Market Roundup
• Drop in US jobless claims boosts hopes of economic rebound (278k vs 275k forecast, 294k previous.
• Philly Fed business conditions index -1.8 in May vs April -1.6, employment -3.3 vs -18.5 previous.
• Fed’s Fischer: US economy needs faster potential growth.
• Fed’s Dudley: June is definitely a live meeting, Brexit is a variable in the mix of possibility of June hike.
• Fed’s Dudley: More comfortable w/China’s management of its FX rate, concerns could return.
• Fed’s Dudley: ret sales supports expectation that Q2 GDP will be stronger, pretty confident inflation will go back to 2% as long as labor market continues to strengthen.
• ECB minutes: Members generally agreed on need to counter perception monetary policy could no longer contribute to inflation.
• ECB Minutes: considered worrisome that market based inflation expectations failed to rebound w/oil price.
• ECB’s Smets: efficiency of monetary policy would be enhanced if other policy helped.
• BOE’s Vlieghe (dove): will not need to wait for first GDP release after EU vote to assess response of econ, UK may need more stimulus if growth stays weak.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currencies Summary
EUR/USD is likely to find support at 1.1142 levels and currently trading at 1.1198 levels. The pair has made session high at 1.1224 and hit lows at 1.1177 levels. The U.S. dollar firmed against the euro on Thursday after the Federal Reserve New York president said that central bank was on track for a rate hike in June or July. The euro was last down 0.11 percent against the dollar at $1.1204 after the comment from William Dudley, who also said there was a strong sense among Fed policymakers that markets were underestimating the probability of monetary policy tightening. The U.S. dollar index, which measures the greenback against a basket of six major currencies, was last up just 0.22 percent at 95.290. The index pared gains after hitting a more than seven-week high of 95.502.
GBP/USD is supported in the range of 1.4550 currently trading at 1.4595 levels. It reached session high at 1.4636 and hit low at 1.4573 levels. Sterling soared to a 3 1/2-month high against dollar on Thursday, as the sterling was boosted by better than expected retail sales report for April and which reduced chances of an interest rate cut that some investors expecting in the near future. Retail sales increased 1.3 percent in April from a month ago, beating forecasts of a 0.5 percent rise, and gaining 4.3 percent on an annual basis. The pound gained on the day after an Ipsos-Mori poll showed 55 percent of those surveyed supported staying in the European Union and just 37 percent wanted to leave. The retail sales numbers came during a week of mixed economic reports that showed inflation was subdued but the job market resilient.
USD/CAD is supported at 1.3053 levels and is trading at 1.3096 levels. It has made session high at 1.3151 and lows at 1.3080 levels. The Canadian dollar declined sharply on Thursday to hit a fresh six-week low against its U.S. counterpart as Federal Reserve interest rate hike speculation weighed on commodity related currencies, while domestic data was weaker than expected. The U.S. dollar rose against a basket of major currencies, supported by a perceived increase in chances of a rise in U.S. interest rates by September after hawkish Fed minutes on Wednesday. On the data front, Canadian wholesale trade dropped by 1.0 percent in March, pulled down in part by weaker sales in the motor vehicles and parts subsector, Statistics Canada said on Thursday. Meanwhile Initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 278,000 for the week ended May 14, the Labor Department said. That was the biggest drop since February and snapped a three-week string of increases.
AUD/USD is supported around 0.7150 levels and currently trading at 0.7223 levels. It hit session high at 0.7229 and made session lows at 0.7175 levels. The Australian dollar slipped to hit 2 ½ month low on Thursday as mixed jobs data sparked some speculative selling though the numbers were unlikely to build the case for an imminent rate cut by the Reserve Bank of Australia (RBA). The Australian dollar hit as low as $0.7175, a level not seen since early March, from $0.7232 early and last traded at $0.7226. A break below under $0.7212 would target a major retracement level of $0.7051. The Aussie had already skidded 1.3 percent on Wednesday on rising expectations that the U.S. Federal Reserve (Fed) may hike as early as June. A total of 10,800 net new jobs were created in April, slightly undershooting forecasts of 12,500, with the unemployment rate staying at its lowest in more than two years.
Equities Recap
European shares fell on Thursday as weaker oil and metals prices put pressure on commodities stocks and concern mounted that U.S. interest rates would be raised soon.
Britain's blue-chip FTSE 100 index closed down by 1.68 percent, France's benchmark CAC-40 index closed down by 0.75 percent, Germany's DAX ended down 1.4 percent, meanwhile the pan-European Eurofirst 300 index was down by 1.15 percent.
The S&P 500 fell to its lowest level since March on Thursday as Wall Street became more worried that the U.S. Federal Reserve might raise interest rates as early as June.
Dow Jones closed down by 0.53 percent, S&P 500 ended down by 0.38 percent, Nasdaq finished the day down by 58 percent.
Treasuries Recap
Gold slid more than 1 percent to a three-week low on Thursday, extending the previous day's decline, after minutes from the Federal Reserve's April policy meeting signaled that it could raise U.S. interest rates as soon as next month.
Benchmark U.S. 10-year notes rose 11/32 in price to yield 1.85 percent.
Commodities Recap
Oil prices settled largely unchanged on Thursday as worries about Canadian and Nigerian supply outages offset the impact of a stronger dollar, which has rallied on growing expectations the Federal Reserve will raise interest rates next month.
Brent's front-month contract, July, settled down 12 cents at $48.81 a barrel. It had fallen $1.55, or more than 3 percent, to $47.38 a barrel during the session.
WTI's June contract settled down 3 cents at $48.16 a barrel, expiring as the front-month. It slid to $46.73 earlier.
Gold slid more than 1 percent to a three-week low on Thursday, extending the previous day's decline, after minutes from the Federal Reserve's April policy meeting signaled that it could raise U.S. interest rates as soon as next month.
Spot gold was down 0.3 percent at $1,253.80 an ounce at 1:56 p.m. EDT (1756 GMT), off an earlier low of $1,244.00, its weakest since April 28. It fell 1.7 percent on Wednesday.
U.S. gold futures for June delivery settled down 1.5 percent at $1,254.80 an ounce.
