Market Roundup
• US housing starts 1.288m v 1.26m forecast, 1.251m previous, boosted by warmer weather; building permits -6.2%.
• US jobless claims 241k v 240k forecast, 243k previous; continuing claims 2.03m v 2.06m previous.
• US Philly Fed Bus Index 32.8 v 30 forecasts, 43.3 previous, prices paid and employment rise fall as labor market tightens.
• BoE’s keeps rate steady (vote was 8-1), Forbes votes for rate hike, others may follow soon, cable rallies.
• US job openings (JOLTS) rise to 5.626m from 5.539m previous.
• US Treasury’s Mnuchin: No decision on Border tax, Trump admin has no desire to get into trade wars, stronger USD is sign of growing confidence in the US a good thing in long-term.
• ECB’s Nowotny: could raise depo rate before refinancing rate – Handelsblatt.
• ECB’s Praet: Underlying inflation pressures remain subdued, no doubt ECB measures are having desired effect.
• Germany’s Schaeuble: German C/A surplus has to do with Eurozone & ECB monetary policy.
• Eurozone bond yields rise as ECB comes back into the frame, France sells over EUR 8bn of bonds, pushing yields up.
• Dutch vote puts question mark over Eurozone chief Dijsselbloem.
• BOJ chief Kuroda sets high hurdles for tapering, rate hike in wake of Fed move.
• Oil eases despite weak USD as US stockpiles remain high, modest dip in US crude stockpiles from record high.
Looking Ahead - Economic Data (GMT)
• 21:30 New Zealand Manufacturing PMI* Feb 51.6-previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0681 levels and currently trading at 1.0765 levels. The pair has made session high at 1.0770 and hit lows at 1.0706 levels. Euro rose against the dollar on Thursday as investors digested the recent U.S. interest rate increase and indications there would be no pick-up in the pace of monetary tightening. The Federal Reserve on Wednesday raised U.S. interest rates for the second time in three months, as expected, but did not flag any plan to accelerate the pace of monetary tightening as some investors had anticipated. Investors snapped up the greenback at the start of European trade, judging it looked cheap after sharp falls following the U.S. Federal Reserve's failure to point aggressively to further rises in the official premium for holding the currency. The euro was also buoyed by a Dutch election defeat for far-right leader Geert Wilders which eased broader fears of a populist drift in European polls this year. The dollar fell 0.5 percent against a basket of key currencies, adding to Wednesday's steep slide after the Fed's decision. It touched a five-week low.
GBP/USD is supported in the range of 1.2241levels and currently trading at 1.2356 levels. It reached session high at 1.2376 and dropped to session low at 1.2338 levels. Sterling jumped higher against the greenback on Thursday after outgoing Bank of England policymaker Kristin Forbes unexpectedly voted for a rise in interest rates and others signaled it would not take much for them to follow suit. With evidence building that wages and consumer spending are finally slowing, however, money market pricing has pointed to there being little chance of the bank raising rates to cool an economy at a time when political risks to growth are rising. Those views were given a jolt by Thursday's BoE minutes and forward interest rates for 12 months' time moved up by 4-5 basis points. Sterling, which may be at the heart of the bank's concern over inflation and would benefit from any rise in interest rates, jumped by a full cent to $1.2361 and by more than half a percent to 86.83 pence per euro.
USD/CAD is supported at 1.3274 levels and is trading at 1.3324 levels. It has made session high at 1.3354 and lows at 1.3287 levels. The Canadian dollar declined against its U.S. counterpart on Friday from an earlier fresh two-week high against its U.S. counterpart as a rally triggered by the Federal Reserve's outlook for interest rate hikes faded. On Wednesday, the loonie rallied the most in a year as the Fed raised interest rates as expected but central bank officials stuck to their outlook for two more rate hikes this year and three in 2018, a more gradual path than some investors had expected. Oil prices slipped as support from a weaker dollar was offset by U.S. crude inventories near record high levels. Brent crude ended the session 7 cents lower at $51.74 a barrel. U.S. light crude settled 11 cents lower at $48.75 a barrel. The Canadian dollar was last trading at C$1.3315 to the greenback, or 74.92 U.S. cents, weaker than Wednesday's close of C$1.3307, or 75.15 U.S. cents.
AUD/USD is supported around 0.7635 levels and currently trading at 0.7676 levels. It hit session high at 0.7687 and made session lows at 0.7662 levels. The Australian held solid gains on Thursday after the U.S. Federal Reserve stuck to its outlook for monetary tightening this year, offsetting pressure from underwhelming local economic data. The Australian dollar stood at $0.7676, having gained 2 percent on Wednesday trading in New York. It briefly touched a three-week peak of $0.7720 where it ran into heavy resistance. It dipped nearly a quarter of a U.S. cent after a disappointing jobs report. Australia's jobless rate climbed to a 13-month high in February and employment unexpectedly fell, a risk to the outlook for wage growth and inflation that will likely keep open the possibility of another interest rate cut. The jobless rate rose to 5.9 percent, compared with analysts' expectations for a steady 5.7 percent, data from the Australian Bureau of Statistics showed on Thursday. Employment dropped 6,400 in February, also upsetting forecasts of an increase of 16,000.The decline was led by a 33,500 hit to part-time work even as the number of full-time jobs rose 27,100 in the month.
Equities Recap
European shares hit their highest level in 15 months on Thursday after the Federal Reserve signalled no pick-up in the pace of monetary tightening and centre-right Prime Minister Mark Rutte won elections in the Netherlands.
UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 provisionally closes up by 0.69 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day up by 0.5 percent.
U.S. stocks slipped on Thursday pressured by healthcare shares as traders cashed in gains from one of the best performing sectors so far this year.
Dow Jones closed down by 0.09 percent, S&P 500 ended down by 0.18 percent, Nasdaq finished the day down by 0.03 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday from more than one-week lows on the view that they had fallen too sharply in the prior session after the Federal Reserve maintained its outlook for only a gradual pace of interest rate increases this year.
U.S. 30-year bonds fell 19/32 in price, and yields rose to 3.134 percent from 3.102 percent. Yields hit a session high of 3.156 percent in afternoon U.S. Trading.
Two-year notes, which are considered most vulnerable to Fed policy, were down slightly in price, while yields increased to 1.324 percent from 1.316 percent.
Commodities Recap
Oil prices slipped on Thursday, as support from a weaker dollar was offset by U.S. crude inventories near record high levels that again raised concerns whether OPEC-led output cuts were starting to drain a global glut.
Brent crude ended the session 7 cents lower at $51.74 a barrel, recovering from Tuesday's drop to $50.25, its lowest since Nov. 30 when OPEC announced its supply accord. The price is still nearly $7 below January's post-deal peak of $58.37.
U.S. light crude settled 11 cents lower at $48.75 a barrel, but still above the three-month low hit on Tuesday.
Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the U.S. central bank signaled only gradual rate tightening and the dollar slid to its lowest in five weeks.
Spot gold gained 0.7 percent at $1,227.43 an ounce by 3:03 p.m. EDT (1903 GMT), after touching $1,233.13, the highest since March 6. U.S. gold futures for April delivery settled up 2.2 percent at $1,227.10.
