Market Roundup
• US Initial Jobless Claims w/e, 260k, 265k forecast, 272k previous.
• US Continued Jobless Claims w/e, 1.938M, 1.950M forecast, 1.934M previous.
• US Jobless Claims 4-wk Avg w/e, 268.25k, 277.75k previous.
• US International Trade MM $ Aug, -42.4B, -42.7B forecast, -43.7B previous.
• US Goods Trade Balance $ (R) Aug, -63.3B, -62.9B previous.
• US Factory Orders MM Aug, 1.2%, 1.0% forecast, -3.3% previous.
• US Durables Ex-Def, R MM Aug, 2.5%, 2.2% previous.
• US Durable Goods, R MM Aug, 2.0%, 1.7% previous.
• US Durables Ex-Transport R MM Aug, 0.5%, 0.2% previous.
• US Nondef Cap Ex-Air R MM Aug, 1.1%, 0.9% previous.
• US Factory Ex-Transp MM Aug, 0.4%, 0.5% previous.
• CA Trade Balance C$ Aug, -3.41B, -2.60B forecast, -3.04B previous.
• CA Exports C$ Aug, 43.63B, 44.14B previous.
• CA Imports C$ Aug, 47.04B, 47.18B previous.
• US Republicans move on tax reform, Fed officials warn danger ahead.
• Fed's Powell says more US regulation not always the answer.
Looking Ahead - Economic Data (GMT)
• 00:00 Japan Overtime Pay Aug, 0.1% previous
• 05:00 Japan Coincident Indicator MM Aug, -1.2 previous
• 05:00 Japan Leading Indicator Aug, -0.7 previous
Looking Ahead - Events, Other Releases (GMT)
• 08:00 BoE official Chris Salmon speaks at conf. in London
• 11:30 BoE’s Andrew Hauser speaks in Cambridge, England
• 12:00 BoE’s Andy Haldane speaks in London about trust in public institutions
• 13:15 Fed’s Atlanta President Raphael Bostic speaks at conf. in Austin, Texas
• 13:30 ECB’s Francois Villeroy de Galhau speaks in Vienna
• 16:15 Fed’s William Dudley speaks in Brooklyn, New York
• 16:45 Fed’s Kaplan participates in moderated Q&A at conf. in Austin, Texas
• 17:50 Fed’s Bullard speaks in St. Louis, Missouri
Currency Summaries
EUR/USD is likely to find support at 1.1685 levels and currently trading at 1.1704 levels. The pair has made session high at 1.1733 and hit lows at 1.1696 levels. The euro declined against the U.S. dollar on Thursday as the greenback strengthened after data pointed to solid U.S. growth, a day before Friday's highly anticipated jobs report for September. The U.S. trade deficit fell in August as exports of goods and services rose to the highest level in more than 2-1/2 years, while the number of Americans filing for unemployment benefits fell more than expected last week. New orders for U.S.-made goods rose in August and orders for core capital goods were stronger than previously reported, suggesting robust business spending could help offset some of the economic drag of Hurricanes Harvey and Irma. The greenback was also supported by higher Treasury yields as U.S. stock indices hit record highs. Improving U.S. data along with the prospect of U.S. tax cuts and the likelihood that the Federal Reserve will raise interest rates in December have boosted the U.S. currency in recent weeks. The rally paused earlier this week, however, on caution that Friday's employment report will be adversely impacted by recent hurricanes. The dollar index, a basket of six major currencies rose to 93.989, the highest level since August 17.
GBP/USD is supported in the range of 1.3090 levels and currently trading at 1.3110 levels. It reached session high at 1.3148 and dropped to session low at 1.3106 levels. Sterling declined against the dollar on Thursday as sterling came under selling pressure after investors were worried about a possible leadership battle at the top of the UK government. British Prime Minister Theresa May reinforced markets' doubts about her ability to govern effectively in a poorly-received keynote speech at the annual Conservative party conference on Wednesday. The conference had been meant to help reassert May's grip on the party as she tries to revive Brexit talks. But after a speech that was interrupted by coughing fits and a prankster, investors saw the prime minister's position weakened further, and more vulnerable to leadership challenges. The pound fell to as low as $1.3111 against a dollar that was strengthening across the board, its weakest since Sept. 8. Having two weeks ago reached its highest levels since last year's Brexit vote on expectations that the Bank of England will hike interest rates in November, sterling has since fallen back almost 4 percent versus the dollar on political uncertainty as well as a run of weak economic data. For the week, the pound is down more than 2 percent against the dollar - its worst showing since October 2016.
USD/CAD is supported at 1.2445 levels and is trading at 1.2572 levels. It has made session high at 1.2585 and lows at 1.2514levels. The Canadian dollar weakened to a five-week low against its U.S. counterpart on Thursday after domestic data showing a drop in exports for the third straight month further weakened prospects of another interest rate hike this year from the Bank of Canada. Canada’s trade deficit widened in August to C$3.41 billion from a revised C$2.98 billion shortfall in July, as exports fell for a third consecutive month, Statistics Canada said. The central bank has raised rates twice since July. But the chances of another hike this year dropped to 60 percent from 66 percent before the data, the overnight index swaps market indicated. They were nearly 100 percent before Governor Stephen Poloz signalled last week that a third hike was not imminent. The price of oil, one of Canada's major exports, steadied on expectations that Saudi Arabia and Russia would extend production cuts. The Canadian dollar was last trading at C$1.2574 to the greenback, down 0.5 percent. The currency's strongest level of the session was C$1.2463, while it touched its weakest since Aug. 31 at C$1.2582.
USD/JPY is supported around 112.31 levels and currently trading at 112.79 levels. It peaked to hit session high at 112.84 and made session lows at 112.40 levels. The U.S. dollar strengthened against the Japanese yen on Thursday after strong U.S. economic data boosted greenback across the board and underlined expectations that U.S. interest rates would be hiked. The dollar index rose to a 2-1/2-month high after data showed the U.S. trade deficit narrowed in August as exports of goods and services rose to a more than 2-1/2-year high, while jobless claims fell more than expected. Expectations of monetary tightening were also supported by Philadelphia Federal Reserve Bank President Patrick Harker saying he was still penciling in one more rate hike this year and three next year. San Francisco Fed President John Williams echoed the same sentiment. He said he does not need to see inflation move higher to support another interest rate increase this year as long as other economic data points to continued economic strength. Williams is a voter on the FOMC in 2018. Following the Fed officials' comments, the rate futures market has priced in a more than 80 percent chance of a rate increase in December, according to CME's FedWatch. Investors are also looking to Friday's U.S. non-farm payrolls report, even though the headline number could be distorted by the hurricanes that hit the United States last month.
Equities Recap
Spanish stocks rebounded on Thursday from heavy losses in the previous session driven by escalating tensions over Catalonia, leading gains across European indexes.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day up by 0.3 percent.
U.S. stocks rose to record highs again on Thursday, with optimism over a tax overhaul increasing as Congress moved closer to agreement on a budget resolution and as data added to recent signs of economic strength.
Dow Jones closed up by 0.49 percent, S&P 500 ended up by 0.57 percent, Nasdaq finished the day up by 0.77 percent.
Treasuries Recap
U.S. Treasury debt yields rose on Thursday, bolstered by continued gains in the U.S. stock market as well as bullish comments on the economy from Federal Reserve officials that supported another rate hike in December.
In late trading, the benchmark 10-year U.S. Treasury note yield was at 2.349 percent, up from 2.332 percent late on Wednesday, while the 30-year yield was at 2.891 percent, up from 2.877 percent. U.S. two-year note yields were up at 1.495 percent, from 1.479 percent on Wednesday.
Commodities Recap
Gold dipped on Thursday after strong U.S. economic data lifted the dollar and underlined expectations that U.S. interest rates would be hiked.
Spot gold dropped 0.34 percent at $1,270.01 an ounce by 2:11 p.m. EDT (1811 GMT), while U.S. gold futures for December delivery settled down $3.60, or 0.3 percent, at $1,273.20 per ounce.
Oil prices rose about 2 percent on Thursday as signs Saudi Arabia and Russia would limit production through next year pushed the U.S. benchmark back above $50 a barrel.
Brent futures settled at $57 a barrel, up 2.2 percent, or $1.20, while U.S. crude rose 81 cents, or 1.6 percent, to end at $50.79.
