Market Roundup
• US Q2 GDP Final 4.2%, 4.2% previous.
• US w/e 22 Sep Initial Jobless Claims, 214k, 201k previous, 202k revised.
• US w/e 15 Sep Continued Jobless Claims, 1.661M, 1.645M previous.
• US Aug Pending Sales Change m/m, -1.8%, -0.7% previous, -0.8% revised.
• US Q2 GDP Cons Spending Final, 3.8%, 3.8% previous.
• US Q2 Core PCE Prices Final 2.1%, 2.0% previous.
• US Sep KC Fed Composite Index, 13, 14 previous.
• US Aug Durable Goods, 4.5%, -1.7% previous, -1.2% revised.
• Fed chief Powell signals central bank is done with signalling.
• Italy govt agrees on 2.4 pct deficit-gdp target for 2019.
• Canada sticks to plan to stay at NAFTA talks despite Trump attack.
• Argentina's peso slips as investors fear volatility despite IMF deal.
• WTO cuts world merchandise trade forecasts for 2018 and 2019.
• Trump and deputy attorney general Rosenstein delay meeting to next week.
• CA Jul Average Weekly Earnings y/y, 3.02%, 2.80% previous, 2.94% revised.
Looking Ahead - Economic Data (GMT)
• Sep 27 22:45 New Zealand Aug Building Consents, -10.3% previous
• Sep 27 23:30 Japan Sep CPI Tokyo Ex fresh food y/y, 0.95 forecast, 0.95 previous
• Sep 27 23:30 Japan Sep CPI, Overall Tokyo 1.2% previous
• Sep 27 23:30 Japan Aug Jobs/Applicants Ratio 1.63 forecast, 1.63 previous
• Sep 27 23:30 Japan Aug Unemployment Rate 2.5% forecast, 2.5% previous
• Sep 27 23:50 Japan Aug Industrial Output Prelim m/m 1.5% forecast, -0.2% previous
• Sep 28 01:30 Australia Aug Private Sector Credit, 0.4% previous
• Sep 28 01:30 Australia Aug Housing Credit, 0.4% previous
Looking Ahead - Events, Other Releases (GMT)
• Sep 27 20:30 Federal Reserve Chairman Jerome Powell will give brief remarks on the U.S. economy before a Senator Reed's Rhode Island Business Leaders Day event in Washington D.C.
• Sep 27 23:50 Bank of Japan to release summary of opinions from board members at its Sep. 18-19 policy meeting in Tokyo, Japan.
• Sep 28 08:35 Norway Central Bank Deputy Governor Jon Nicolaisen gives a speech to Norges Bank's Regional network in Lillehammer, Norway.
• Sep 28 11:00 Riksbank General Council Meeting in Stockholm.
• Sep 28 12:30 Federal Reserve Bank of Richmond President Thomas Barkin speaks before the "Banking and the Economy: a Forum for Minorities in Banking" in Charlotte, North Carolina.
• Sep 28 12:35 ECB chief economist Peter Praet will attend a discussion at the 3rd Annual ESRB conference in Frankfurt.
• Sep 28 13:20 Bank of England Deputy Governor, Markets and Banking Dave Ramsden gives speech at Society of Professional Economists Annual Conference in London.
Currency Summaries
EUR/USD is likely to find support at 1.1616 levels and currently trading at 1.1638 levels. The pair has made session high at 1.1696 and hit lows at 1.1638 levels. The euro slipped lower against the U.S. dollar on Thursday as euro fell on media reports that an Italian budget meeting was likely to be delayed, spooking traders concerned that the ruling parties will push for a bigger deficit target in the euro zone's third-largest economy.Political wrangling over the budget in heavily indebted Italy has overshadowed a recent revival in the euro's fortunes against the dollar. Italian daily La Stampa said Economy Minister Giovanni Tria "was ready to leave," before a spokeswoman for the ministry denied that the minister planned to quit. Prime Minister Giuseppe Conte's office denied the cabinet meeting would be delayed but with Italy's new government struggling to contain the battle over fiscal policy. That spooked traders concerned that Italy's ruling parties will push for a bigger deficit target. The euro dropped 0.5 percent to $1.1638, its weakest since Sept. 17.Political wrangling over the budget in heavily indebted Italy, the euro zone's third-biggest economy, has overshadowed a recent revival in the euro's fortunes against the dollar.
GBP/USD is supported in the range of 1.3050 levels and currently trading at 1.3073 levels. It reached session high at 1.3139 and dropped to session low at 1.3073 levels. Britain's pound declined sharply against the dollar on Thursday on the back of broad greenback gains after a U.S. rate hike, and with investors still nervous about the outcome of negotiations on the terms of Britain's planned exit from the European Union. Sterling fell 0.6 percent to $1.3073, edging down towards a one-week low of $1.3042 hit last week. British opposition Labour party leader Jeremy Corbyn will warn EU chief Brexit negotiator Michel Barnier of the dangers of a "no-deal" Brexit when he visits Brussels later on Thursday, his party said. Prime Minister Theresa May has said the EU needs to show Britain respect and come up with its own alternatives to her so-called "Chequers" proposals, which EU leaders rejected at a summit in Austria last week. The dollar rose against its rivals and particularly against the euro after the U.S. Federal Reserve raised interest rates on Wednesday and left intact its plans to steadily tighten monetary policy, while sentiment towards the single currency was dogged by Italian budget concerns.With little in the way of big market-moving economic data in the near term, domestic politics and sentiment around the talks on Britain's exit from the EU remain the driver for the pound.
USD/CAD is supported at 1.3000 levels and is trading at 1.3035 levels. It has made session high at 1.3084 and lows at 1.3012 levels. The Canadian dollar fell to a two-week low versus the greenback on Thursday, but ahead of a speech by Bank of Canada Governor Stephen Poloz, fared better than other G10 currencies as worries eased that a NAFTA trade deal would not be reached. Criticism on Wednesday by U.S. President Donald Trump that talks to modernize the North American Free Trade Agreement were moving too slowly had helped send the loonie to its weakest intraday level since Sept. 11 at $1.3083.But Canada shrugged off the complaint and made clear it had to keep negotiating as long as there was a chance of success. Trump has already concluded a text with Mexico, the third country in NAFTA, and is threatening to leave out Canada unless it signs up by Sunday. Canada sends about 75 percent of its exports to the United States, so its economy could be hurt if a deal is not reached or if Trump follows through on a threat to impose tariffs on Canadian autos. The Canadian dollar was last trading 0.2 percent lower at C$1.3036 to the greenback, or 76.65 U.S. cents, the smallest decline against the U.S. dollar among G10 currencies.
USD/JPY is supported around 112.53 levels and currently trading at 113.37 levels. It peaked to hit session high at 111.46 and made session lows at 111.97 levels. The dollar strengthened against the Japanese yen on Thursday as greenback was boosted by the Federal Reserve's outlook for more rate hikes beyond this year as well as a weakening of the euro on worries about the Italian budget. On Wednesday, the Fed raised rates for the third time in 2018, as expected. The central bank still foresees another rate hike in December, three more next year, and one increase in 2020. That helped propel the dollar on Wednesday and carried over to Thursday, even as the Fed dropped "accommodative" from the its statement, which some analysts said was a dovish signal since it meant the Fed was moving to a neutral stance. In late US trading, the dollar index rose 0.5 percent to 94.66.The greenback's gains came at the expense of the euro, which declined on media reports that an Italian budget meeting was likely to be delayed. On the data front, new orders for key U.S.-made capital goods fell in August after four straight months of strong gains and the goods trade deficit widened sharply, prompting some economists to significantly lower their economic growth estimates for the third quarter.
Equities Recap
European shares rose slightly on Thursday, reversing initial losses, as anxiety over political stability in Italy appeared to ease just hours before a cabinet meeting to set budget targets.
The UK's benchmark FTSE 100 closed up by 0.50 percent, FTSEurofirst 300 ended the day down by 0.46 percent, Germany's Dax ended up by 0.44 percent, and France’s CAC finished the up by 0.47 percent.
Wall Street climbed on Thursday, helped by gains in Apple, Alphabet and Facebook, as well as the U.S. Federal Reserve's confidence in the strength of the economy after it raised rates for the third time this year.
Dow Jones closed up by 0.22 percent, S&P 500 ended up 0.29 percent, Nasdaq finished the day up by 0.65 percent.
Treasuries Recap
U.S. Treasury yield curve moved to its flattest level in over a week on Thursday, led by a fall in longer-dated yields, despite weak demand at a $31 billion auction of seven-year government notes.
Benchmark 10-year Treasury yield was down 0.7 basis point at 3.054 percent. On Tuesday, it reached 3.113 percent, its highest since May.
The 30-year yield slipped 0.5 basis point to 3.186 percent. It hit a four-month peak of 3.249 percent on Tuesday.
Two-year yields gained 0.8 basis point to 2.835 percent after touching 2.847 percent on Tuesday, which was last seen in June 2008.
Commodities Recap
Gold prices fell 1 percent on Thursday and broke below their recent trading range around $1,190-$1,210 an ounce after the U.S. dollar surged, making bullion more expensive for buyers using other currencies.
Spot gold declined 0.8 percent to $1,184.54 an ounce by 1:36 p.m. EDT (1736 GMT) after hitting its lowest since Aug. 24 at $1,186.78. It was nearing August's 19-month low of $1,159.96.
U.S. gold futures for December delivery settled down $11.70 per ounce, or 1 percent, at $1,187.40.
Oil edged higher on Thursday, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in five weeks.
The most-active December Brent crude futures contract settled up 59 cents at $81.38 a barrel, below the session high of $81.90 but still within sight of Tuesday's four-year high of $82.55.The front-month November contract expires on Friday. U.S futures settled up 55 cents at $72.12 a barrel.
