Market Roundup
• US Initial Jobless Claims w/e, 259K, 300K forecast, 284k previous.
• US Continued Jobless Claims w/e, 1.980M, 1.975M forecast, 1.944M previous.
• US Jobless Claims 4-Wk Avg w/e, 268.75k, 263.25k previous.
• US Monthly Home Price Jul, 0.2% MM, 6.3% YY; 0.1%, 6.5% previous.
• US Monthly Home Price Index Jul, 249.8, 249.3 previous.
• US Philly Fed Business Index Sep, 23.8, 17.2 forecast, 18.9 previous.
• US Leading Index Chg MM Aug, 0.4%, 0.2% forecast, 0.3% previous.
• EZ Consumer Confidence Flash Sep, -1.20, -1.50 forecast, -1.50 previous.
• CA Wholesale Trade MM Jul, 1.5%, -0.9% forecast, -0.5% previous.
• Lower food prices keep Brazil inflation near 18-year low.
• Trump orders new sanctions to tighten screws on N.Korea nuclear program.
Looking Ahead - Economic Data (GMT)
• Japan BOJ Rate Decision, -0.10%, -0.10% forecast, -0.10% previous
Looking Ahead - Events, Other Releases (GMT)
• 06:45 ECB’s Hakkarainen participating in ESRB annual conf. in Frankfurt
• 07:15 ECB’s Coeure gives Keynote statement at conf. in Sarajevo
• 08:00 ECB’s Draghi gives Keynote speech in Dublin
• 08:45 ECB’s Angeloni gives Speech in Courmayeur, Italy
• 09:30 ECB’s Draghi Participates in Student Roundtable/Dialogue in Dublin
• 11:15 ECB’s Constancio gives closing remarks at the ECB conference in Frankfurt
• 13:15 ECB’s Constancio chairing panel at ESRB annual conf. in Frankfurt
• 13:30 Fed’s Kansas City President Esther George speaks in Oklahoma
• 17:30 Fed’s Dallas President Kaplan participates in moderated Q&A in Oklahoma
• N/A Top ECB officials speak at a financial stability conference
Currency Summaries
EUR/USD is likely to find support at 1.1860 levels and currently trading at 1.1934 levels. The pair has made session high at 1.1952 and hit lows at 1.1903 levels. The euro rose against the greenback on Thursday as dollar turned lower from a more than two-week peak as bets stoked by the Federal Reserve signalling it may raise interest rates in December abated. The U.S. central bank said on Wednesday it would start to reduce its $4.2 trillion worth of bond holdings that ballooned through three rounds of quantitative easing. Some traders had speculated the Fed led by Chair Janet Yellen may soften its stance on raising interest rates a third time in 2017 as inflation has been stuck below its 2 percent goal and amid signs of weaker business activity in the aftermath of two hurricanes that hammered two southern U.S. states. Dollar index that tracks the dollar against six currencies was last down 0.25 percent at 92.214. It reached 92.697 on Wednesday, its highest since Sept. 5. Meanwhile, traders reassessed the possibility of another U.S. rate increase, they awaited clues on whether European Central Bank would slow its bond purchases later this year due to an improving economy. On Thursday, ECB President Mario Draghi said monetary policy is not an appropriate tool to address financial imbalances but offered no fresh insight on the central bank's asset purchase program.
GBP/USD is supported in the range of 1.3451 levels and currently trading at 1.3571 levels. It reached session high at 1.3585 and dropped to session low at 1.2492 levels. Sterling firmed against the dollar on Thursday, with traders hopeful that a much-anticipated speech from Prime Minister Theresa May the following day would signal she wants a "soft" exit for Britain from the European Union. The BBC reported on Thursday that May will say on Friday that Britain is willing to pay 20 billion euros ($24 billion) to the EU during a post-Brexit transition period, but only if it has access to the bloc's single market. That eased fears that she would pursue a "harder" Brexit, a complete dismantling of political and economic ties with the EU, that some in her cabinet notably foreign minister Boris Johnson want. Having earlier dipped to as low as $1.3471, the pound climbed in afternoon trade in London, reaching as high as $1.3568 to trade 0.6 percent higher on the day. That left sterling less than a cent away from its highest levels since the results of the June 2016 Brexit referendum. Against the euro, sterling was up 0.1 percent at 88.02 pence per euro.
USD/CAD is supported at 1.2252 levels and is trading at 1.2332 levels. It has made session high at 1.2335 and lows at 1.2317 levels. The Canadian dollar initially weakened against its U.S. counterpart on Thursday as oil prices fell, but pared some losses after domestic data showed much stronger-than-expected growth in wholesale trade. The 1.5 percent increase in July wholesale trade exceeded economists' forecasts for a decline of 0.9 percent and was the biggest increase since January, data from Statistics Canada showed. Stripping out the effects of price changes, volumes were even stronger, up 2.1 percent. Prices of oil, one of Canada's major exports, gave up some recent gains before a meeting of oil producers that could extend production limits aimed at clearing a glut. On Wednesday, the loonie hit a 2-week low at C$1.2390 after the Federal Reserve signaled that it expected to raise interest rates once more by year-end. Economists will turn to Canada's retail sales report, due on Friday, for further clues on prospects for July gross domestic product. The country's August inflation report is also due on Friday. The Canadian dollar was trading at C$1.2334 to the greenback, or 81.00 U.S. cents, down 0.2 percent.
USD/JPY is supported around 112.00 levels and currently trading at 112.55 levels. It peaked to hit session high at 112.59 and made session lows at 112.10 levels. The U.S. dollar strengthened against the Japanese yen on Thursday as increasing prospects of a December rate hike by the Federal Reserve curbed appetite for safe-haven assets. In a statement following its latest two-day policy meeting, the U.S. central bank indicated it still expected one more increase by the end of the year in spite of a recent run of soft inflation readings. New economic projections released after the Fed's two-day policy meeting showed 11 of 16 officials see the "appropriate" level for the federal funds rate, the central bank's benchmark interest rate, to be in a range between 1.25 percent and 1.50 percent by the end of 2017, one-quarter of a point above the current level.It also said it planned to trim the $4.2 trillion in asset holdings that it had built up in the wake of the 2008 financial crisis.The greenback firmed against the yen, hitting a two-month peak at 112.71 yen in overseas trading. It was last up 0.06 percent at 112.52 yen.
Equities Recap
Banking shares drove European bourses higher on Thursday after the U.S. Federal Reserve signaled a likely December rate hike and announced it would begin trimming its balance sheet in October.
UK's benchmark FTSE 100 closed down by 0.07 percent, the pan-European FTSEurofirst 300 ended the day up by 0.36 percent, Germany's Dax ended up by 0.30 percent, France’s CAC finished the day up by 0.59 percent.
U.S. stock indexes closed lower on Thursday, with market heavyweight Apple out of favor on concerns about its latest iPhones, while financials rose as investors reacted to rising expectations for a third interest rate hike this year.
Dow Jones closed down by 0.23 percent, S&P 500 ended down 0.29 percent, Nasdaq finished the day down by 0.51 percent.
Treasuries Recap
The U.S. Treasury yield curve flattened to two-and-a-half month lows on Thursday as investors adjusted for the likelihood of a December interest rate increase, a day after the Federal Reserve struck a more-hawkish-than-expected tone at its September meeting.
The yield curve between Treasury five-year notes and 30-year bonds flattened to 92 basis points on Thursday, the lowest level since July 6.
Commodities Recap
Gold fell about 1 percent to its lowest in nearly four weeks on Thursday, shrugging off further weakness in the dollar, after the Federal Reserve signalled it was on track to raise U.S. interest rates again in December.
Spot gold was down 0.7 percent at $1,291.46 an ounce by 3:25 p.m. EDT (1925 GMT), having earlier touched its lowest since late August 25 at $1,287.61. U.S. gold futures for December delivery settled at $1,294.80.
Oil prices settled nearly flat on Thursday, the eve of a meeting of major oil-producing countries in Vienna to discuss whether they will extend production limits that have helped reduce the global crude glut.
U.S. crude futures dipped 14 cents, or 0.3 percent, to settle at $50.55 a barrel. Brent crude futures rose 14 cents, or 0.3 percent, to end at $56.43 a barrel.
