Market Roundup
• Fed's Powell: Trump stimulus to boost economy for "at least" three years.
• US Jun Core CPI MM SA, 0.2%, 0.2% forecast, 0.2% previous.
• US Jun Core CPI YY NSA, 2.3%, 2.3% forecast, 2.2% previous.
• US Jun CPI Index NSA, 251.98, 252.00 forecast, 251.58 previous.
• US Jun Core CPI Index SA, 257.31, 256.89 previous.
• US Jun CPI MM SA, 0.1%, 0.2% forecast, 0.2% previous.
• US Jun CPI YY NSA, 2.9%, 2.9% forecast, 2.8% previous.
• US Initial Jobless Claims w/e, 214k, 225k forecast, 231k previous.
• US Jobless Claims 4-Wk Avg w/e, 223.00k, 224.50k previous.
• US Continued Jobless Claims w/e, 1.739 mln, 1.720 mln forecast, 1.739 mln previous.
• US Jun Federal Budget, -$75.00 bln, -$98.20 bln forecast, -$147.00 bln previous.
• U.S. would re-open trade talks if China makes major changes –Mnuchin.
• US House Speaker casts doubt on Congress acting to stop trade tariffs.
• EU cuts euro zone growth forecast, blames U.S. trade wars.
• ECB sees rates at record low levels for as long as needed: minutes.
• Setting out vision for future ties, Britain's May presses Brexit plans
• CA May New Housing Price Index, 0.0%, 0.0% previous.
Looking Ahead - Economic Data (GMT)
• 13 Jul N/A China Jun Exports YY, 10.0% forecast, 12.6% previous
• 13 Jul N/A China Jun Imports YY, 20.8% forecast, 26.0% previous
• 13 Jul N/A China Jun Trade Balance USD, 27.61 bln forecast, 24.92 bln previous
• 13 Jul N/A China Jun Yuan-Denominated Exports, 3.2% previous
• 13 Jul N/A China Jun Yuan-Denominated Imports, 15.6% previous
• 13 Jul N/A China Jun Yuan-Denominated Trade Bal CNY, 156.51 bln previous
• 13 Jul 02:00 China Jul TR IPSOS PCSI, 69.65 previous
• 13 Jul 02:00 Japan Jul TR IPSOS PCSI, 46.85 previous
• 13 Jul 02:00 Australia Jul TR IPSOS PCSI, 54.05 previous
• 13 Jul 04:30 Japan May Industrial Output Rev, -0.2% previous
• 13 Jul 04:30 Japan May Capacity Util Index Chg MM, 1.8% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A European Central Bank Vice President Luis de Guindos participates in ECOFIN meeting in Brussels, Belgium
• N/A The EU Economic and Financial Affairs Council meeting in Brussels
• 00:00 Fed's Neel Kashkari participates in panel on immigration before the Worthington International Festival in Worthington, Minnesota
• 08:00 Zambia Finance Minister Mwanakatwe speaks at Chatham House in London
• 11:00 Jon Cunliffe, Bank of England Deputy Governor, Financial Stability gives speech at the Cumbria Chamber of Commerce,Kendall, UK
• 16:30 Fed's Raphael Bostic participates in Town Hall chat before the Northern Chapter Virginia Society of Certified Public Accountants in Falls Church, Virginia
Currency Summaries
EUR/USD is likely to find support at 1.1619 levels and currently trading at 1.1669 levels. The pair has made session high at 1.1694 and hit lows at 1.1665 levels. The euro declined against US dollar on Friday as greenback was bolstered by solid inflation data and trade war worries. U.S. consumer prices recorded their largest increase in nearly 6-1/2 years in the year through June, while the monthly pace continued to suggest a steady buildup of inflation that could keep the Federal Reserve on a path of gradual interest rate increases. Other data on Thursday showed first-time applications for unemployment benefits dropped to a two-month low last week as the labor market strengthened further. The tight jobs market is supporting inflation, and import tariffs, which are set to be broadened to include consumer goods, could fan price pressures. The Labor Department said its Consumer Price Index edged up 0.1 percent last month on moderate gains in gasoline prices and sharp declines in the cost of apparel and hotel accommodation. The CPI rose 0.2 percent in May. The CPI readings supported the view that inflation is near the Federal Reserve's 2-percent goal. Federal Reserve Chairman Jerome Powell said in an interview on National Public Radio's Marketplace program that he was "not declaring victory" over inflation after meeting the Fed's 2 percent target. The euro fell retracing earlier gains, but maintained levels around $1.1670 throughout Thursday.
GBP/USD is supported in the range of 1.3141 levels and currently trading at 1.3204 levels. It reached session high at 1.3238 and dropped to session low at 1.3177 levels. Britain's pound edged higher against the dollar on Thursday after the release of the British government's blueprint for future relations with the European Union reinforced hopes that the UK is headed for a so-called "soft Brexit", in which trade ties remain close. The size of the bounce was small, however, as much of the content of the government's white paper policy document was already priced in. Markets are also concerned that the EU will demand more concessions from Britain before agreeing a deal, leaving months more uncertainty ahead. Prime Minister Theresa May's government outlined its plans to retain the closest possible ties with the bloc, although there was one major shift the government abandoning plans for close trade ties for Britain's huge financial services sector. The British currency had tumbled more than a cent after Boris Johnson and David Davis quit as foreign secretary and Brexit minister on Monday in protest at May's plan, stirring talk of a leadership challenge. But with May holding on for now, a favourable response from the EU to Thursday's blueprint could lift the pound further. The pound was last trading at $1.3209, up 0.1 percent on the day.
USD/CAD is supported at 1.3100 levels and is trading at 1.3155 levels. It has made session high at 1.3186 and lows at 1.3148 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday, rebounding from an earlier 10-day low, as investor appetite for risk recovered and after the Bank of Canada raised interest rates on Wednesday for the second time this year. Stocks and commodity markets rose, having suffered tailspins in the previous session as the United States ratcheted up trade war threats on China. The Bank of Canada raised its benchmark interest rate on Wednesday by 25 basis points to 1.50 percent and signaled more rate hikes to come, saying that while mounting trade tensions with the United States were a concern, their impact on growth and inflation looked modest so far. Money markets see a 65 percent chance of another hike by December. On the data front, Canadian home prices rose in June from May, the fourth straight rise after weakness late last year, returning national prices to just barely above the previous peak in August 2017, the Teranet-National Bank Composite House Price Index showed. Separate data from Statistics Canada showed that new home prices in Canada were flat in May for a third month in a row. On a year-on-year basis, prices were up 0.9 percent. The Canadian dollar was last trading 0.5 percent higher at C$1.3158 to the greenback. The currency touched its weakest intraday since July 2 at C$1.3218.
USD/JPY is supported around 111.38 levels and currently trading at 112.52 levels. It peaked to hit session high at 112.62 and made session lows at 112.33 levels. The dollar strengthened to hit six-month high against the Japanese yen on Thursday as dollar was bolstered by solid inflation data and continuing a weeklong rally of the pair which suggests investors believe the greenback stands to benefit from a trade war.Both the yen and the dollar are favored as safe-haven investments. But the weakness of the yen, which typically benefits more than the dollar from geopolitical instability, suggests bullish sentiment about the greenback, rather than a bid for safety. The consumer price index (CPI) rose 0.1 percent in June, slightly less than analysts had forecast. The CPI core rate, which better reflects the underlying inflation trend, came in at 0.2 percent month-over-month and 2.3 percent year-over-year, in line with expectations of economists. The dollar/yen rally is in its seventh trading day, with the dollar having broken through the psychologically significant barrier of 112 yen for the first time since Jan. 10 on Wednesday. On Thursday, the dollar hit a fresh six-month high against the Japanese currency of 112.53. The dollar index, which measures the currency against a basket of six currencies, was flat in the North American session at 94.78, its highest since July 3.
Equities Recap
A buoyant media sector drove European stocks higher on Thursday following a new bid for British pay-TV firm , helping shares stabilise after heavy losses in the previous session, when fears of an escalating trade war hit markets.
UK's benchmark FTSE 100 closed up by 0.8 percent, the pan-European FTSEurofirst 300 ended the day up by 0.80 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day up by 1 percent.
U.S. stocks climbed on Thursday as top technology names hit record highs and industrials rebounded, offsetting worries about a U.S.-China trade war.
Dow Jones closed up by 0.91 percent, S&P 500 ended up by 0.88 percent, Nasdaq finished the day up by 1.40 percent.
Treasuries Recap
U.S. Treasury yields edged higher on Thursday as economic data showed U.S. inflation buildup remained modest and labor markets were strong, reinforcing expectations the Federal Reserve will maintain its rate increase schedule.
Benchmark 10-year Treasuries yielded 2.853 percent, pulling the price down 2/32 of a point by 3:52 p.m. (1952 GMT).
U.S. 2-year note yields earlier reached 2.602 percent, matching a level seen a month ago that was the highest since August 2008. They have since dipped back to 2.594 percent.
Commodities Recap
Gold edged higher on Thursday as the dollar eased off a six-month high against the Japanese yen, but bullion failed to gain traction as traders said U.S.-China trade tensions so far were boosting the U.S. currency instead of the precious metal.
Spot gold gained 0.4 percent, trading at $1,247.07 per ounce by 1:35 p.m. EDT (1735 GMT). On Wednesday, gold slipped 1 percent to hit its lowest in over a week at $1,240.89.
U.S. gold futures for August delivery settled up $2.20, or 0.2 percent, at $1,246.60 per ounce.
Oil prices steadied on Thursday, after the International Energy Agency's (IEA) warned that the world's oil supply cushion "might be stretched to the limit" due to production losses in several different countries.
Brent crude oil gained 59 cents a barrel to trade at $74 by 1:44 p.m. EDT (1746 GMT), rebounding from a session low of $72.67. On Wednesday, the global benchmark slumped $5.46, or 6.9 percent, its biggest one-day fall in two years.
U.S. crude fell 41 cents to $69.97 a barrel, after losing 5 percent the previous session.
