Market Roundup
• US Initial Jobless Claims w/e, 222K, 240k forecast, 243k previous.
• US Continued Jobless Claims w/e, 1.900M, 1.888M forecast, 1.889M previous.
• US Philly Fed Business Index Oct, 27.9, 22 forecast, 23.8 previous.
• US Senate heads for vote crucial to Trump's tax reform plan.
• Trump met Fed's Yellen in Fed chair search-White House official.
• Bipartisan Obamacare deal gains Republican support in US Senate.
• Spain to suspend Catalonia's autonomy in response to independence threat.|
Looking Ahead - Economic Data (GMT)
• No significant events
Looking Ahead - Events, Other Releases (GMT)
• 06:35 BOJ’s Haruhiko Kuroda to deliver speech in Tokyo
• 18:00 Fed’s Loretta Mester participates in a panel in New York
• 23:30 Fed’s Yellen speaks at a Memorial Lecture in Washington
Currency Summaries
EUR/USD is likely to find support at 1.1766 levels and currently trading at 1.1827 levels. The pair has made session high at 1.1857 and hit lows at 1.1822 levels. The euro rose against the U.S. dollar on Thursday as U.S. Treasury yields fell, pulling back from a two-year high, with the euro rebounding from losses earlier in the week ahead of a policy meeting of the European Central Bank. Investors shrugged off political uncertainty emerging from Spain before the ECB meeting, where policymakers are expected to reveal plans to unwind their multi-year stimulus. The single currency rose to $1.1857, its highest since last Friday. The European Central Bank will likely say on Oct. 26 that it will start trimming its monthly asset purchases to 40 billion euros from 60 billion euros in January, according to a Reuters poll of economists. The euro briefly waned against the dollar after the release of U.S. jobless claims data, which showed the lowest reading in 44 years, and a record high reading on the Philadelphia Fed Business Index. Federal Reserve Chair Janet Yellen's current term ends in February, and investors are waiting to see who U.S. President Donald Trump will pick as her replacement. The White House said a decision would be announced in coming days.
GBP/USD is supported in the range of 1.3100 levels and currently trading at 1.3119 levels. It reached session high at 1.3210 and dropped to session low at 1.3011 levels. Sterling declined against the dollar on Thursday after data showing an unexpectedly sharp slowdown in British retail sales added to doubts over the outlook for Bank of England interest rate moves. The pound has been pushed lower this week by a combination of weak data and comments from BoE policymakers that markets have interpreted as dovish. Although investors are pricing in an 80 percent chance of a rate hike next month, doubts are growing about whether the BoE will continue to tighten policy next year. Thursday’s numbers showed retail sales volumes fell 0.8 percent in September, dragging quarterly growth to its weakest annual rate since 2013. That was below all economists' forecasts in a poll. Sterling declined to hit a one-week low against the dollar after the retail sales numbers, it was last trading around $1.3152 in the late US session. Though investors were eyeing an ongoing European Union summit where British Prime Minister Theresa May was trying to revive stalled Brexit talks, sterling's movements appeared to be driven more by BoE expectations than political news, with little in the way of major new developments in Brussels.
USD/CAD is supported at 1.2449 levels and is trading at 1.2490 levels. It has made session high at 1.2490 and lows at 1.2455 levels. The Canadian dollar edged lower against its U.S. counterpart on Thursday, retreating from a near one-week high earlier in the day, as oil prices fell and the rally in global stocks paused. Prices of oil, one of Canada's major exports, slipped on profit-taking. Oil had been supported in recent weeks by OPEC-led supply cuts, tension in the Middle East and lower U.S. production. U.S. crude prices were down 1.48 percent at $51.27 a barrel. World stocks retreated from all-time highs as traders marked 30 years to the day since the 1987 Black Monday stock market crash. Still, an uncertain outlook for the North American Free Trade Agreement remains a headwind for the loonie and growth in the economy is expected to slow after rapid expansion in the first half of the year. The release on Friday of the September inflation report and August retail sales data will provide clues on prospects for the economy, ahead of an interest rate decision next week from the Bank of Canada. The Canadian dollar was last trading at C$1.2491 to the greenback, or 80.12 U.S. cents, down 0.1 percent. The currency touched its strongest intraday since Friday at C$1.2451. It had found support earlier this week ahead of its October low at C$1.2600.
NZD/USD is supported around 0.7000 levels and currently trading at 0.7009 levels. It hit session high at 0.7033 and made session lows at 0.7008 levels. The New Zealand dollar tumbled to a five-month low on Thursday, posting its biggest daily drop in more than a year after a surprise election outcome sparked a sell-off on concerns the new government would pursue policies that would weaken the currency. The kiwi, as the currency is widely known, extended earlier losses in the US trading session and dropped as much as 1.8 percent against its U.S. counterpart to $0.7009, the lowest since late May. The daily drop was the biggest in percentage terms since the Brexit referendum last year. New Zealand's next prime minister will be Jacinda Ardern, whose Labour party won the support of a small nationalist party to form the government, spelling big changes for a small but open economy, whose currency hit a 4-1/2-month low on the news. The kiwi has been on a weakening bias since hitting a more than 2-year peak in May 2015 and taking today's plunge, the currency has fallen more than 7 percent. The weakness in the currency has taken its toll on hedge fund positions with markets steadily scaling back long kiwi bets in recent weeks to be broadly neutral.
Equities Recap
European shares fell across the board on Thursday as Spain's political showdown with Catalonia deepened, and a batch of third-quarter results brought some disappointments for investors.
UK's benchmark FTSE 100 closed down by 0.3 percent, FTSEurofirst 300 ended the day down by 0.65 percent, Germany's Dax ended down by 0.5 percent, and France’s CAC finished the day down by 0.4 percent.
U.S. stocks were flat on Thursday, pausing after their recent run of record highs, as technology shares dragged and some earnings disappointed.
Dow Jones closed up by 0.03 percent, S&P 500 ended up 0.03 percent, Nasdaq finished the day down by 0.29 percent.
Treasuries Recap
U.S. Treasury yields fell on Thursday with the two-year yield scaling back from a near nine-year peak as a retreat in U.S. stock prices from record highs revived some safe-haven appetite for bonds.
The two-year Treasury note yield was down 1 basis point at 1.555 percent after reaching 1.571 percent, the highest since October 2008.
Benchmark 10-year Treasury yields were down over 1 basis point at 2.325 percent, retreating from a one-week high of 2.352 percent on Wednesday.
Commodities Recap
Gold prices recovered on Thursday from the more than one-week low they had reached overnight as a rally in both the dollar and equities ran out of steam, but the precious metal remained vulnerable to further declines.
U.S. gold futures for December delivery settled up $7, or 0.6 percent, at $1,290 per ounce, hitting $1,277.60, its lowest since Oct. 6.
Oil prices fell more than 1 percent on Thursday, pressured by larger-than-expected product inventories in the United States, and some profit-taking after a recent run-up in oil benchmarks.
Brent crude was down 94 cents, or 1.6 percent, at $57.22 a barrel by 1:53 p.m. EDT (1753 GMT). The global benchmark is still about 30 percent above its mid-year levels.
U.S. light crude fell 68 cents, or 1.3 percent, to $51.36, but is still almost 25 percent higher than June's lows.
