Market Roundup
• Wall St extends slide as Nasdaq flirts with correction.
• Trump calls "loco" Federal Reserve "too aggressive".
• Fed's George says inflation to rise; backs more rate increases.
• Brexit backstop talks likely to continue till November - British PM.
• British banks risk ratings downgrades in disorderly Brexit - S&P.
• IMF's Lagarde warns against trade, currency wars, urges fix to global rules.
• US Sep Core CPI y/y, NSA, 2.2%, 2.3% forecast, 2.2% previous.
• US Sep CPI m/m SA, 0.1%, 0.2% forecast 0.2% previous.
• US Sep CPI y/y NSA, 2.3%, 2.4% forecast, 2.7% previous.
• US 6 Oct w/e Initial Jobless Claims, 214k, 206k forecast, 207k previous.
• US 29 Sep w/e Continued Jobless Claims, 1.660M, 1.660M forecast, 1.650M previous.
• ECB cannot come to Italy's rescue without EU bailout: sources.
• CA Aug New Housing Price Index, 0.0%, 0.1% forecast, 0.1% previous.
Looking Ahead - Economic Data (GMT)
• 11 Oct 21:30 New Zealand Sep Manufacturing PMI, 52.0 previous
• 11 Oct 23:50 Japan 6 Oct w/e Foreign Bond Investment, 379.9B previous
• 11 Oct 23:50 Japan 6 Oct w/e Foreign Invest JP Stock, 835.7B previous
• 12 Oct 00:30 Australia Aug Housing Finance, 0.4% previous
• 12 Oct 00:30 Australia Aug Invest Housing Finance, -1.3% previous
• 12 Oct N/A China Sep Exports y/y, 8.9% forecast, 9.8% previous
• 12 Oct N/A China Sep Imports y/y, 15.0% forecast, 20.0% previous, 19.9% revised
• 12 Oct N/A China Sep Trade Balance USD, 19.40B forecast, 27.91B previous, 27.89B previous
Looking Ahead - Events, Other Releases (GMT)
• 09:00 ECB's Sabine Lautenschlager speaks at the 50th Anniversary of the Central Bank of Malta in Valletta, Malta.
• 13:30 Chicago Fed's Charles Evans speaks on current economic conditions at the ENGAGE Undergraduate Investment Conference in Ann Arbor, Michigan.
• 14:00 BoE's Andy Haldane speaks at a conference at King's College London.
• 15:45 Atlanta Fed's Raphael Bostic participates in a discussion at the Network of Schools of Public Policy, Affairs and Administration Conference in Atlanta.
Currency Summaries
EUR/USD is likely to find support at 1.1456 levels and currently trading at 1.1591 levels. The pair has made session high at 1.1599 and hit lows at 1.1540 levels. The euro strengthened against dollar on Thursday as traders pared greenback holdings on lower U.S. Treasury yields and further losses on Wall Street. Investors kept a close eye on U.S. stocks after the previous day's fall. By late afternoon, Wall Street shares were down in choppy trading. A weaker-than-forecast rise in U.S. consumer prices in September also reduced bets for a faster pace of interest rate increases by the Federal Reserve, further eroding the dollar's appeal. The U.S. Labor Department said on Thursday its consumer price index rose 0.1 percent in September, less than the 0.2 percent increase forecast among analysts polled by Reuters. The CPI miss reduced bets U.S. inflation is accelerating, spurring appetite for U.S. government bonds. This added to the safe-haven bid for Treasuries stemming from a dramatic sell-off in overseas stock markets that followed big losses in the S&P 500 and Dow Jones indexes on Wednesday. An index that tracks the dollar versus six currencies fell to 94.987, the lowest since Sept. 28. The dollar index was down 0.28 percent at 95.242. The euro zone common currency was up 0.41 percent at $1.1594 after touching a one-week high.
GBP/USD is supported in the range of 1.3135 levels and currently trading at 1.3230 levels. It reached session high at 1.3241 and dropped to session low at 1.3180 levels. Britain's pound gained against the dollar on Thursday on hopes of a Brexit deal, but concern among investors about the Ireland border issue kept gains in check. Hopes are building that a trade deal between the European Union and Britain can be struck before an EU summit on Oct. 18.The pound has risen for three consecutive days and was buoyed by comments on Wednesday from the EU's Brexit negotiator Michel Barnier suggesting a deal next week was imminent. Sterling rose 0.3 percent to $1.3250, nearing a three-month high of $1.3295. Doubts over whether the fraught issue of EU checks on goods entering Northern Ireland can be overcome remains, and that is stopping some traders from unwinding their short bets on the currency. The EU's Barnier says Britain must accept possible checks on goods moving between its main islandand its province of Northern Ireland. But the Northern Irish party that British Prime Minister Theresa May's government relies on for support has threatened to challenge her leadership if their wishes aren't respected on the Irish border.
USD/CAD is supported at 1.3000 levels and is trading at 1.3048 levels. It has made session high at 1.3077 and lows at 1.3012 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday , recovering from an earlier 12-day low as data showing a slowdown in U.S. inflation weighed on the yields of U.S. government bonds. Treasury yields extended their fall as the inflation data dented expectations of a more aggressive pace in raising interest rates by the U.S. Federal Reserve. A faster pace of Fed rate hikes could reduce investor incentive to buy lower-yielding instruments denominated in Canadian dollars. Oil was pressured by an industry report showed that U.S. crude inventories rose more than expected. U.S. crude prices were down 1.6 percent at $71.97 a barrel. The Canadian dollar traded 0.3 percent higher at 1.3016 to the greenback. The currency touched its weakest intraday level since Sept. 27 at 1.3077.Still, the loonie climbed less than some other G10 currencies as the price of oil, one of Canada's major exports, slumped to two-week lows.On the data front, New home prices in Canada were unchanged in August, Statistics Canada said, falling short of the 0.1 percent gain that analysts had estimated. The year-over-year advance in prices slowed to 0.4 percent from 0.5 percent in the prior month.
USD/JPY is supported around 111.80 levels and currently trading at 112.12 levels. It peaked to hit session high at 112.50 and made session lows at 111.80 levels. The dollar weakened against the Japanese yen on Thursday as lower-than-expected rise in U.S. inflation dampened the case for an aggressive rate hike pace by the Federal Reserve. Thursday's softer-than-forecast U.S. consumer prices data weighed on yields as well, but analysts said this should also not deter the Fed from its rate path. U.S. consumer prices rose less than expected in September, held back by a slower increase in the cost of rent and falling energy prices, as underlying inflation pressures appeared to cool slightly. The modest price increases come despite a U.S. labor market that looks robust by most measures. A separate report on Thursday showed an unexpected but moderate rise in the number of Americans filing for unemployment benefits last week. The Consumer Price Index increased 0.1 percent last month after rising 0.2 percent in August, the Labor Department said. In the 12 months through September, the CPI increased 2.3 percent, slowing from August's 2.7 percent advance. An index that tracks the dollar versus six currencies fell to 94.987, the lowest since Sept. 28. The dollar index was down 0.28 percent at 95.242.
Equities Recap
European shares hit their lowest in more than 21 months on Thursday following a slide on Wall Street as jitters over rising U.S. Treasury yields and signs of slowing global growth prompted broad selling of risky assets.
UK's benchmark FTSE 100 closed down by 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 1.98 percent, Germany's Dax ended down by 1.4 percent, France’s CAC finished the day down by 1.18 percent.
Wall Street indexes continued their slide in Thursday's volatile session as investors worried about rising interest rates and braced for impact on corporate earnings from trade conflicts, a day before quarterly reporting season begins.
Dow Jones closed down by 2.14 percent, S&P 500 ended down by 2.06 percent, Nasdaq finished the day down by 1.20 percent.
Treasuries Recap
U.S. Treasury yields fell to one-week lows on Thursday, sliding for a second straight session, as Wall Street shares dropped a day after posting steep losses on worries about prospects for rising interest rates.
U.S. 10-year note yields were at 3.142 percent, down from 3.225 percent late on Wednesday. Earlier in the global session, 10-year yields hit a one-week low of 3.124 percent.
U.S. 30-year bond yields fell to 3.316 percent, versus Wednesday's 3.401 percent. The yield earlier dropped to 3.229 percent, the lowest since Oct. 3.
Commodities Recap
Gold prices on Thursday jumped over 2 percent to more than a two-month high as tumbling global stock markets sent investors rushing to the safe-haven asset.
Spot gold rose 2.6 percent to $1,225.26 as of 2:11 p.m. EDT (1811 GMT), after hitting its highest since July 31 at $1,226.27. It was also the metal's best one-day percentage gain since June 2016.U.S. gold futures settled up $34.20, or 2.87 percent, at $1,227.60.
Oil prices slumped to more than two-week lows on Thursday as global stock markets fell, with investor sentiment made more bearish by a bigger-than-expected build in U.S. crude inventories.
Brent crude futures fell $2.83 to settle at $80.26 a barrel, a 3.41 percent loss, after hitting a low of $79.80, its weakest since Sept. 24. The global benchmark has retreated after hitting a four-year high of $86.74 on Oct. 3.
U.S. West Texas Intermediate (WTI) crude futures fell $2.2 to settle at $70.97 a barrel, a 3.01 percent loss. WTI hit its lowest since Sept. 21.
