Market Roundup
• US Jan PPI Final Demand YY, 2.7%, 2.5% forecast, 2.6% previous.
• US Jan PPI Final Demand MM, 0.4%, 0.4% forecast, -0.1% previous, 0.0% revised.
• US Jan Industrial Production MM, -0.1%, 0.2% forecast, 0.9% previous, 0.4% revised.
• US Jan Capacity Utilization MM, 77.5%, 78.0% forecast, 77.9% previous, 77.7% revised.
• US Jan Manufacturing Output MM, 0.0%, 0.3% forecast, 0.1% previous, 0.0% revised.
• US Feb NY Fed Manufacturing, 13.10, 17.50 forecast, 17.70 previous.
• US w/e Initial Jobless Claims, 230k, 230k forecast, 221k previous, 223k revised.
• US w/e Jobless Claims 4-Wk Avg, 228.50k, 224.50k previous, 225.00k revised.
• US w/e Continued Jobless Claims, 1.942M, 1.925M forecast, 1.923M previous, 1.927M revised.
• US Feb Philly Fed Business Index, 25.8, 21.1 forecast, 22.2 previous.
• US Feb NAHB Housing Market Index, 72, 72 forecast, 72 previous.
• White House rejects bipartisan Senate immigration plan.
• U.S. 30-year mortgage rates rise near four-year high -Freddie Mac.
• Bitcoin rises above $10,000; strategist sees new high by July.
• Subdued growth may change monetary policy approach -Bank of Canada.
• Mexico, U.S. express cautious optimism on NAFTA deal.
Looking Ahead - Economic Data (GMT)
• 15 Feb 21:30 New Zealand Jan Manufacturing PMI, 51.2 previous
• 16 Feb 02:00 New Zealand Jan RBNZ Offshore Holdings, 58.0% previous
• 15 Feb 23:50 Japan w/e Foreign Bond Investment, -866.6B previous
• 15 Feb 23:50 Japan w/e Foreign Invest JP Stock, -126.7B previous
• 16 Feb 02:00 Japan Feb TR IPSOS PCSI, 44.96 previous
• 16 Feb 02:00 China Feb TR IPSOS PCSI, 69.65 previous
• 16 Feb 02:00 Australia Feb TR IPSOS PCSI, 53.71 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:30 Swedish central bank governor Stefan Ingves talks about the economy and monetary policy - Stockholm
• 08:20 ECB's Benoit Coeure gives keynote speech at National Bank of the Republic of Macedonia/Reinventing Bretton Woods Committee International conference in Macedonia - Skopje
• 12:00 Riksbank general council meeting - Stockholm
Currency Summaries
EUR/USD is likely to find support at 1.2408 levels and currently trading at 1.2500 levels. The pair has made session high at 1.2507 and hit lows at 1.2453 levels. The euro strengthened against US dollar on Thursday as greenback fell across the board, as negative sentiment around the U.S. currency outweighed a rise in 10-year Treasury yields to their highest levels in four years. The greenback had briefly jumped on Wednesday after data showed U.S. inflation was stronger than expected in January, bolstering expectations that the Federal Reserve could increase interest rates as many as four times this year. But it quickly turned lower, eventually posting its worst daily performance in three weeks against a basket of major rivals. It added to those losses on Thursday, with the dollar index hitting a two-week low of 88.585.Further evidence of rising inflation came in a report on Thursday which showed U.S. producer prices accelerated in January, boosted by strong gains in the cost of gasoline and healthcare. There was no significant move in the dollar on the news. Some analysts suggested mounting worries over twin deficits in the United States, amid a government spending splurge and large corporate tax cuts, as a reason for dollar weakness. The euro briefly climbed back above $1.2510 for the first time in two weeks, trading up almost half a percent from its last close.
GBP/USD is supported in the range of 1.3972 levels and currently trading at 1.4090 levels. It reached session high at 1.4098 and dropped to session low at 1.4020 levels. Sterling gained for the fourth day on the trot against the dollar on Thursday, briefly touching $1.41 on the back of a broadly weakened U.S. currency, with traders eyeing earnings data next week to give the pound fresh momentum. The pound has rallied in 2018 on the back of optimism Britain could secure itself a transition deal for when it leaves the European Union next year and better than expected economic performance. Expectations the Bank of England will need to hike interest rates more than previously expected were also confirmed by the central bank's governor Mark Carney last week.A bounce in the dollar since early February has crimped sterling's run, but the pound found its feet again on Thursday as investors sold the U.S. currency. A BoE survey published on Wednesday that showed British workers were in line for their biggest pay rises since 2008 also reinforced the view that the central bank could face growing inflationary pressures that it will need to address by raising interest rates more than expected. The pound gained as much as 0.7 percent to trade at a day's high of $1.4100, its best level since Feb. 5, and stood at $1.4063 at 1520 GMT.Against the euro, the pound was up 0.2 percent to 88.66 pence per euro.
USD/CAD is supported at 1.2461 levels and is trading at 1.2485 levels. It has made session high at 1.2535 and lows at 1.2466 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday as comments on cautious policy by Bank of Canada's Deputy Governor Lawrence Schembri boosted Canadian dollar. Bank of Canada Deputy Governor Lawrence Schembri said on Thursday, Bank of Canada's cautious approach to further rate hikes does not mean rates will stay low forever, as policymakers also have to weigh inflationary pressures. In his speech, Schembri also said monetary policy might have to be more aggressive to boost confidence and increase demand at a time when fundamental forces are weighing on economic growth. The price of oil, one of Canada's major exports, slipped as record U.S. production and rising inventories outweighed a weak U.S. dollar and Saudi Arabia's comments that major producers were committed to their pact on cutting supplies. The U.S. dollar fell against a basket of major currencies, hitting a 15-month low against the yen, as negative sentiment around the dollar outweighed a rise in 10-year U.S. Treasury yields to their highest levels in four years. The Canadian dollar was trading 0.1 percent up at C$1.2400 to the greenback. The loonie's weakest level of the session was C$1.2535, while it touched its strongest since Feb. 5 at C$1.2466.
AUD/USD is supported around 0.7848 levels and currently trading at 0.7938 levels. It hit session high at 0.7938 and made session lows at 0.7889 levels. The Australian held firm against its U.S. counterpart on Thursday as the sudden, and unexpected, return of risk appetite helped offset a sharp rise in U.S. bond yields. The Aussie was holding at $0.7936 after climbing 0.8 percent in a wild session overnight. It had been down as deep as $0.7774 after U.S. inflation figures surprised on the high side, only to rally sharply when Wall Street and commodities brushed the data aside and swept higher. The Aussie took a brief knock when domestic labour data showed a large 48,900 drop in full-time jobs, though overall employment was up a solid 16,000. The jobless rate dropped a tick to 5.5 percent which is pretty much where it has been for nine months now as strong hiring was met by an expanding workforce.The increase in supply has contributed to weakness in wage growth which slowed to record lows last year. Just last week, the Reserve Bank of Australia (RBA) said a revival in wages, and thus inflation, would likely take some time yet. The greenback was approaching the three-year low hit in late January. The greenback has been hit by several setbacks this year, ranging from the possibility Washington might pursue a weak dollar strategy to the perceived erosion of its yield advantage as other countries end their easier monetary policy. Concerns about the growing U.S. fiscal deficit have also weighed on the currency.
Equities Recap
European stocks rose for a second day on Thursday as investors brushed off a spike in U.S. inflation, turning their focus back to company earnings from heavy hitters including Europe's largest aerospace firm Airbus.
UK's benchmark FTSE 100 closed up 0.28 percent, the pan-European FTSEurofirst 300 ended the day up by 0.36 percent, Germany's Dax ended down by 0.05 percent, France’s CAC finished the day down by 1.05 percent.
Wall Street surged on Thursday and was on track to end higher for a fifth straight session, led by Apple and other technology stocks as investors shrugged off recent inflation worries that threw the market into a sell-off at the start of the month.
Dow Jones closed up by 1.23 percent, S&P 500 ended up by 1.21 percent, Nasdaq finished the day down by 1.58 percent.
Treasuries Recap
U.S. Treasury yields slipped on Thursday after sizable gains in recent sessions, as investors took a breather from selling bonds and readjusted positions to prepare for more inflation-related volatility, a scenario that could take yields even higher.
In late trading, U.S. benchmark 10-year Treasury note yields fell to 2.896 percent, from 2.913 percent late on Wednesday. Earlier in the session, 10-year yields hit a more than four-year peak of 2.944 percent. U.S. 30-year yields dropped to 3.146 percent from Wednesday's 3.177 percent.
U.S. 2-year yields, meanwhile, rose to 2.184 percent, compared with 2.172 percent on Wednesday. Two-year yields earlier hit a more than nine-year peak of 2.213 percent.
Commodities Recap
Gold was on track for its fourth straight session of gains on Thursday as the U.S. dollar slid to its lowest in two weeks on concerns about the impact of high U.S debt levels and tax cuts.
Spot gold added 0.2 percent at $1,352.81 an ounce by 2:04 p.m. EST (1904 GMT), after earlier hitting $1,357.08, its highest since Jan. 25. It had risen 1.6 percent on Wednesday, its biggest one-day gain since May 2017.
U.S. gold futures for April delivery settled down $2.70, or 0.2 percent, at $1,355.30 per ounce.
Oil prices were mixed on Thursday with Brent paring losses and U.S. crude turning positive as a weak dollar and Saudi Arabia's comments that OPEC and other producers were committed to their pact on cutting supplies outweighed record U.S. production and rising inventories.
Brent futures were down 25 cents, or 0.4 percent, at $64.11 a barrel by 2:10 p.m. EST (1910 GMT), while U.S. West Texas Intermediate crude were up 48 cents, or 0.8 percent, at $61.08.The premium of Brent over WTI was near its lowest in six months.
