Market Roundup
• US 29 Sep w/e Jobless Claims 4-Wk Avg, 207.00k, 206.25k previous, 206.50k revised.
• US 22 Sep w/e Continued Jobless Claims, 1.650M, 1.665M forecast, 1.661M previous, 1.663M revised.
• US Aug Durables Ex-Def, R m/m, 2.5%, 2.6% previous.
• US Aug Durable Goods, R m/m, 4.4%, 4.5% previous.
• US Aug Durables Ex-Transpt R m/m, 0.0%, 0.1% previous.
• US Aug Nondef Cap Ex-Air R m/m, -0.9%, -0.5% previous.
• US Aug Factory Orders m/m, 2.3%, 2.1% forecast, -0.80% previous, -0.5% revised.
• US Aug Factory Ex-Transp m/m, 0.1%, 0.2% previous, 0.1% revised.
• Fed survey points to tighter borrowing terms if yield curve inverts.
• Italy dismisses concern the EU will reject its budget plan.
• Brexit-linked dangers being underestimated, ECB's Nowotny.
• Seeking Brexit deal, EU eyes compromise on Irish border.
• Central banks risk bad outcomes if influenced by politics -Fed's Quarles.
• Argentina peso snaps three-day rally with more losses expected.
• CA Sep Ivey PMI, 56.5, 61.3 previous.
• CA Sep Ivey PMI SA, 50.4, 61.9 previous.
Looking Ahead - Economic Data (GMT)
• 5 Oct 05:00 Japan Aug All Household Spending y/y, -0.1% forecast, 0.1% previous
• 5 Oct 05:20 Japan Sep Foreign Reserves, 1259.30BLN US previous
• 5 Oct 05:20 Japan Aug Overtime Pay, 1.9% previous
• 5 Oct 05:20 Japan Aug Overall Lab Cash Earnings, 1.5% previous, 1.6% revised
• 5 Oct 05:20 Japan Aug Coincident Index, -0.6 previous, -0.8 revised
• 5 Oct 05:20 Japan Aug Leading Indicator, -1.1 previous, -0.7 revised
• 5 Oct 08:30 New Zealand Sep Reserve Assets Total, 31,462M previous
• 5 Oct 04:00 Australia Sep AIG construction Index, 51.8 previous
• 5 Oct 07:00 Australia Aug Retail Sales m/m, 0.2% forecast, 0.0% revised
Looking Ahead - Events, Other Releases (GMT)
• Oct 5 08:00 European Commission President Jean-Claude Juncker holds lecture on Europe and global policy in Vienna.
• Oct 5 11:00 ECB Vice-President Luis de Guindos gives speech at the XXIX Edition of the LLM in EU Law of the University Carlos III of Madrid.
• Oct 5 16:30 Federal Reserve Bank of Dallas President Robert Kaplan participates in a community luncheon sponsored by the Federal Reserve Bank of Dallas in Waco, Texas.
• Oct 5 16:40 Federal Reserve Bank of Atlanta President Raphael Bostic speaks before the 57th Annual Financial Literacy and Economic Education Conference in Atlanta.
Currency Summaries
EUR/USD is likely to find support at 1.1460 levels and currently trading at 1.1517 levels. The pair has made session high at 1.1543 and hit lows at 1.1490 levels. The euro rose against dollar on Thursday as investors evaluated the impact of a global government bond rout that has lifted benchmark U.S. Treasury yields to seven-year peaks. Strong economic data and hawkish speeches by Federal Reserve officials, including Chairman Jerome Powell, spooked investors on Wednesday and caused U.S. Treasury yields and the euro/dollar currency pair to breach key technical levels. Powell on Wednesday talked up the U.S. economy a day after hailing a "remarkably positive outlook," saying that the United States is on the verge of a "historically rare" era of ultra-low unemployment and tame prices. The dollar has outperformed on strong U.S. growth while economic data in other large economies, including the eurozone, has come in below expectations. Investors are watching for signs of increasing U.S. inflation as companies, including Amazon, raise minimum wages, and after jobs data last month showed that wages notched their largest annual increase in August in more than nine years. U.S. jobs data on Friday for September will give new indications of wage growth and labor market strength. The euro recovered from six-week lows against the dollar, after breaching technical support at around $1.15 on Wednesday.
GBP/USD is supported in the range of 1.2919 levels and currently trading at 1.3025 levels. It reached session high at 1.3042 and dropped to session low at 1.2996 levels. Sterling firmed against the dollar on Thursday, recovering from losses earlier in the week, as investors bet Britain and the European Union were moving closer to an agreed position on a deal for Brexit and a way to avoid extensive border checks in Ireland. The pound hit a 2-1/2-month high versus the euro and rose above $1.30 against the dollar. Most of the gains came after a European Union source told new British proposals for avoiding extensive border checks in Ireland after Brexit were a step in the right direction and make finding a compromise possible. That followed other signs this week that London is making progress towards a Brexit agreement before Britain quits the EU in March. Britain is trying to overcome one of the thorniest issues in the Brexit negotiations: a "backstop" deal to protect an open border between Northern Ireland, part of the United Kingdom, and EU member Ireland, should the UK leave the EU without an overall exit agreement. May's conference speech on Wednesday lacked anything new to shift market sentiment and had little impact on the pound .After falling as low as $1.2922 overnight, sterling rallied to as high as $1.3041, up 0.8 percent on the day.
USD/CAD is supported at 1.2831 levels and is trading at 1.2925 levels. It has made session high at 1.2937 and lows at 1.2855 levels. The Canadian dollar weakened against the greenback on Thursday, giving up the gains that followed a deal over the weekend to revamp the NAFTA trade pact, as lower oil and metal prices pressured the currencies of commodity producing countries. The price of oil, one of Canada's major exports, fell as the prospect of increased crude production from Saudi Arabia and Russia prompted profit-taking the day after futures hit four-year highs. It touched its weakest level since last Friday at 1.2938, which was before a deal was clinched to salvage the North American Free Trade Agreement. On Monday, the loonie touched its strongest in more than four months at 1.2783.Declines for commodity-linked currencies came as U.S. Treasury yield pushed to multi-year highs ahead of U.S. jobs data on Friday that could show the American economy growing at a robust pace. Canada’s jobs data is also due on Friday. Ivey Purchasing Managers Index data released on Thursday showed that purchasing activity in Canada expanded in September at its slowest pace in more than two years as a measure of employment tumbled. The Canadian dollar was last trading 0.5 percent lower at 1.2931 to the greenback, or 77.33 U.S. cents.
AUD/USD is supported around 0.7000 levels and currently trading at 0.7075 levels. It hit session high at 0.7093 and made session lows at 0.7064 levels. The Australian dollar slipped towards recent 30-month lows against dollar on Thursday as resoundingly upbeat U.S. economic data pushed Treasury yields to near-decade highs and sent the greenback soaring. The U.S. data on Wednesday likely will keep the Federal Reserve on track to raise interest rates again in December and suggest the U.S. central bank's tightening cycle is unlikely to end any time soon. The Fed increased rates last week for the third time this year. About half of the Fed's policymakers, including Chairman Jerome Powell, used public appearances on Wednesday to show an increasingly unified view that the U.S. economy was not headed for any obvious potholes. Higher U.S. interest rates draw investors to the dollar, boosting its value and in turn making assets priced in the U.S. unit more expensive for holders of other currencies. The Australian dollar went as deep as $0.7063 to within striking distance of a more than 2-1/2 year trough of $0.7012. Investors are awaiting U.S. non-farm payrolls numbers due on Friday, with a survey showing economists on average expect a rise of 185,000 in September after a jump of 201,000 in August.
Equities Recap
European shares suffered their biggest fall in a month on Thursday as global stock markets came under pressure from surging bond yields.
UK's benchmark FTSE 100 closed down 1.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.99 percent, Germany's Dax ended down by 0.4percent, France’s CAC finished the day down by 1.5 percent.
Wall Street stocks stumbled on Thursday as U.S. Treasury yields continued their ascent to multi-year highs on the latest round of strong economic data, building concerns for an acceleration of inflation.
Dow Jones closed up by 0.78 percent, S&P 500 ended down by 0.84 percent, Nasdaq finished the day down by 01.83 percent.
Treasuries Recap
A selloff in U.S. Treasury bonds that has sent yields to multi-year highs continued on Thursday, pushing the benchmark 10-year bond yield to its highest level since May 2011.
The yield on the benchmark 10-year note hit a high of 3.232 percent, marking its largest daily jump since the 2016 U.S. presidential election, on anticipation that monthly U.S. jobs data on Friday would be stronger than expected.
Commodities Recap
Gold steadied on Thursday as positive U.S. economic data and prospects of tighter monetary policy offset limited gains from safe haven buying.
Spot gold was up 0.1 percent at $1,197.87 an ounce by 2:14 p.m. EDT (1814 GMT). U.S. gold futures settled down $1.30, or 0.11 percent, at $1,201.60.
Oil prices fell on Thursday as the prospect of increased crude production from Saudi Arabia and Russia prompted profit-taking the day after futures hit four-year highs on a boost from imminent U.S. sanctions on OPEC's No. 3 producer Iran.
Brent crude futures fell $1.71, or 1.98 percent, to settle at $84.58 a barrel. On Wednesday, Brent rose to a late 2014 high of $86.74.
U.S. West Texas Intermediate (WTI) crude futures fell $2.08 to settle at $74.33 a barrel, a 2.72 percent loss.
