Market Roundup
• US w/e Initial Jobless Claims, 225k, 239k forecast, 236k previous.
• US w/e Jobless Claims 4-Wk Avg, 234.75k, 241.50k previous.
• US w/e Continued Jobless Claims, 1.886 mln, 1.900 mln forecast, 1.908 mln previous, 1.913 mln revised.
• US Nov Retail Sales MM, 0.8%, 0.3% forecast, 0.2% previous 0.5% revised.
• US Nov Retail Control, 0.8%, 0.3% forecast, 0.3% previous 0.4% revised.
• US Dec Markit Comp Flash PMI, 53.0, 54.5 previous.
• US Dec Markit Svcs PMI Flash, 52.4, 55.0 forecast, 54.5 previous.
• US Dec Markit Mfg PMI Flash, 55.0, 54.0 forecast, 53.9 previous.
• US Nov Import Prices MM, 0.7%, 0.7% forecast, 0.2% prev, 0.1% revised.
• US Nov Export Prices MM, 0.5%, 0.2% forecast, 0.0% prev, 0.1% revised.
• US Oct Business Inventories MM, -0.1%, -0.1% forecast, 0.0% previous.
• White House says will work with Rubio on child tax credit.
• ECB's Draghi sidelines critics to keep money taps wide open.
• Bank of Canada more confident less stimulus needed-Poloz.
• CA Oct New Housing Price Index, 0.1%, 0.2% forecast, 0.2% previous.
• BoE votes 9-0 to keep interest rates at 0.5 pct.
• China says war must not be allowed on Korean peninsula.
• Despite parliament defeat, Britain's May on course to deliver Brexit.
• Brazil government raises 2017, 2018 GDP growth estimates.
• Mexico's central bank hikes interest rate on inflation risks.
Looking Ahead - Economic Data (GMT)
• 14 Dec 21:30 New Zealand Nov Manufacturing PMI, 57.2 previous
• 14 Dec 23:50 Japan Q4 Tankan Big Mf Idx, 24 forecast, 22 previous
• 14 Dec 23:50 Japan Q4 Tankan Big Mf Outlook DI, 22 forecast,19 previous
• 14 Dec 23:50 Japan Q4 Tankan Big Non-Mf Idx, 23 forecast, 23 previous
• 14 Dec 23:50 Japan Q4 Tankan big non-mf outlook DI, 20 forecast,19 previous
• 15 Dec 02:00 China Dec TR IPSOS PCSI, 71.15 previous
• 15 Dec 02:00 Japan Dec TR IPSOS PCSI, 45.31 previous
• 15 Dec 02:00 Australia Dec TR IPSOS PCSI, 52.87 previous
Looking Ahead - Events, Other Releases (GMT)
• N/A European Euro Summit in Brussels
• N/A ECB's Draghi participating in European Council meeting in Brussels
• 13:15 BoE'S Haldane speaks in Palermo, Italy
Currency Summaries
EUR/USD is likely to find support at 1.1742 levels and currently trading at 1.1780 levels. The pair has made session high at 1.1827 and hit lows at 1.1766 levels. Euro declined against the dollar on Thursday after the European Central Bank raised growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed. The ECB kept its key rates on hold and also held rigidly to its script on its intentions for next year despite pressure from some policymakers to acknowledge explicitly the strength of the eurozone recovery and more closely follow the U.S. Federal Reserve's tightening trend. The euro rose to a day high of $1.186 after the bank raised its growth forecasts from this year through to 2019, before weakening back to $1.178, down 0.38 percent on the day. The dollar index, tracking the greenback against a basket of major currencies, rose 0.12 percent, paring earlier gains on tax legislation concern. The dollar had weakened on Thursday after the Fed left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in U.S. economic growth from the Trump administration's proposed tax cuts. Some investors had expected that the Fed would indicate a faster pace of rate increases in the near term. The Fed has projected three more hikes in both 2018 and 2019.
GBP/USD is supported in the range of 1.3330 levels and currently trading at 1.3430 levels. It reached session high at 1.3445 and dropped to session low at 1.3390 levels. Sterling struggled for direction against the dollar on Thursday as some traders were disappointed after Bank of England stuck to its view that interest rates were likely to rise only gradually despite above-target inflation and progress in Brexit talks.The BoE said in a statement that last week's breakthrough in Brexit talks has reduced the risk of Britain leaving the European Union in a disorderly way and might boost economic confidence. But it also said only modest increases in Bank Rate, currently 0.5 percent, would be warranted over the next few years. Sterling initially slipped to as low as $1.3390, but recovered to trade at $1.3467 in the late US session. The BoE's monetary policy committee last month voted 7-2 in favour of raising rates by a quarter of a percentage point, and maintained a forecast that the economy would grow 1.6 percent next year slightly faster than expected by the government and most economists polled.Since then, inflation has risen to its highest since March 2012 at 3.1 percent. The BoE says this overshoot is almost all due to sterling's fall after June 2016's Brexit vote, and it expects inflation to fall slowly next year.
USD/CAD is supported at 1.2690 levels and is trading at 1.2747 levels. It has made session high at 1.2854 and lows at 1.2709 levels. The Canadian dollar rallied more than one percent against its U.S. counterpart on Thursday after upbeat remark on Canadian economy by Bank of Canada's Poloz. Poloz said the economy was in a sweet spot after making "tremendous" progress over the last year, with early signs that a long-awaited rotation to higher exports and business investment is happening as the housing boom cools. Poloz acknowledged that current monetary policy "clearly remains quite stimulative" despite rate hikes in July and September, fueling market bets the next hike will come in the first quarter of 2018. The next policy meeting is Jan. 17.On the data front, resale’s of Canadian homes rose 3.9 percent in November from October, the fourth straight monthly rise, but the momentum may not last as stricter mortgage rules take effect in January, the Canadian Real Estate Association said. Statistics Canada said new home prices edged up by 0.1 percent in October on strength in the capital, Ottawa, and the first increase in Toronto in five months. The Canadian dollar was up 0.16 percent at C$1.2794 to the greenback. The currency traded in a range of C$1.2856 to C$1.2711.
USD/JPY is supported around 111.96 levels and currently trading at 112.16 levels. It peaked to hit session high at 112.80 and made session lows at 112.05 levels. The U.S. dollar declined against the Japanese yen on Thursday as greenback weakened after two lawmakers were reported to seek changes to proposed legislation to overhaul the U.S. tax code in order to garner their support.U.S. Republican Senator Mike Lee has not decided whether to support a Republican tax bill and wants changes to the child tax credit, an aide to the lawmaker said on Thursday. Both Lee and Republican Senator Marco Rubio want more of the proposed child tax credit to be refundable, Conn Carroll, Lee's communications director said, adding Lee is "undecided on the tax bill as currently written. Many investors are betting that tax changes will help stimulate the economy and boost growth. The dollar index against a basket of six major currencies was unchanged on the day at 93.431, after earlier rising to 93.759.The Japanese yen strengthened 0.28 percent at 112.26 per dollar.
Equities Recap
European shares lagged their U.S. peers and closed in negative territory on Thursday, as a busy day of central bank meetings failed to provide momentum even though the European Central Bank raised its growth and inflation forecasts.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day down by 0.34 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.7 percent.
U.S. stocks ended lower on Thursday as investors worried about potential roadblocks to Republicans' tax overhaul, offsetting their optimism over strong retail sales data.
Dow Jones closed down by 0. 28 percent, S&P 500 ended down 0. 0.39 percent, Nasdaq finished the day down by 0.27 percent.
Treasuries Recap
The gap between U.S. shorter-dated and longer-dated Treasury yields shrank on Thursday as surprisingly strong data on retail sales in November supported the view the Federal Reserve would raise interest rates further to keep the economy from overheating.
The benchmark 10-year Treasury yield was 2.346 percent, little changed from late Wednesday.
The two-year yield rose nearly 3 basis points to 1.811 percent but still below the nine-plus-year peak at 1.852 percent set on Wednesday. The five-year yield increased almost 2 basis points to 2.128 percent, which was short of the 6-1/2 year high of 2.199 percent seen on Wednesday.
Commodities Recap
Gold dipped slightly on Thursday, easing off a one-week high following strong U.S. retail sales data, while palladium rose to its highest since February 2001.
Spot gold dipped 0.03 percent to $1,255.77 per ounce by 2:43 p.m. EST (1943 GMT). In early trading, it touched a one-week high of $1,259.11.
U.S. gold futures for February delivery settled up $8.50, or 0.7 percent, at $1,257.10 per ounce.
Oil prices rose almost 1 percent on Thursday after a pipeline outage in Britain continued to support prices despite data expecting a global crude surplus in the beginning of next year.
U.S. West Texas Intermediate futures settled up 44 cents, or 0.8 percent, to $57.04 a barrel.Brent crude futures settled at $62.44 a barrel, the same settlement as Wednesday.
