Market Roundup
• US Initial jobless claims 235k v 260k- forecast 263k- previous.
• US continued job claims 2.112m v 2.096m previous; 4-wk avg 256.75k v 262.5k -previous.
• US Dec Markit Comp final PMI 54.1 v 53.7; Svcs PMI final 53.9 v 53.4 -previous.
• US ISM Dec N-Mfg PMI 57.2 v 56.5 forecast, 57.2 –previous.
• US ISM Dec N-Mfg employment Index 53.8 v 58.2 –previous.
• Fed’s Williams: Three rate hikes in 2017 reasonable, fiscal stimulus to have modest effect on economy.
• Euro zone producer prices rise in Nov for 3rd straight month; consumer goods prices subdued.
• German economists call for ECB rate rise after euro zone CPI rise.
• Price pressures mount as UK econ records strong end to ‘16, UK svcs PMI rises to highest since Jul ’15, Markit estimates UK economy grew 0.5 pct in Q4 2016.
• Mexico central bank sells USD1bn to prop peso after Trump slump-traders.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Foreign Bond Investment w/e -216.7b-previous
• 23:50 Japan Foreign Invest JP Stock w/e 114.1b- previous
• 00:00 Japan Overtime Pay Nov -1.40%- previous
• 00:30 Australia Trade Bal G&S (A$)* Nov forecast -500m, -1541m- previous
• 00:30 Australia Goods/SVCS Imports* Nov 2.00%- previous
• 00:30 Australia Goods/SVCS Exports* Nov 1.00%- previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0515 levels and currently trading at 1.0592 levels. The pair has made session high at 1.0615 and hit lows at 1.0585 levels. Euro rose against dollar on Thursday as dollar declined after U.S. inflation and unemployment data failed to reverse a downtrend that followed some of the biggest gains on record for China's yuan. A rise in overnight borrowing costs in Hong Kong and growth in China's services sector to a 17-month high last month helped put the offshore yuan on pace for the biggest two-day rise since its inception in 2010.That in turn triggered profit-taking on the dollar, which fell to its lowest since Dec. 14 as more investors piled on. The dollar index a measure of the greenback against six world currencies dropped 1.3 percent to 101.370. The index is on pace for its worst one-day percentage loss since Sept. 6. Minutes from the U.S. Federal Reserve's December meeting showed that almost all policymakers thought the economy could grow more quickly with expected fiscal stimulus under the Donald Trump administration.
GBP/USD is supported in the range of 1.2350 levels and currently trading at 1.2409 levels. It reached session high at 1.2432 and dropped to session low at 1.2405 levels. Sterling surged against dollar on Thursday as more upbeat data underlined the UK economy's post-Brexit resilience and helped the pound make ground against greenback. Sterling initially in European session declined slightly after strong data from the UK's dominant services sector and record car sales. However, after unspectacular weekly U.S. jobs figures weighted on the dollar ahead of non-farm payrolls data on Friday and left sterling at $1.2432, up 0.9 percent and on course for its best day against the U.S. currency since the start of December. The UK services Purchasing Managers' Index (PMI) beat all forecasts, showing the key engine of the economy grew in December at the fastest rate since mid-2015.A record 2.69 million new cars were also sold in Britain in 2016, car industry data showed, adding to a run of economic surveys this week that have shown no impact yet from the UK's soon-to-start Brexit negotiations.
USD/CAD is supported at 1.3181 levels and is trading at 1.3242 levels. It has made session high at 1.3242 and lows at 1.3189 levels. The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Thursday as oil prices rose and the greenback lost ground against a basket of major currencies. Some of the biggest gains on record for China's yuan sent currency markets spinning, driving the U.S. dollar broadly lower and threatening to quash one of the central bets of global investors for 2017. Prices of oil, one of Canada's major exports, rose after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to reduce global supply. On the data front, Canadian producer prices increased by 0.3 percent in November from October on higher costs for vehicles and primary non-ferrous metal products, Statistics Canada said on Thursday. The Canadian dollar was trading at C$1.3287 to the greenback, or 75.26 U.S. cents, stronger than Wednesday's close of C$1.3308, or 75.14 U.S. cents.
AUD/USD is supported around 0.7282 levels and currently trading at 0.7337 levels. It hit session high at 0.7344 and made session lows at 0.7332 levels. The Australian dollar strengthened against US dollar on Thursday as the greenback lost ground against a basket of currencies after unimpressive U.S. labour data. The dollar extended losses against a basket of six major currencies after data showed U.S. private employers added 153,000 jobs in December, below economists' expectations. The Aussie dollar was last trading at $0.7340, having rallied 0.9 percent earlier in the Asian session. Chart resistance lay just ahead at $0.7299, with support around $0.7240/50.Dealers said the U.S. dollar had enjoyed a strong run in the last couple of months and the market was heavily long on the currency, leaving it vulnerable to a sudden pullback on very little news. Indeed, minutes of the Federal Reserve's last policy meeting out on Wednesday should actually have been bullish for the currency given they showed many policymakers saw a risk they might have to raise interest rates faster to head off inflation. The Aussie also drew direct support from recent strength in prices for its main commodities, notably iron ore and coal.
Equities Recap
European shares hovered near recent highs on Thursday, with Britain's top equity index hitting a new peak following a rally in housebuilders and miners.
UK's benchmark FTSE 100 closed down flat, the pan-European FTSEurofirst 300 ended the day up by 0.04 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.1 percent.
The S&P 500 closed slightly lower on Thursday weighed by financial shares and as investors dumped traditional retailers, but the Nasdaq Composite set a record closing high led by the strength of online retailer Amazon.
Dow Jones closed down by 0.23 percent, S&P 500 ended down 0.8 percent, Nasdaq finished the day up by 0.19 percent.
Treasuries Recap
U.S. Treasury debt yields dropped broadly on Thursday, falling for a third straight session, as investors grew uncertain about the incoming Trump administration and waited for more clarity about its policies before taking more positions.
The U.S. 10-year note was up 13/32 in price to yield 2.402 percent, compared with 2.452 percent late on Wednesday. It hit a four-week low of 2.401 percent earlier.
U.S. 30-year bond prices were up 21/32, yielding 3.012 percent down from Wednesday's 3.048 percent. Yields touched a five-week trough of 3.004 percent.
U.S. two-year note yields were at 1.194 percent from 1.234 percent on Wednesday
Commodities Recap
Gold rose to its highest price in one month on Thursday as the dollar slipped further below a 14-year peak hit earlier this week, while palladium turned lower after extending this week's steep gains to a four-week high.
Spot gold rose as much as 1.85 percent to its highest since Dec. 5 at $1,184.90 an ounce and was up 1.5 percent at $1,180.94 by 3:11 p.m. EST (2011 GMT).
Spot prices were heading for a 2.5 percent gain for the week, the strongest since June.U.S. gold futures settled up 1.5 percent at $1,181.30 per ounce.
Oil prices rose on Thursday in an up-and-down session, lifted by news that Saudi Arabia had cut production to meet OPEC's agreement to reduce output after prices fell on data showing a surprisingly large increase in U.S. gasoline and distillate inventories.
West Texas Intermediate crude settled up 50 cents, or 0.9 percent, to $53.76 a barrel. Brent crude rose 43 cents, or 0.8 percent, to settle at $56.89 a barrel, after hitting a session high of $57.35.
