1.7% revised.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Q4 Retail Sales Volumes QQ, 0.20% previous
• 21:45 New Zealand Q4 Retail Qrtly Vs Yr Ago, 4.1% previous
• 23:30 Japan Jan CPI, Core Nationwide YY, 0.8% forecast, 0.9% previous
• 23:30 Japan Jan CPI, Overall Nationwide, 1.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 08:30 Swedish Central Bank minutes of its monetary policy meeting will be published – Stockholm
• 12:00 BOE's Dave Ramsden takes part in a panel discussion on productivity and economic rebalancing with the Confederation of British Industry's Director-General Carolyn Fairbairn - London
• 15:15 Fed's William Dudley and Eric Rosengren participate in a panel to discuss a U.S. Monetary Policy Forum report on the Fed's balance sheet before the 2018 U.S. Monetary Policy Forum sponsored by the Initiative on Global Markets at the University of Chicago Booth School of Business - New York
• 18:30 ECB's Benoit Coeure speaks at the 2018 U.S. Monetary Policy Forum – New York
• 18:30 Fed's Loretta Mester participates in panel, "A Review of the Objectives for Monetary Policy" before the 2018 U.S. Monetary Policy Forum sponsored by the Initiative on Global Markets at the University
of Chicago Booth School of Business - New York
• 20:40 Fed's John Williams speaks on the economic outlook and implications for monetary policy - Los Angeles
Currency Summaries
EUR/USD is likely to find support at 1.2231 levels and currently trading at 1.2231 levels. The pair has made session high at 1.2351 and hit lows at 1.2258 levels. The euro rose higher against US dollar on Thursday as greenbacks rally from a three-year low last week ran out of steam, and heightened volatility kept investors cautious. The euro was 0.32 percent higher against the greenback at $1.2320.European Central Bank policymakers meeting last month rejected even a token change in the bank's policy message, arguing that it was premature to signal policy normalisation given weak inflation, the minutes of the meeting showed on Thursday. Discussion over tweaking the bank's stance could still start early this year, concluded the ECB's Governing Council, which will meet next on March 8. But with inflation still not moving decisively higher they were wary about euro volatility and keen to avoid any disorderly market reaction to a shift in stance. The minutes suggest that rate-setters are in no hurry to adjust policy, even as markets expect the bank's unprecedented 2.55 trillion euro asset purchase programme to finally expire this year, more than three years after its launch. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.31 percent at 89.72. Through Wednesday, the index gained nearly 2 percent since hitting a three-year low of 88.253 on Friday.
GBP/USD is supported in the range of 1.3842 levels and currently trading at 1.3948 levels. It reached session high at 1.3987 and dropped to session low at 1.3853 levels. Sterling strengthened against the dollar on Thursday as the dollar slumped towards a session low, although renewed concerns over the state of play in Brexit negotiations checked the British currency's gains. Despite sterling's weakness this week, it is still up nearly 3 percent against the dollar this year as investors have ramped up bets that the Bank of England may raise interest rates more than previously forecast. On Thursday, the European Union said it would not agree to a post-Brexit deal in which Britain would stick to the bloc's rules in some areas, diverge moderately in others and go for distinctively different solutions for the rest. However, a shift in market expectations of the BOE's policy stance has offered some support to the pound in recent sessions. In an annual report to parliament on Wednesday, Bank of England's chief economist Andy Haldane said the risks to the BoE's latest projections, for both UK demand and inflation, were to the upside. Most economists now expect the BoE to raise rates to 0.75 percent in May, and financial markets see a roughly 70 percent chance of a further rise this year, taking rates to 1 percent. Sterling rose 0.2 percent to $1.3940 on Thursday, rising from an intraday low of $1.3858 and nearing a post-Brexit vote high of above $1.43 hit in late January.
USD/CAD is supported at 1.2659 levels and is trading at 1.2713 levels. It has made session high at 1.2759 and lows at 1.2667 levels. The Canadian dollar weakened to a two-month low against its U.S. counterpart on Thursday after a surprise drop in domestic retail sales dented prospects for further Bank of Canada interest rate hikes over the coming months. Canadian retail sales decreased by 0.8 percent in December from November as sales fell at general merchandise stores and electronics and appliance stores, Statistics Canada said. Analysts had forecast an increase of 0.2 percent. Chances of another Bank of Canada interest rate hike in May fell to 77 percent from 86 percent before the retail sales report, data from the overnight index swaps market showed. The central bank raised interest rates in January for the third time since July. Its benchmark rate sits at 1.25 percent. The price of oil, one of Canada's major exports, was supported by a surprise decline in U.S. crude inventories. The Canadian dollar was last trading 0.1 percent lower at C$1.2714 to the greenback. The currency's strongest level of the session was C$1.2677, while it touched its weakest since Dec. 22 at C$1.2760.
USD/JPY is supported around 106.00 levels and currently trading at 106.69 levels. It peaked to hit session high at 107.34 and made session lows at 106.61 levels. The U.S. dollar declined against the yen on Thursday as dollar’s rally from a three-year low last week ran out of steam. The dollar slipped 1.04 percent against the yen to 106.69 yen, as increased volatility across markets sent traders looking for a safe haven. The yen soared as volatility in financial markets led investors to favor the Japanese currency. The yen tends to benefit during times of heightened volatility as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialize. The dollar rose on Wednesday after minutes from the U.S. Federal Reserve's January meeting showed the central bank's rate-setting committee grew more confident in the need to keep raising rates. But, concerns about a faster pace of rate hikes from the central bank were eased by comments on Thursday from St. Louis Fed President James Bullard that expressed concerns a "bunch of hikes" could turn Fed policy restrictive. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.31 percent at 89.724. Through Wednesday, the index gained nearly 2 percent since hitting a three-year low of 88.253 on Friday.
Equities Recap
European shares fell slightly on Thursday as a flurry of corporate results failed to lift sentiment after a new wave of speculation about faster hikes in U.S interest rates soured risk appetite globally.
The UK's benchmark FTSE 100 closed down by 0.27 percent, FTSEurofirst 300 ended the day down by 0.02 percent, Germany's Dax ended up by 0.19 percent, and France’s CAC finished up by 0.33 percent.
U.S. stocks advanced on Thursday, putting major indexes on track to snap a recent spate of declines, buoyed by gains in industrial and energy shares as U.S. Treasury yields eased.
Dow Jones closed up by 0.66 percent, S&P 500 ended up 0.09 percent, Nasdaq finished the day up by 0.12 percent.
Treasuries Recap
U.S. Treasuries pared price gains on Thursday after the U.S. government sold new seven-year notes to slightly soft demand, the final sale of $258 billion in debt this week.
Benchmark 10-year note yields were last up 4/32 in price to yield 2.926 percent, after rising to a four-year high of 2.957 percent on Wednesday.
Commodities Recap
Gold rose on Thursday, snapping four sessions of losses as the U.S. dollar surrendered early gains, though the metal remained lower for the week to date and analysts said they expected trading to be rangebound.
Spot gold gained 0.6 percent at $1,331.56 per ounce by 1:35 p.m. EST (1835 GMT), bouncing off a session low of $1,320.61 but still down 1.2 percent so far this week. U.S. gold futures for April delivery settled up 60 cents, or 0.1 percent, at $1,332.70 per ounce.
Oil prices rose to two-week highs on Thursday, boosted by data showing a surprise draw in U.S. crude inventories and also by a drop in the dollar.
West Texas Intermediate (WTI) crude futures rose $1.07, or 1.7 percent, to $62.75 a barrel by 1:56 p.m. EST (1856 GMT) after peaking at $63.09, its highest since Feb. 7.
Brent crude gained 96 cents, or 1.5 percent, to $66.38 a barrel, after touching its two-week high at $66.56.
