Market Roundup
• U.S. ISM manufacturing misses big: 49.4 vs forecast 52.0, previous 52.6.
• Fed's Mester says case for rate increases is compelling.
• U.S. jobless claims 263k vs forecast 265k, previous 261k.
• U.S. Q2 nonfarm labor costs revised to +4.3% (forecast 2.1%) from 2.0%.
• US July construction spending flat, forecast +0.5% pct.
• U.S. June construction revised to +0.9% vs previous -0.6%.
• New Zealand evacuates some coastal areas due to tsunami fears after quake.
• Daily FX trading volume falls 5.5 pct to $5.1 trillion –BIS.
• Chinese yuan is most actively traded emerging market currency –BIS.
• S&P affirms Japan's debt rating as negative rates lower government debt burden.
Looking Ahead - Economic Data (GMT)
• Japan Consumer Confidence Index Aug 41.3 -previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1120 levels and currently trading at 1.1198 levels. The pair has made session high at 1.1205 and hit lows at 1.1128 levels. US dollar declined against the euro on Thursday after U.S. manufacturing activity unexpectedly declined in August, casting some doubts on the strength of U.S. economic growth. A report from the Institute of Supply Management showed U.S. factory activity contracted for the first time in six months in August as new orders and production tumbled, but data on the labor market pointed to a pickup in third-quarter economic growth. Investors, however, are now focused on the release on Friday of the U.S. nonfarm payrolls report for August to see whether it will put the Federal Reserve on track to raise interest rates later this year. The dollar index, which measures the greenback against a basket of six major currencies, fell 0.40 percent to 95.620, after earlier trading as high as 96.239.
GBP/USD is supported in the range of 1.3166 currently trading at 1.3268 levels. It reached session high at 1.3318 and hit low at 1.3232 levels. Sterling surged higher against US dollar on Thursday as sterling continued its bullish momentum in the New York session by hitting four weeks high against US dollar. Dollar declined in the US session after a report showed weakness in U.S. manufacturing last month. The conflicting manufacturing and jobs data prompted caution as investors tried to position ahead of Friday's U.S. non-farms payrolls report. The data hurt sentiment amid an already nervous investor environment ahead of Friday's U.S. employment report for August. Employers are expected to have added 180,000 jobs in August, according to economists. Sterling rallied 1.3 percent to $1.3318, its highest since early August and up from $1.3152 after the release of US ISM manufacturing data.
USD/CAD is supported at 1.3000 levels and is trading at 1.3095 levels. It has made session high at 1.3147 and lows at 1.3081 levels. The Canadian dollar firmed slightly against the greenback on Thursday as oil prices slumped and an unexpected decline in U.S. manufacturing data cast some doubt on economic growth ahead of a key US jobs report on Friday. Oil prices fell more than 3 percent, heading for their sharpest weekly slide since January, as investors brushed aside talk that OPEC might freeze production and focused on a growing glut from U.S. crude stockpiles. The U.S. dollar weakened as data showed U.S. factory activity contracted in August for the first time in six months as new orders and production tumbled. Investors are keenly attuned to data that could sway Federal Reserve policymakers considering whether to raise interest rates, possibly as soon as this month, with Friday's nonfarm payrolls offering a major new insight. The Canadian dollar was last trading at C$1.3095 to the greenback, slightly stronger than Wednesday's close of C$1.3116.
AUD/USD is supported around 0.7490 levels and currently trading at 0.7551 levels. It hit session high at 0.7559 and made session lows at 0.7503 levels. The Australian dollar edged higher against US dollar on Thursday as investors focused on the positives in domestic economic data, though their longer-term direction remained at the mercy of a looming U.S. jobs report. Also Aussie was helped by unexpected decline in US factory activity in August, casting some doubts on the strength of U.S economy. The Australian dollar inched up to $0.7550, from $0.7520 in the US session, but was still down slightly for the week. Support lies around $0.7490 with resistance at $0.7580.Australia's economic data proved a mixed bag but there were enough signs of improvement in business investment to keep the currency underpinned. Business spending fell 5.4 percent in the second quarter, firms upgraded their plans for the 2016/17 financial year in a promising sign of a long-awaited pick-up outside of mining. Retail sales disappointed with a flat result for July, but a strong rise in home prices boded well for household wealth.
Equities Recap
European shares closed lower on Thursday, weighed down by pharma and oil stocks, while banks extended a recent rally which was fuelled by expectations of monetary tightening in the United States.
UK's benchmark FTSE 100 closed down 0.53 percent, the pan-European FTSEurofirst 300 ended the day down by 0.16 percent, Germany's DAX ended down by 0.63 percent, France’s CAC finished the day down by 0.9 percent.
U.S. stocks were ended mixed on Thursday, with gains in the tech sector offseting sluggish factory activity data and lower oil prices, as investors exercised caution ahead of a key payrolls report on Friday.
Dow Jones closed up by 0.09 percent, S&P 500 ended down by 0.02 percent, Nasdaq finished the day up by 0.26 percent.
Treasuries Recap
U.S. Treasury yields were little moved on Thursday after weak U.S. manufacturing data contrasted with strong overseas manufacturing numbers and U.S. jobless claims data that beat expectations as investors tried to position ahead of Friday's U.S. non-farms payrolls report.
Benchmark U.S. 10-year treasury notes were little changed from their late Wednesday close to yield 1.571 percent. Two-year notes were also little changed in price to yield 0.789 percent.
Commodities Recap
Gold turned higher after tapping the lowest level in more than two months on Thursday, as the dollar fell on unexpectedly weak U.S. manufacturing data that raised doubts about the economy's strength.
Spot gold touched its lowest level since June 24 at $1,301.91 an ounce, before rising 0.35 percent to $1,313.07 by 2:33 p.m. EDT (1833 GMT). U.S. gold futures settled up 0.4 percent at $1,317.10.
Oil prices fell more than 3 percent on Thursday, heading for their sharpest weekly slide since January as investors brushed aside talk that OPEC might freeze production and focused on a growing glut from U.S. crude stockpiles.
Brent crude futures ended the session at $45.45 per barrel, down $1.44 or 3.07 percent. U.S. crude's West Texas Intermediate (WTI) futures closed down $1.54 or 3.45 percent at $43.16 a barrel.
