Market Roundup
• Under govt pressure, BOJ mulling specific steps for easing-sources.
• U.S. jobless claims rise above forecast: 266k vs expectation 260k, previous 252k.
• U.S. June advance goods trade deficit widens to $63.3b from $60.59b.
• Citi's U.S. economic surprise index falls after weak data.
• Atlanta Fed slashes U.S. Q2 GDP growth view to 1.8% from 2.3%.
• German July prelim HICP above forecast: +0.4% m/m, +0.4 pct y/y vs forecast +0.3% m/m, +0.3% y/y.
• Spain's Rajoy accepts mandate to form government, warns he may fail.
• Moody's: Sterling's Brexit vote plunge will distort companies' leverage ratios.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan All Household Spending YY Jun forecast -0.30% -1.10% -previous
• 23:30 Japan All Household Spending MM Jun forecast 0.40% -1.50% - previous
• 23:30 Japan CPI, Core Nationwide YY Jun forecast -0.40% -0.40% - previous
• 23:30 Japan CPI, Overall Nationwide Jun -0.40% - previous
• 23:30 Japan Unemployment Rate Jun forecast 3.20% 3.20% - previous
• 23:50 Japan Industrial output prelim mm Jun forecast 0.70% -2.60% - previous
• 23:50 Japan Retail Sales YY Jun forecast -1.50% -1.90% - previous
• 5:00 Japan Housing Starts YY Jun forecast -3.00% 9.80% - previous
• 1:00 New Zealand NBNZ Business Outlook Jul 20.20% - previous
• 1:30 Australia PPI YY Q2 1.20% - previous
• 1:30 Australia Private Sector Credit Jun 0.40% - previous
• 1:30 Australia Housing Credit Jun 0.50% - previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan BOJ Rate Decision forecast -0.20% -0.10% - previous
• --:-- Japan BOJ Base Money Target forecast 85.00t 80.00t - previous
Currency Summaries
EUR/USD is likely to find support at 1.1050 levels and currently trading at 1.1077 levels. The pair has made session high at 1.1118 and hit lows at 1.1067 levels. Euro inched higher against the dollar in the wake of disappointing U.S. data and the possibility of more stimulus from the Bank of Japan. The mildly disappointing data supported the notion the U.S. economy is not strong enough for the Federal Reserve to raise interest rates before the end of the year at the earliest; on Wednesday, the Fed left interest rates unchanged. The number of Americans filing for unemployment benefits rose more than expected last week, but the underlying trend continued to point to sustained labor market strength. Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 266,000 for the week ended July 23, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 fewer applications received than previously reported. The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.46 percent to 96.611. The euro rose 0.28 percent to $1.1086.
GBP/USD is supported in the range of 1.3075 currently trading at 1.3154 levels. It reached session high at 1.3180 and hit low at 1.3114 levels. Sterling edged lower against the U.S. dollar on Thursday as 3,000 job cuts at British bank Lloyds showed signs of a worsening economic outlook as investors bet the Bank of England will cut interest rates next week. By late afternoon in London, sterling had lost 0.9 percent to 84.41 pence per euro. It was also more than half a percent lower against the dollar at $1.3130. The Federal Reserve said on Wednesday the labor market had "strengthened" and that nonfarm payrolls and other job market measures pointed to some "increase in labor utilization in recent months." The U.S. central bank left interest rates unchanged amid concerns over persistently low inflation. The economy added 287,000 jobs in June, the largest increase this year. Labor market strength is fueling consumer spending, which in turn is spurring faster economic growth. Thursday's claims report showed the number of people still receiving benefits after an initial week of aid increased 7,000 to 2.14 million in the week ended July 16. The four-week average of the so-called continuing claims fell 7,000 to 2.14 million, the lowest level since November 2000.
USD/CAD is supported at 1.3070 levels and is trading at 1.3158 levels. It has made session high at 1.3195 and lows at 1.3142 levels. The Canadian dollar firmed against the greenback on Thursday as its U.S. counterpart was under pressure after the Federal Reserve stopped short of signaling an imminent interest rate hike, while investors looked to domestic economic data at the end of the week. The U.S. central bank left interest rates unchanged on Wednesday and said the near-term risks to the U.S. economic outlook had diminished. While that opened the door to another rate hike, the Fed gave no firm indication it would do so at its next meeting in September. Following a light week on the domestic economic calendar, investors were turning their attention to monthly gross domestic product data due on Friday. Economic growth is expected to have declined 0.4 percent in May as the economy was hurt by disruptions caused by wildfires in Alberta.
USD/JPY is supported around 104.40 levels and currently trading at 105.33 levels. It peaked to hit session high at 105.48 and made session lows at 104.68 levels. The safe-haven yen firmed against US dollar on Thursday as investors feared that the Bank of Japan will not meet high expectations for a large stimulus package when it concludes its two-day meeting on Friday, and after the U.S. Federal Reserve on Wednesday stopped short of flagging a near-term rate rise. Expectations of further stimulus in Japan has dominated trading for the past few weeks and eclipsed attention paid to the U.S. central bank’s statement on Wednesday, when the Fed was seen as indicating that a September rate increase was possible, but not necessarily likely. The dollar fell 0.48 percent to 104.87 yen. The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.50 percent to 96.573, after earlier dropping to a two-week low of 96.287.
Equities Recap
European shares fell on Thursday with Lloyds leading a weaker financial sector lower and disappointing earning updates from firms including oil major Royal Dutch Shell also weighing.
UK's benchmark FTSE 100 closed down by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.80 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.3 percent.
Wall Street ended mixed on Thursday as investors looked beyond disappointing earnings from Ford and bought shares in Apple, while Alphabet surged after the bell following its quarterly report.
Dow Jones closed down by 0.09 percent, S&P 500 ended up by 0.16 percent, Nasdaq finished the day up by 0.29 percent.
Treasuries Recap
U.S. Treasury prices were little changed on Thursday, with longer-dated yields dropping to two-week lows, as the possibility of more stimulus from the Bank of Japan offset softer-than-expected readings on traded goods and jobless claims.
In late U.S. trading, the two-year Treasury yield , which is sensitive to traders' views on Fed policy, was down 1.5 basis points at 0.715 percent.
Benchmark 10-year Treasury notes were up 1/32 in price for a yield of 1.506 percent, down 1 basis point from Wednesday, while the 30-year bond was flat, yielding 2.228 percent.
Commodities Recap
Gold turned lower after hitting a two-week peak on Thursday as the dollar pared losses and U.S. stocks climbed from their lows ahead of a possible Bank of Japan announcement to expand monetary stimulus on Friday.
Spot gold was down 0.3 percent at $1,335.60 an ounce at 3:28 p.m. EDT (1938 GMT), after rising to a two-week top at $1,345.21. U.S. gold futures for August delivery settled up 0.4 percent at $1,332.30.
Oil prices settled down nearly 2 percent on Thursday, hitting April lows and with U.S. crude headed for its biggest monthly loss in a year, on growing worries that the world was pumping more crude than needed.
U.S. crude's West Texas Intermediate (WTI) futures settled down 78 cents, or 1.9 percent, at $41.14 a barrel.
Brent crude futures fell 77 cents, or 1.8 percent, to settle at $42.70, after falling earlier to $42.56, the lowest since April 18.
