Market Roundup
• US w/e Initial Jobless Claims, 222k, 225k forecast, 221k previous.
• US w/e Jobless Claims 4-Wk Avg, 225.50k, 222.25k previous.
• US w/e Continues Jobless Claims, 1.741 mln, 1.738 mln, 1.726 mln.
• Trump says working with Abe to improve U.S.-Japan trading relationship.
• Trump to discuss autos, defense sales in trade talks with Japan's Abe.
• Trump requested Saudi oil support before Iran nuclear decision.
• Trump says North Korea summit is ready to go.
• Battered by Trump, G7 leaders choose to be "polite," productive.
• Britain proposes one-year Brexit backstop plan to EU.
• Data backs Bank of England view that Q1 slowdown won't last-Ramsden.
• Trade uncertainty 'a little more risky' now -Bank of Canada.
• Mexico inflation eases to 17-month low in May, peso weakness eyed.
• Argentina's treasury minister says IMF deal expected soon.
Looking Ahead - Economic Data (GMT)
• 7 Jun 23:50 Japan May Bank Lending YY, 2.1% previous
• 7 Jun 23:50 Japan Apr Current Account NSA JPY, 2,096 bln forecast, 3,122.3 bln previous
• 7 Jun 23:50 Japan Q1 GDP Rev QQ Annualized, -0.4% forecast, -0.6% previous
• 7 Jun 23:50 Japan Q1 GDP Revised QQ, -0.1% forecast, -0.2% previous
• 7 Jun 23:50 Japan Q1 GDP Cap Ex Rev QQ, 0.2% forecast, -0.1% previous
• 7 Jun 23:50 Japan Q1 GDP QQ Pvt Consumption Revised, 0.0% previous
• 7 Jun 23:50 Japan Q1 GDP QQ External Demand R, 0.1% previous
• 8 Jun 05:00 Japan May Economy Watchers Poll SA, 49.0 previous
• 8 Jun N/A China May Exports YY, 10.0% forecast, 12.9% previous
• 8 Jun N/A China May Imports YY, 18.7% forecast, 21.5% previous
• 8 Jun N/A China May Trade Balance USD, 31.90 bln, 28.78 bln previous
• 8 Jun N/A China May Yuan-Denominated Exports, 3.5% previous
• 8 Jun N/A China May Yuan-Denominated Imports, 11.6% previous
• 8 Jun N/A China May Yuan-Denominated Trade Ba, 180.30 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:15 Keynote speech by ECB executive board member Yves Mersch at International Risk Management Conference 2018 in Paris
Currency Summaries
EUR/USD is likely to find support at 1.1672 levels and currently trading at 1.1798 levels. The pair has made session high at 1.1838 and hit lows at 1.1795 levels. Euro rose to hit 3-weeks high against the dollar on Thursday as investors boosted their bets that the European Central Bank at next week's monetary policy meeting will flag the winding down of its vast bond-buying program by the end of this year. Since hitting a 10-month low last week, the euro has gained nearly 3 percent against the dollar and is on track to post its largest weekly gain in four months. The ECB's chief economist, Peter Praet, a close ally of bank President Mario Draghi, said on Wednesday the central bank at its policy meeting next week would debate whether to end bond purchases later this year. Jens Weidmann, the head of Germany's central bank, also said on Wednesday expectations the ECB would taper its bond-buying program by the end of this year were plausible, while Weidmann's Dutch counterpart, Klaas Knot, said there was no reason to continue a quantitative easing program. The comments drove the euro on Thursday to $1.1840, the highest since May 17. It was last up 0.3 percent at $1.1798. The euro's gains have pushed the dollar index, a measure heavily weighted toward Europe's single currency, to a three-week low as well. The dollar index was last down 0.3 percent at 93.369.However, investors remain cautious ahead of a summit this weekend of the Group of Seven leaders, where U.S. President Donald Trump looks set to clash with his counterparts over trade.
GBP/USD is supported in the range of 1.3343 levels and currently trading at 1.3420 levels. It reached session high at 1.3453 and dropped to session low at 1.3369 levels. Sterling declined against the dollar on Thursday as concerns about Brexit negotiations weighed on British Pound. The British currency had hit a two-week high in early trading, helped by general dollar weakness on the back of a broadening rally in the euro currency with some recent improvement in data also helping sentiment. But headlines about Prime Minister Theresa May's struggles to get her own cabinet to agree on a plan to prevent a hard border on the island of Ireland if Brexit talks fail, pushed the pound lower. Sterling rose to $1.3472 per dollar in early London trading, its highest levels since May. 22 as the dollar's run higher in recent weeks peaked. But it gave up those gains and fell as much as 0.3 percent on the day to $1.3371.Against the euro, sterling weakened to a one-month low at 87.77 pence. The dollar's rally in recent weeks has squeezed out long sterling positions with net long bets on the British pound falling to a quarter from a four-year high in April. But after falling to around $1.32 at end-May, sterling has rebounded somewhat thanks to a pick-up in data. Data this week, including a widely watched survey of the dominant services sector on Tuesday, suggest weaker economic momentum in the first quarter was temporary and the economy was recovering.
USD/CAD is supported at 1.2856 levels and is trading at 1.2978 levels. It has made session high at 1.3001 and lows at 1.2934 levels. The Canadian dollar edged lower against its U.S. counterpart on Thursday as investors turned their attention to NAFTA renegotiations. U.S. President Donald Trump is not backing down from the tough line he has taken on trade, the White House's top economic adviser said on Wednesday, setting the stage for a showdown with top allies at this week's G7 summit in Canada. The meeting on Friday and Saturday in Charlevoix, Quebec, will be the first chance G7 leaders have had to confront Trump in person since U.S. tariffs on steel and aluminum imports from Canada, Mexico and the European Union were imposed last week. That move unleashed fury in the Group of Seven industrialized nations and prompted quick retaliation from Canada and Mexico and a promise from the EU to do so as well, unnerving investors who fear a trade war that could derail the global economy. The price of oil, one of Canada's major exports, rose on Thursday on concerns about a plunge in exports from Venezuela, although surging U.S. production kept gains in check. The U.S. dollar fell against a basket of major currencies as bets that the European Central Bank will next week signal a winding down of its vast bond-buying program by the end of this year boosted the euro. Canadian dollar was last trading 0.3 percent lower at C$1.2984 to the greenback. The currency traded in a narrow range of C$1.2929 to C$1.3001.
USD/JPY is supported around 109.29 levels and currently trading at 109.71 levels. It peaked to hit session high at 110.03 and made session lows at 109.45 levels. The U.S. dollar dipped against the yen on Thursday as tensions between the United States and its major trade partners ahead of the Group of Seven summit increased demand for safe heaven Japanese Yen. U.S. President Donald Trump stuck to his tough stance against top allies ahead of the summit on Friday and Saturday in Charlevoix, Quebec, after imposing tariffs on steel and aluminum imports from Canada, Mexico and the European Union last week. Trade concerns overshadowed speculation about the outcome of the European Central Bank's debate next week about ending the expansion of its 2.55 trillion euro ($3 trillion) bond purchase program in September. Traders also waited for the U.S. Federal Reserve to signal how many times it would raise interest rates for the rest of 2018 as domestic labor conditions tighten and inflation moves closer to its 2 percent goal. Traders widely expect the U.S. central bank to raise key overnight borrowing costs by a quarter point to a 1.75 percent to 2.00 percent range next Wednesday. On the data front, the number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to a further tightening in labor market conditions. Initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 222,000 for the week ended June 2, the Labor Department said on Thursday.
Equities Recap
European shares dipped on Thursday at the end of a choppy session with luxury stocks among the leading losers after an underwhelming presentation from Gucci owner Kering.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day down by 0.16 percent, Germany's Dax ended down by 0.13 percent, France’s CAC finished the day down by 0.08 percent.
The S&P and Nasdaq fell on Thursday, as the technology sector snapped a rally and investors turned to safer bets while keeping an eye on global trade tensions and awaiting next week's U.S. and European central bank meetings.
Dow Jones closed up by 0.35 percent, S&P 500 ended down by 0.09 percent, Nasdaq finished the day down by 0.72 percent.
Treasuries Recap
U.S. Treasury yields fell on Thursday in a volatile session, reversing the prior day's sell-off, as safe-haven demand rose on tensions between the United States and its major trade partners ahead of the Group of Seven summit.
The benchmark 10-year Treasury notes' yield was down 4.5 basis points at 2.930 percent after hitting a four-day low at 2.884 percent. It reached a near two-week high at 2.994 percent earlier on Thursday.
Commodities Recap
U.S. dollar weakness helped boost gold prices on Thursday, but gains were limited as the market awaited clues from next week's meeting of the Federal Reserve on the pace of U.S. interest rate rises.
Spot gold rose 0.24 percent to $1,299.05 an ounce by 1:34 p.m. EDT (1734 GMT), earlier hitting a one-week high, $1,303.08. U.S. gold futures for August delivery settled up $1.60, or 0.1 percent, at $1,303 per ounce.
Global benchmark Brent crude surged nearly $2 a barrel on Thursday, lifted by concern about a steep drop in exports from Venezuela and worries OPEC may not raise production at its meeting this month.
Brent crude futures settled up $1.96 a barrel, or 2.6 percent at $77.32. U.S. West Texas Intermediate (WTI) crude rose $1.22, or 1.88 percent to $65.95 a barrel.
