Market Roundup
• US ADP National Employment Jun +158k vs 185k forecast, 230k previous.
• US Initial Jobless Claims w/e 248k vs 243k forecast, 244k previous.
• US Goods Trade Balance (R) May -66.3b, -65.90b previous.
• US ISM N-Mfg Employment Idx Jun 55.8, 57.8 previous.
• US ISM N-Mfg PMI Jun 57.4 vs 56.5 forecast, 56.9 previous.
• US Markit Comp Final PMI Jun 53.9, 53.0 previous.
• US economy is seen growing 2.7% in Q2 vs 3.0% July 3 estimate - Atlanta Fed.
• Fed's Powell: Current US housing finance system 'unsustainable'.
• Trump calls out Russia, cites efforts to subvert Western civilization.
• Trump pledges to act 'very strongly' on North Korea missile threat.
• ECB open to further step towards slow stimulus exit: Minutes.
• ECB's Weidmann: Ongoing recovery now raises the prospect of a monetary policy normalization.
• Weidmann: QE was launched to fend off deflation but such a risk is now distant.
• BOE's McCafferty: Brexit transition deal would be clearly beneficial for the economy.
• McCafferty: Big pick-up in inflation is not something we can ignore.
• UK should stay in the single market for Brexit transition –CBI.
• Canada trade data shows economic strength ahead of rate decision
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Construction Index Jun, 56.7 previous
• 23:50 Japan Foreign Reserves Jun 1251.9b previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1352 levels and currently trading at 1.1418 levels. The pair has made session high at 1.1352 and hit lows at 1.1381 levels. The euro rose against US dollar in the US session on Thursday as the dollar fell after a round of weaker-than-expected U.S. labor market data, affirming a gradual pace for raising interest rates by the Federal Reserve. The greenback was already on the defensive after Wednesday's issue of the Fed's policy minutes failed to provide a clear picture of future interest rate increases. The slide extended with Thursday's poor set of U.S. economic data. The ADP National Employment Report showed private-sector payrolls increased by 158,000 jobs last month, lower than the 230,000 positions created in May and below economists' expectations for a gain of 185,000. In a separate report, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally-adjusted 248,000 for the week ended July 1. It was the third straight weekly increase in claims. The dollar index fell 0.5 percent, with the euro up 0.61 percent to $1.1421.
GBP/USD is supported in the range of 1.2900 levels and currently trading at 1.2972 levels. It reached session high at 1.2974 and dropped to session low at 1.2921 levels. Sterling strengthened against the dollar on Thursday as a run of weaker British economic data failed to deter investors from bets that the Bank of England will hike interest rates in the coming months. Surveys of purchasing managers pointing to a cooling economy have put some pressure on the pound this week, but it is still less than a cent away from nine-month highs reached against the dollar in May. That resilience is largely due to expectations of monetary tightening from the BoE, with some investors betting on a rate hike as soon as next month after a number of policymakers have spoken out in favour of one. But some investors remain unconvinced the BoE will move on rates soon, citing underlying risks to the UK economy as it negotiates an exit from the European Union and the change in the Bank's rate-setting committee. By late US session, sterling was up 0.3 percent at $1.2971.But it lost ground to a strengthening euro following a round of weaker-than-expected U.S. labour market data that pulled the dollar lower.
USD/CAD is supported at 1.2912 levels and is trading at 1.2953 levels. It has made session high at 1.2964 and lows at 1.2915 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rose, while domestic data showed a solid gain for the country's exports. Canada's trade deficit almost doubled to C$1.09 billion in May but in a sign of economic strength, both exports and imports reached record highs, Statistics Canada data indicated. Separate domestic data showed that the value of Canadian building permits issued in May jumped 8.9 percent on plans for more residential building construction, particularly in the red-hot Ontario market. Prices of oil, one of Canada's major exports, recovered some ground after a surprisingly upbeat picture of U.S. demand halted the previous day's steep slide, although the prospect of oversupply in 2018 prompted more analysts to cut their price forecasts. The Canadian dollar was last trading at C$1.2960 to the greenback, up 0.2 percent. The currency traded in a range of C$1.2924 to C$1.2984. It touched on Tuesday its strongest since September at C$1.2912.
AUD/USD is supported around 0.7457 levels and currently trading at 0.7584 levels. It hit session high at 0.7596 and made session lows at 0.7575 levels. The Australian dollar declined against the greenback on Thursday as Australian dollar was weighed down as investors pared back the probability of interest rate hike after Australia's central bank stuck to a neutral stance on the economy and interest rates on Tuesday. Australia dollar was also pressured as investors were uneasy about geopolitical issues and focus shifted to a summit of G20 nations after this week's test of a long-range missile by North Korea. The Australian dollar sank half of a U.S. cent after the Reserve Bank of Australia (RBA) finished its July policy meeting with rates staying at a record low 1.50 percent, where it has been since August last year. Investors had bid the currency up on speculation the central bank would turn hawkish like its counterparts in Europe and Canada. Instead, its statement was anodyne. The Aussie was pinned at $0.7587, having slid from a peak of $0.7712 hit last week. The currency is likely to have its worst weekly performance since early April.
Equities Recap
European shares fell on Thursday to their lowest in 11 weeks after minutes from the ECB'S latest meeting showed the central bank had left the door open to scrapping its bond-buying pledge.
UK's benchmark FTSE 100 closed down by 0.4 percent, FTSEurofirst 300 ended the day down by 0.68 percent, Germany's Dax ended down by 0.6 percent, and France’s CAC finished the day down by 0.6 percent.
U.S. stocks fell sharply on Thursday after a batch of disappointing labor market data clashed with the possibility of a more hawkish Federal Reserve while rising tensions in the Korean peninsula provided additional pressure.
Dow Jones closed down by 0.72 percent, S&P 500 ended down 0.92 percent, Nasdaq finished the day down by 0.98 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday, with benchmark yields touching nearly eight-week highs, on the prospect of hawkish global central bank policy and concern that rising oil prices could spur inflationary pressures.
Benchmark 10-year yields touched a nearly eight-week high of 2.391 percent before easing from that peak to last stand at 2.373 percent.
While shorter-dated yields were not up as much as long-dated yields, they still hit peaks in early trading with two-year yields hitting a more than eight-year high of 1.435 percent and three-year yields touching a roughly 3-1/2-month high of 1.617 percent.
U.S. five-year Treasury yields hit a more than three-month high of 1.968 percent while seven-year yields hit an eight-week high of 2.228 percent.
Commodities Recap
Oil futures rose on Thursday, but were off the day's highs, despite a sharper-than-expected decline in crude oil and gasoline stocks.
U.S. futures were up 25 cents to $45.38 a barrel as of 2:04 p.m. EDT (1804 GMT).
Brent futures hit a high of $49.18 a barrel after the figures were released, but were up just 20 cents to $47.99 a barrel.
Gold eased but hovered above the previous session's two-month low on Thursday as weaker-than-expected private sector payrolls data fed into a more cautious view on the pace of U.S. interest rate hikes this year and Treasury yields firmed.
Spot gold was down 0.2 percent at $1,224.47 an ounce by 2:41 p.m. EDT (1841 GMT). Spot prices hit $1,217.14 an ounce on Wednesday, their weakest since May 10.U.S. gold futures for August delivery settled up 0.1 percent at $1,223.30.
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