Market Roundup
• US Jan Markit Mfg PMI Final, 55.5, 55.5 previous.
• US Dec Construction Spending MM, 0.7%, 0.4% forecast, 0.8% previous, 0.6% revised.
• US Jan ISM Manufacturing PMI, 59.1, 58.8 forecast, 59.7 previous, 59.3 revised.
• US Jan Challenger Layoffs, 44.653k, 32.423k previous.
• US w/e Inital Jobless Claims, 230k, 238k forecast, 233k previous, 231k revised.
• US w/e Jobless Claims 4-Wk Avg, 234.50k, 240.00k previous, 239.50k revised.
• US w/e Continued Jobless Claims, 1.953M, 1.928M forecast, 1.937 previous, 1.940 revised.
• US Q4 Labour Costs Prelim, 2.0%, 0.8% forecast, -0.2% previous, -0.1% revised.
• US Q4 Productivity Prelim, -0.1%, 1.0% forecast, 3.0% previous, 2.7% revised.
• US Fed Funds Target Rate, 1.375%, 1.375% forecast, 1.375% previous.
• No. 3 U.S. diplomat quits in latest departure under Trump.
• Eurozone still needs ECB stimulus: Praet.
• After first UK rate rise in a decade, chances grow of another in May.
• Merkel sees scope for more spending, in boost for coalition talks.
• Canada Jan Markit Mfg PMI SA, 55.9, 54.7 previous.
Looking Ahead - Economic Data (GMT)
• 1 Feb 21:45 New Zealand Dec Building Consents, 10.8% previous
• 1 Feb 21:45 New Zealand Dec Ext Migration & Visitors, 8.00% previous
• 1 Feb 21:45 New Zealand Dec Perm/Long-term Migration, 5,610 previous
• 2 Feb 00:30 Australia Q4 PPI QQ, 0.2% previous
• 2 Feb 00:30 Australia Q4 PPI YY, 1.6% previous
Looking Ahead - Events, Other Releases (GMT)
• 18:30 Fed's Robert Kaplan participates in a moderated question-and-answer session before the Teacher Retirement System of Texas Annual Conference - Texas
• 14:00 French Central Bank Governor François Villeroy and Ireland's Central Bank Head Philip Lane speak in Dublin - Dublin
• 10:00 ECB's Benoit Coeure gives a speech at a conference on "Deepening of EMU" followed by a panel discussion organized by the University of Ljubljana - Slovenia
Currency Summaries
EUR/USD is likely to find support at 1.2429 levels and currently trading at 1.2488 levels. The pair has made session high at 1.2498 and hit lows at 1.2429 levels. The euro rose on Thursday as dollar erased early gains on Federal Reserve comments about rising inflation this year failed to lift the currency from near its three-year lows.After its worst monthly performance since mid-2016, the dollar rose in Asian trading before falling back, with traders preparing for economic data due on Friday. The dollar has struggled this year as expected monetary-policy tightening in other parts of the world, along with stronger global economic growth, encouraged investors to put more of their money elsewhere, particularly the euro zone. The Fed left interest rates unchanged on Wednesday but said inflation is likely to accelerate this year, bolstering expectations rates will continue to rise under its incoming chairman, Jerome Powell. The dollar index fell 0.58 percent, while euro rose against the dollar by 0.75 percent to $1.2514, supported by a survey on Thursday that showed euro zone manufacturing was booming. The single currency reached a three-year high above $1.25 in January and ended the month up 3.54 percent amid expectations that the European Central Bank would begin normalizing monetary policy this year.
GBP/USD is supported in the range of 1.4158 levels and currently trading at 1.4253 levels. It reached session high at 1.4260 and dropped to session low at 1.4187 levels. Sterling firmed against the dollar on Thursday, recovering from losses earlier in the week, as concerns over Prime Minister Theresa May's leadership eased and expectations grew that the Bank of England to take a more hawkish tone in its meeting next week. Reports that May was facing a leadership challenge from members of her own party, as well as criticism from the House of Lords, which said in a report that her Brexit legislation plans contained "fundamental flaws", weighed on the currency earlier in the week.But the pound has been recovering since Tuesday, when Bank of England Governor Mark Carney struck an upbeat tone on the economy and said focus was turning to inflation, which investors thought might mean interest rate would rise faster. The pound was last trading up 0.4 percent up at $1.4244, having earlier reached $1.4275. Against the euro, it was up 0.1 percent at 87.36 pence. Since the EU referendum, sterling is still down around 9 percent on a trade-weighted basis, but it is up about 8 percent from a trough reached in October 2016.
USD/CAD is supported at 1.2200 levels and is trading at 1.2274 levels. It has made session high at 1.2333 and lows at 1.2244 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday after posting a four-month high the day before, as investors weighed the prospects for future Federal Reserve interest rate decisions and turned attention to Friday's U.S. jobs data. The U.S. dollar erased early gains after Fed comments about rising inflation this year failed to lift the currency from near its three-year lows. The prospect of higher inflation has supported market expectations for another interest rate hike from the Fed as soon as March. Friday's non-farm payrolls report will provide the next major clue for investors. The price of oil, one of Canada's major exports, rose after a survey showed commitment by the Organization of the Petroleum Exporting Countries to supply cuts remains in place. The Canadian dollar was trading nearly unchanged at C$1.2316 to the greenback, or 81.20 U.S. cents. The currency traded in a narrow range between C$1.2295 and C$1.2331. On Wednesday, it touched its strongest since Sept. 20 at C$1.2250.
AUD/USD is supported around 0.7955 levels and currently trading at 0.8035 levels. It hit session high at 0.8037 and made session lows at 0.7984 levels. The Australian dollar eased for a fourth straight session on Thursday as weaker-than-expected economic data weighed on the Australian dollar. Data showed domestic data showed building approvals tumbled 20 percent in December against expectations of an 8 percent fall. The Aussie was already soggy after tepid reading on inflation on Wednesday led investors to push out the likely timing of a hike in interest rates. The Aussie has started the year with a bang, soaring about 3 percent in January alone led by blistering commodity prices. But its golden run seems to have ended with the currency on course for its first weekly loss after seven consecutive gains. The market currently implies around a 50-50 chance of a hike from the Reserve Bank of Australia (RBA) by October, and is not fully priced for a move to 1.75 percent until early next year. The Australian dollar was last trading down 0.2 percent at $0.8044, drifting away from a 2-1/2 year peak of $0.8136 set last week.
Equities Recap
European shares fell on Thursday, reversing earlier gains, on worries that the bond market will sell off further after U.S. policymakers raised their forecast for inflation.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day down by 0.66 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.5 percent.
U.S. stocks pulled back from earlier gains on Thursday as bond yields rose and technology stocks retreated ahead of a host of high-profile earnings.
Dow Jones closed up by 0.16 percent, S&P 500 ended down by 0.06 percent, Nasdaq finished the day down by 0.35 percent.
Treasuries Recap
The U.S. Treasuries market started February on a sour note with the 10-year yield hitting a near four-year peak on Thursday as investors booked profits on curve-related bets ahead of Friday's jobs report.
Benchmark 10-year Treasury yields reached a fresh near four-year high at 2.786 percent. It was last at 2.784 percent, up 6 basis points on the day, data showed.
The 30-year bond yield rose above the 3 percent mark to its highest level since last May.
Commodities Recap
Gold prices were nearly unchanged on Thursday as markets anticipated U.S. jobs data due at the end of the week for guidance on monetary policy for the remainder of the year.
Spot gold shed 0.01 percent at $1,344.56 ounce by 1:36 p.m. EST (1836 GMT). It touched $1,332.30 an ounce in the previous session, its lowest since Jan. 23.U.S. gold futures for April delivery settled up $4.80, or 0.4 percent, at $1,347.90 per ounce.
Oil rose on Thursday after a survey showed OPEC's commitment to its supply cuts remains in place, even as U.S. production topped 10 million barrels per day (bpd) for the first time since 1970.
Brent futures for April delivery gained 76 cents, or 1.1 percent, to settle at $69.65 a barrel, while U.S. West Texas Intermediate (WTI) crude for March delivery jumped $1.07, or 1.7 percent, to settle at $65.80.
