Market Roundup
• ECB to end bond buying but pushes out first rate hike.
• ECB policymakers split over wording of stimulus end, rate hike –sources.
• US May Retail Sales MM, 0.8%, 0.4% forecast, 0.3% previous.
• US May Retail Sales Ex-Autos MM, 0.9%, 0.5% forecast, 0.3% previous.
• US May Import Prices MM, 0.6%, 0.5% forecast, 0.3% previous.
• US May Export Prices MM, 0.6%, 0.3% forecast, 0.6% previous.
• US w/e Initial Jobless Claims, 218k, 224k forecast, 222k previous.
• US w/e Jobless Claims 4-Wk Avg, 224.25k, 225.50k previous.
• US w/e Continued Jobless Claims, 1.697mln, 1.737 mln forecast, 1.741 mln previous.
• US Apr Business Inventories MM, 0.3%, 0.3% forecast, 0.0% previous.
• CA Apr New Housing Price Index, 0.0%, 0.0% forecast, 0.0% previous.
• Trump's tariffs pose risk to global trade, U.S. economy – IMF.
• China urges U.S. to make 'wise choice' on trade tariffs.
• Canada says agreed with U.S. to keep NAFTA alive, no talks set.
• Pompeo says N.Korea sanctions to remain until complete denuclearization.
Looking Ahead - Economic Data (GMT)
• 14 Jun 22:30 New Zealand May Manufacturing PMI, 58.9 previous
• 15 Jun N/A Japan Jun BOJ rate decision, -0.10% Rtrs f'cast, -0.10% previous
• 15 Jun 01:30 China May China House Prices YY, 4.7% previous
• 15 Jun 02:00 Japan Jun TR IPSOS PCSI, 43.60 previous
• 15 Jun 02:00 China Jun TR IPSOS PCSI, 72.57 previous
• 15 Jun 02:00 Australia Jun TR IPSOS PCSI, 53.64 previous
• 15 Jun 03:00 New Zealand May RBNZ Offshore Holdings, 57.4% previous
Looking Ahead - Events, Other Releases (GMT)
• N/A Bank of Japan holds Monetary Policy Meeting in Tokyo
• 08:45 ECB Executive Board Member Benoit Coeure gives speech at Club des Trente's "Chief Investment Officer - Chief Financial Officer" conference in Paris, France
• 17:30 Federal Reserve Bank of Dallas President Robert Kaplan speaks before a business leaders luncheon hosted by the Fort Worth Chamber of Commerce in Fort Worth, Texas
Currency Summaries
EUR/USD is likely to find support at 1.1506 levels and currently trading at 1.1584 levels. The pair has made session high at 1.1849 and hit lows at 1.1584 levels. Euro suffered its worst day against the dollar on Thursday since the UK's Brexit vote nearly two years ago after the European Central Bank unexpectedly indicated that it planned to keep interest rates at record lows into the summer of 2019. The European Central Bank will shut its hallmark bond purchase scheme by the close of the year, it said on Thursday, taking its biggest step yet towards dismantling crisis-era stimulus a decade after the start of the euro zone's economic downturn. But in a balanced announcement reflecting the uncertainties hanging over the economy, it signalled that any interest rate hike is still distant, raising the prospect that ECB chief Mario Draghi might leave office in October 2019 without having raised rates in his eight-year term. Investors now price only a 30 percent chance of an ECB rate hike of 10 basis points by July 2019, compared with a roughly 80 percent chance earlier in the day.The timid move to roll back stimulus contrasted with the U.S. Federal Reserve's rate hike a day earlier, which signalled a break from policies used to battle the 2007-2009 financial crisis and a return to normalised central banking. The euro hit two-week lows versus the dollar and briefly traded below $1.16. It was last at $1.1582 for a loss of 1.58 percent, which was the biggest loss since the 2.37 percent drop on June 24, 2016, the day after British citizens voted to leave the European Union.
GBP/USD is supported in the range of 1.3225 levels and currently trading at 1.3263 levels. It reached session high at 1.3437 and dropped to session low at 1.3260 levels. The British pound declined to hit seven week lows against the greenback on Thursday as the dollar rallied broadly on robust U.S. retail sales and the euro floundered. The pound had climbed to a five-day high in early trading after UK retail sales data beat expectations, suggesting the economy may be recovering from a slump in early 2018. However, sterling fell victim to sharp swings in other major currencies as the dollar rose 0.8 percent versus a currency basket and the euro slumped more than 1 percent on dovish comments from the European Central Bank. UK retail sales jumped for a second month in a row in May, far outstripping expectations, as a royal wedding and warm weather helped shoppers to put a sharp winter slowdown further behind them. Analysts said the data might not point to a fully-fledged recovery for the economy, however, since retailers benefited from people spending more on food and household goods in the run-up to the wedding of Prince Harry and Meghan Markle. Stubbornly weak finances of many households, combined with the rise of online shopping, have hammered many retailers. The pound was down half a percent at $1.3271. Versus the euro, it was up 0.9 percent at 87.40 pence and on track for its biggest daily gain since September.
USD/CAD is supported at 1.2918 levels and is trading at 1.3092 levels. It has made session high at 1.3109 and lows at 1.2964 levels. The Canadian dollar declined against its U.S. counterpart on Thursday as the greenback broadly climbed and after Italy added to Canada's uncertain trade outlook, saying it will not ratify the European Union's free trade accord with the country. The free trade agreement with Canada does not ensure sufficient protection for Italy's specialty foods, new Agriculture Minister Gian Marco Centinaio said in a newspaper interview. Canada is also contending with new U.S. tariffs on steel and aluminum imports as well as slow-moving talks to modernize the North American Free Trade Agreement.The U.S. dollar rose against a basket of major currencies after a signal by the European Central Bank that it would keep interest rates at record lows through the summer of 2019 weighed on the euro. Gains for the greenback came as U.S. data showing the strongest rise in retail sales in six months supported expectations that the Federal Reserve would raise interest rates further. The price of oil, one of Canada's major exports, rose despite evidence of rising U.S. output and uncertainty over the outlook for supply before a meeting next week of the world's largest exporters. The Canadian dollar was last trading 0.8 percent lower at C$1.3092 to the greenback, or 76.38 U.S. cents, its biggest decline since March 13.The currency touched its weakest since March 19 at C$1.3109.
USD/JPY is supported around 109.14 levels and currently trading at 110.63 levels. It peaked to hit session high at 110.67 and made session lows at 109.89 levels. The U.S. dollar rose against the Japanese yen on Thursday as dollar was boosted after US retail sales posted their strongest rise in six months, supporting the view the Federal Reserve would raise short-term interest rates further. U.S. retail sales increased more than expected in May as consumers bought motor vehicle and a range of other goods even as they paid more for gasoline, the latest indication of an acceleration in economic growth in the second quarter.The Commerce Department said on Thursday retail sales jumped 0.8 percent last month, the biggest advance since November 2017. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain. The Federal Reserve raised interest rates on Wednesday for the second time this year. The U.S. central bank forecast two more rate hikes for 2018. The Fed said "economic activity has been rising at a solid rate" and "growth of household spending has picked up."The strong retail sales report added to data ranging from the labor market to manufacturing and trade in suggesting the economy was regaining momentum in the second quarter. The dollar index, which measures the greenback against six other top currencies, rose 1.1 percent.
Equities Recap
European shares jumped on Thursday after the European Central Bank said interest rates would stay at record lows at least through the summer of 2019 as it announced an end to its massive stimulus plan.
UK's benchmark FTSE 100 closed up by 1.1 percent, the pan-European FTSEurofirst 300 ended the day up by 1.40 percent, Germany's Dax ended up by 1.8 percent, France’s CAC finished the day up by 1.6 percent.
U.S. stocks ticked higher on Thursday after the European Central Bank promised not to raise euro zone interest rates before the middle of next year and on better-than-expected May retail sales.
Dow Jones closed up by 0.07 percent, S&P 500 ended up by 0.27 percent, Nasdaq finished the day up by 0.86 percent.
Treasuries Recap
U.S. Treasury yields fell on Thursday after the European Central Bank signaled it will hold rates low for longer than many investors expected.
Benchmark 10-year notes gained 10/32 in price with yields falling to 2.944 percent, from 2.979 percent on Wednesday.
Commodities Recap
Gold prices rose to a one-month high on Thursday after the European Central Bank (ECB) pledged to keep interest rates steady through the summer of 2019 and investors fretted over weak Chinese data.
Spot gold gained 0.3 percent at $1,303.70 per ounce by 1:32 p.m. EDT (1732 GMT) after peaking at $1,309.30.
U.S. gold futures for August delivery settled up $7, or 0.5 percent, at $1,308.30 per ounce.
Oil prices were mixed on Thursday, with Brent slipping and U.S. crude gaining, as a stronger dollar weighed and a key supply-setting meeting of the Organization of the Petroleum Exporting Countries loomed.
Brent crude oil lost 80 cents to settle at $75.94 a barrel, while West Texas Intermediate crude gained 25 cents to settle at $66.89.
