Market Roundup
• Tightening US labor market boosts econ growth outlook, Private payrolls +173k in May.
• US jobless claims fall as labor market tightens (267k vs 270k forecast, 268k previous).
• ECB’s Draghi: inflation to pick in H2 ’16, recover in 2017/18.
• ECB’s Draghi: Measures taken very effective, no plan to revise inflation objective, FX rate is important for growth, price stability, ECB has no FX target.
• Fed’s Kaplan forecasts US GDP growth of 2% in ’16, expects China growth to continue to ratchet down.
• Fed’s Kaplan: Some room for labor force participation rate to improve, Inflation has picked up in last 3-months.
• Fed’s Powell: Overwhelming evidence' there is probably an increase in fragility in market liquidity.
• OPEC fails to agree policy, Saudis pledge no shocks.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Services Index May 49.7-previous
• 01:45 China Caixin Services PMI May 51.8-previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1113 levels and currently trading at 1.1151 levels. The pair has made session high at 1.1192 and hit lows at 1.1145 levels. The euro declined against US dollar on Thursday on the European Central Bank's cautious economic outlook. President Mario Draghi said the ECB had lifted growth forecasts for 2016 but cut growth estimates for 2018, and raised its inflation forecast to just 0.2 percent from 0.1 for this year. The euro was down 0.35 percent at $1.1147, fading from its highest against the greenback in over a week. It lost 1 percent at 121.31 against yen after hitting its weakest against the yen since April 2013. The dollar index , which tracks the greenback against six major world currencies, was little changed from late Wednesday at 95.454.Investors will now focus on U.S. nonfarm payrolls data on Friday. A solid reading could heighten expectations for a U.S. interest rate move as early as the Federal Reserve's June 14-15 policy meeting
GBP/USD is supported in the range of 1.4377 levels and currently trading at 1.4424 levels. It reached session high at 1.4473 and hit low at 1.4410 levels. Sterling declined against dollar on Thursday as Sterling was dragged down by falling euro after European Central Bank chief Mario Draghi said the bank made only marginal upward adjustments to its inflation projections. The euro fell broadly after the market perceived those upward adjustments as rather dovish, a move that helped the dollar outperform against the single currency. On the data front, British construction orders fell last month for the first time in more than three years, as concern about a June 23 referendum on whether Britain should remain a member of the European Union prompted companies to put off new projects. Data showed headline construction PMI dropped to 51.2 from April's 52.0. Against the dollar, sterling initially rose to $1.4463, but declined to hit low at $1.4416 in the late US session.
USD/CAD is supported at 1.3030 levels and is trading at 1.3100 levels. It has made session high at 1.3143 and lows at 1.3070 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as investors braced for upcoming economic data from United States and Canada and as the 50$ threshold continued to cap crude oil prices. Oil edged up higher after data showing a weekly drawdown in US crude stockpiles offset a decision by the Organization of the Petroleum Exporting Countries not to set ceiling for its production. Data on Thursday showed economic growth accelerated at a weaker pace than expected in the first due months of the year and lost momentum at the end of the quarter ,boding poorly for a second quarter that is expected to be further affected by Alberta’s wildfires. The loonie is expected to weaken in the near term as slower economic growth and rising speculation of US interest hike this month is set weigh on the currency pair.
USD/JPY is supported around 108.45 levels and currently trading at 108.87 levels. It hit session high at 109.05 and made session lows at 108.50 levels. The dollar declined to hit its lowest level in more than two weeks against the Japanese yen on Thursday, as the pair was weighed down by uncertainty over whether the U.S. Federal Reserve will raise interest rates later this month. Risk aversion was also heightened after factory surveys over the past 24 hours highlighted a sluggish global economy, even as the U.S. Federal Reserve appears to be preparing jittery financial markets for a possible interest rate hike in coming months. Meanwhile, data showed U.S. private employers increased hiring in May and new applications for jobless benefits fell last week, further boosting the economic outlook for the second quarter. The ADP National Employment Report showed private payrolls increased 173,000 last month on top of the 166,000 jobs added in April. Gains in private employment were nearly broad-based last month, though manufacturing lost 3,000 jobs.
Equities Recap
European shares closed mixed on Thursday after OPEC failed to agree an output ceiling for oil and the European Central Bank revised its inflation and growth forecasts only slightly higher.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day down by 0. 1 percent.
Wall Street closed slightly higher on Thursday to send the S&P 500 to a seven-month high, as fresh data gave a rosier view of the economy and further gains for healthcare shares countered declines in energy and tech names.
Dow Jones closed up by 0.25 percent, S&P 500 ended up by 0.26 percent, Nasdaq finished the day up by 0.37 percent.
Treasuries Recap
U.S. Treasury debt yields fell on Thursday, spooked by weakness in global stock markets and persistent concerns about Britain's future in the European Union.
In the late trading, benchmark 10-year Treasury notes were up 13/32 in price for a yield of 1.800 percent, from 1.840 percent on Wednesday.
U.S. 30-year bonds rose 31/32 in price, yielding 2.578 percent, from 2.616 percent on Wednesday.
Two-year notes were flat in price, with a yield of 0.890 percent, compared with 0.915 percent on Wednesday.
Commodities Recap
Gold was little changed on Thursday as the dollar turned positive after the European Central Bank said it made only marginal upward adjustments to its inflation projections, while investors remained cautious ahead of U.S. labor data.
Spot gold was down 0.1 percent at $1,210.96 an ounce by 1:54 p.m. EDT (1754 GMT). U.S. gold futures settled down 0.2 percent at $1,212.60.
Oil prices edged higher on Thursday, with Brent settling above $50 a barrel the first time in seven months, after the latest drawdown in U.S. crude stockpiles offset OPEC's failure to set a ceiling for its output.
U.S. West Texas Intermediate (WTI) crude futures settled up 16 cents, or 0.3 percent, at $49.17 a barrel. It had tumbled more than $1 earlier.
Brent futures rose 32 cents, or 0.6 percent, to settle at $50.04, after peaking at $50.30. It was its first settlement above $50 since Nov. 3.
