Market Roundup
• ECB rules out rate hike, opens the door to more stimulus
• Euro strengthens against dollar after ECB dashes dovish hopes
• Trump to decide on $300 billion China tariffs after G20 meeting
• Trade war, tariffs pose risks to U.S. and global growth - IMF, Fed officials
• US w/e Initial Jobless Claims, 218k, 215k forecast, 215k previous
• US w/e Jobless Claims 4-Wk Avg, 215k, 216.75k previous
• US International Trade $, -50.8 bln, -50.7 bln forecast, -50.0 bln previous
• US Q1 Productivity Revised, 3.4%, 3.5% forecast, 3.6% previous
• CA Apr Trade Balance C$, -0.97 bln, -2.80 bln forecast -3.21 bln previous
• CA May Ivey PMI, 61.8, 56.7 previous
• Fed's Williams sees headwinds from tariffs, open mind on rates
• Gold gains luster as Fed rate cut bets, trade tensions boost demand
Looking Ahead - Economic Data (GMT)
• 6 Jun 23:30 Japan Apr All Household Spending YY, 2.6% forecast, 2.1% previous
• 6 Jun 23:30 Japan Apr All Household Spending MM, -0.3% forecast, 0.1% previous
• 7 Jun 01:30 Australia Apr Housing Finance, -2.5% previous
• 7 Jun 08:00 China May FX Reserves (Monthly), 3.090 trln, 3.095 trln
Looking Ahead - Events, Other Releases (GMT)
• 03:50 Bank of Japan Governor Haruhiko Kuroda speaks in Tokyo
• 10:15 Swedish Central Bank Governor Stefan Ingves speaks in Paris
• 16:30 Federal Reserve Bank of Richmond President Thomas Barkin speaks in Richmond, VA
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Thursday, after the European Central Bank refrained from hinting at an interest rate cut, merely pushing back the timing of its first post-crisis rate hike. The ECB said it would lend to banks at a rate just 10 basis points above its minus 0.4% deposit rate in a new targeted longer-term refinancing operation, or TLTRO. Money market futures are now pricing in a 45% chance of a 10 basis point euro zone rate cut by the end of year versus 75% before the ECB statement. The single currency was 0.5% higher at $1.1273 after brushing a 1-1/2-month high of $1.1307 earlier this week. An index that tracks the dollar versus a basket of six major currencies was down 0.39 at 96.92. Immediate resistance can be seen at 1.1300 (Higher Bollinger Band), an upside break can trigger rise towards 1.1394 (23.6% retracement level).On the downside, immediate support is seen at 1.1272 (100 DMA), a break below could take the pair towards 1.1202 (11 DMA).
GBP/USD: Sterling was little changed against dollar on Thursday, as British currency looked broadly directionless as race to succeed PM May heated up. Investors are reluctant to take positions on the pound as they await the outcome of the Conservative party leadership contest to succeed Prime Minister Theresa May, who is stepping down. A eurosceptic winner could increase the risk of a no-deal Brexit, which traders say would send the pound plummeting. Pound was little changed at $1.2694, having recovered from a five-month low of $1.2560 hit on Friday as the dollar has weakened.. Immediate resistance can be seen at 1.2717 (61.8% retracement level), an upside break can trigger rise towards 1.2742 (June 6th High).On the downside, immediate support is seen at 1.2564 (May 31st low), a break below could take the pair towards 1.2498 (Lower Bollinger Bands).
USD/CAD:The Canadian dollar strengthened to a two-week high against its U.S. counterpart on Thursday, as the greenback broadly declined and trade data added to evidence that Canada's economy is picking up.Rising exports and falling imports helped shrink Canada's trade deficit in goods in April to C$966 million, Statistics Canada said, in the latest sign the economy is recovering from a slowdown. April's trade deficit was the smallest since October last year. Gains for the loonie also came as U.S. stocks got a boost from a report that the United States is considering a delay to the imposition of tariffs on Mexican products that President Donald Trump has threatened to put in place on Monday. The Canadian dollar was trading 0.1% higher at 1.3359 to the greenback . The currency touched its strongest level since May 22 at1.3360.Immediate resistance can be seen at 1.3411 (50 DMA), an upside break can trigger rise towards 1.3442 (11 DMA).On the downside, immediate support is seen at 1.3350 (100 DMA), a break below could take the pair towards 1.3362 (100 DMA).
USD/JPY: The dollar edged lower against the Japanese yen on Thursday, ahead of Friday's U.S. government jobs report, which is forecast to show slowed growth and will inform market expectations of interest-rate cuts in 2019.The U.S. Labor Department's non-farm payrolls report includes public and private-sector employment, both of which are expected to have dropped in May, according to a Reuters poll of economists. A slowdown was evident in the ADP National Employment Report released on Wednesday, which showed private U.S. employers added 27,000 jobs in May, well below the 180,000 forecast in a poll forecast and the smallest monthly gain in more than nine years. The dollar was 0.02 percent lower versus the Japanese yen at 108.37. Strong resistance can be seen at 108.35 (11 DMA), an upside break can trigger rise towards 109.32 (21 DMA).On the downside, immediate support is seen at 107.33 (Lower Bollinger Band), a break below could take the pair towards 107.00 (Psychological level).
Equities Recap
Euro zone shares underperformed their broader European peers on Thursday, hit by a stronger euro after the European Central Bank matched investors' expectations in keeping rates untouched but refrained from providing as dovish an outlook as hoped.
UK's benchmark FTSE 100 closed upby 0.6 percent, the pan-European FTSEurofirst 300 ended the day down by 0.4 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day down by 0.4 percent.
Wall Street's main indexes closed higher after a choppy session on Thursday as investors grew more optimistic on trade after reports that the United States is considering a delay in imposing tariffs on Mexican imports.
Dow Jones closed up by 0.72 percent, S&P 500 ended up by 0.62 percent, Nasdaq finished the down up by 0.53 percent.
Treasuries Recap
The U.S. Treasury yield curve flattened on Thursday as the European Central Bank committed to leaving interest rates alone into the first half of 2020, disappointing traders who had bet on a rate cut.
In late U.S. trading, benchmark 10-year Treasury yields were up 0.80 basis point at 2.131%, erasing an earlier 3 basis point fall as Wall Street was bolstered by the Bloomberg report on a probable delay on U.S. tariffs on Mexico.
Commodities Recap
Gold prices rose on Thursday, as fears about the impact of trade wars on the global economy, and rising expectations for a U.S. interest rate cut enhanced the metal's appeal.
Spot gold rose 0.7% to $1,338.65 per ounce as of 1:48 p.m. EDT (1748 GMT), while U.S. gold futures settled up 0.7% at $1,342.70.
Oil prices jumped more than 2% on Thursday, reversing course after falling to near five-month lows in the previous session, following a report that the United States could postpone tariffs on Mexico.
Brent crude futures settled at $61.67 a barrel, gaining $1.04, or 1.7%. U.S. West Texas Intermediate crude futures settled at $52.59 a barrel, up 91 cents, or 1.8%. The benchmarks both rallied more than 2% in post-settlement trade.
