Market Roundup
• US Q4 GDP revised higher 2.1% v 2% forecast, 1.9% previous, boosted by consumer spending.
• US Core PCE prices final 1.3% v 1.2% forecast, 1.2% previous.
• US initial jobless claims 258k v 248k forecast, 261k previous; continuing claims 2.052m v 2.02m forecast, 1.987m previous.
• Fed’s Mester: Supports further rate hikes, though not at each meeting, backs starting to trim bond portfolio this year.
• ECB policymakers want to stick to plan, one (Holland’s Knot) calls for flexibility in case econ outperforms.
• German, Spanish inflation ebbs, easing pressure on ECB; German annual inflation 1.5% in March v 2.2% in Feb.
• JP Morgan economist: Sees Fed Balance normalization beginning in early 2018, Baseline case on Fed’s Balance sheet normalization to only not re-invest in MBS.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Building Consents Feb 0.8%-previous
• 23:30 Japan All House hold spending YY* Feb forecast -1.7%, -1.2%- previous
• 23:30 Japan All Household Spending MM* Feb forecast 0.4%, 0.5%- previous
• 23:30 Japan CPI, Core Nationwide YY Feb forecast 0.2%, 0.1%- previous
• 23:30 Japan CPI, Overall Nationwide* Feb 0.4%- previous
• 23:30 Japan CPI Index Ex Fresh Food* Feb 99.6- previous
• 23:30 Japan Unemployment Rate Feb forecast 3%, 3%- previous
• 23:50 Japan Ind output prelim mm Feb forecast 1.2%, -0.4%- previous
• 00:00 New Zealand NBNZ Business Outlook Mar 16.6%- previous
• 00:00 New Zealand NBNZ Own Activity Mar 37.2%- previous
• 00:30 Australia Private Sector Credit* Feb 0.2%- previous
• 00:30 Australia Housing Credit* Feb 0.5%- previous
• 01:00 China NBS Non-Mfg PMI* Mar 54.2- previous
• 01:00 China NBS Manufacturing PMI* Mar forecast 51.6, 51.6- previous
• 05:00 Japan Construction Orders YY* Feb 1.1%- previous
• 05:00 Japan Housing Starts YY* Feb forecast -1.1%, 12.8%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0650 levels and currently trading at 1.0681 levels. The pair has made session high at 1.0753 and hit lows at 1.0680 levels. Euro declined against the dollar on Thursday as a combination of upbeat U.S. economic data and potential weakness in the euro zone weighed down the continental currency. The euro declined earlier in the European session after data released showed German and Spanish consumer inflation slowed more sharply than expected in March, prompting worries that sluggish growth in the euro zone could persist. The Single currency was further weighted down after data showed U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost, the Commerce Department said. Gross domestic product increased at a 2.1 percent annualized rate instead of the previously-reported 1.9 percent pace. The dollar was slightly stronger against a basket of currencies. The dollar index ticked up 0.40 percent while, the euro was down 0.70 percent to $1.0680.
GBP/USD is supported in the range of 1.2400 levels and currently trading at 1.2469 levels. It reached session high at 1.2523 and dropped to session low at 1.2448 levels. Sterling initially declined against dollar on Thursday but recovered some losses as investors looked forward for expectations of a UK interest rate rise. The pound hit an eight-week high of $1.2615 this week and was not far off that high at about $1.25 on Thursday. It is up about 3 percent in the past two weeks as accelerating inflation fuels expectations that the Bank of England is moving towards tightening policy, and is also benefiting from dollar weakness. But gains were capped by continuing economic uncertainty around Britain's departure from the European Union. The pound has also been sensitive recently to British economic data, which has started showing mixed signs. Talk of a Scottish referendum which threatens a breakup of the United Kingdom.
USD/CAD is supported at 1.3260 levels and is trading at 1.3337 levels. It has made session high at 1.3346 and lows at 1.3275 levels. The Canadian dollar initially declined on Thursday but reversed course as Canadian dollar surrendered early gains after posting a nine-day high against its U.S. counterpart as investors were cautious ahead of Friday's Canadian gross domestic product data for January. U.S. crude prices settled 84 cents higher at $50.35 a barrel after Kuwait backed an extension of Organization of the Petroleum Exporting Countries production cuts to reduce a global glut. On the data front, Canadian producer prices edged up 0.1 percent in February from January, which was less than the 0.3 percent increase analysts had expected. Still, the year-on-year gain picked up to 3.5 percent from 2.5 percent. The Canadian dollar last traded at C$1.3334 to the greenback, or 75.00 U.S. cents, little changed from Wednesday's close of C$1.3333, or 75.00 U.S. cents.
USD/JPY is supported around 110.80 levels and currently trading at 111.77 levels. It peaked to hit session high at 111.83 and made session lows at 110.97 levels. The U.S. dollar rose against the yen on Thursday as greenback strengthened against Japanese yen after data showed U.S. economic growth was stronger than previously reported last quarter, helped by robust consumer spending. U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost that was partially offset by the largest gain in imports in two years. Gross domestic product increased at a 2.1 percent annualized rate instead of the previously reported 1.9 percent pace, the Commerce Department said on Thursday in its third GDP estimate for the period. The economy grew at a 3.5 percent rate in the third quarter. Despite the upward revision to the fourth quarter, the economy grew only 1.6 percent for all of 2016, its worst performance since 2011, after expanding 2.6 percent in 2015. The dollar was also boosted by Chicago Fed President Charles Evans, who said he was in line with most of his colleagues in supporting further interest rate increases this year.
Equities Recap
European shares climbed on Thursday, helped by gains among industrials and commodity stocks, while German blue chips came within striking distance of their all-time highs.
UK's benchmark FTSE 100 closed down 0.1, the pan-European FTSEurofirst 300 ended the day up by 0.47 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.04 percent.
Wall Street gained on Thursday, led by financial shares, after data showed U.S. economic growth was stronger than previously reported last quarter, helped by robust consumer spending, and the tech-heavy Nasdaq set a record closing high.
Dow Jones closed up by 0.32 percent, S&P 500 ended up 0.29 percent, Nasdaq finished the day up by 0.28 percent.
Treasuries Recap
U.S. Treasury debt yields rose on Thursday after the final fourth-quarter U.S. gross domestic product number was revised higher, reflecting steady but less spectacular growth than in the prior quarter for the world's largest economy.
In late trading, benchmark 10-year notes fell 9/32 in price to yield 2.419 percent, compared with 2.387 percent late on Wednesday.
U.S. 30-year bond prices fell 24/32, yielding 3.031 percent, up from Wednesday's 2.994 percent.
On the front end of the curve, U.S. two-year note yields were at 1.285 percent, up from 1.278 percent on Wednesday.
Commodities Recap
Gold dipped on Thursday as the dollar strengthened, but losses were capped by continuing economic uncertainty around Britain's departure from the European Union and approaching French elections.
Spot gold was down 0.5 percent at $1,245.41 an ounce by 1:54 p.m. EDT (1754 GMT) and U.S. gold futures settled down 0.7 percent at $1,245.
Oil prices jumped for a third day on Thursday to their highest in three weeks after Kuwait backed an extension of OPEC production cuts to reduce a global glut.
Brent crude oil settled up 54 cents, or about 1 percent, to $52.96 a barrel after hitting $53.10. U.S. crude settled up 84 cents, or 1.7 percent, higher at $50.35 a barrel, after touching $50.47.
