Market Roundup
• US/Europe shares gain, oil prices surge 4% Saudi’s talk of action to stabilize prices.
• US labor market firming, weekly jobless claims slip 1k, 4-week avg of claims +3k.
• US July import prices rise 0.1% v forecast -0.3%, export prices +0.2% v forecast unchanged.
• Fed’s Williams (non-voter): Fed should raise interest rates this year; had expected several hikes in 2016 earlier in the year.
• Sterling slips to 1-month low, pulled down by housing data; indicative of weakening UK economy, lower rates.
• UBS forecasts GBP/USD to dip towards 1.25 in 3-months, drop below 1.20 unlikely given BoE aversion to negative rates.
• Mexico central bank holds interest rate, flags worsening growth.
• Brazil real slips as central bank acts, increases reverse swap notional amount to 15k contracts from 10k.
• US. calls for reducing tensions between Ukraine and Russia.
Looking Ahead - Economic Data (GMT)
• 22:00 New Zealand Manufacturing PMI* Jul 57.70
• 22:45 New Zealand Retail Sales Volumes QQ Q2 forecast 0.9%, 0.8%-previous
• 22:45 New Zealand Retail Quarterly Vs Year Ago* Q2 forecast 4.9%, 4.8%- previous
• 02:00 China Urban investment YoY Jul forecast 8.8%, 9%- previous
• 02:00 China Industrial Output YoY Jul forecast 6.1%, 6.2%- previous
• 02:00 China Retail Sales YY* Jul forecast 10.5%, 10.6%- previous
• 02:00 China TR IPSOS PCSI
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1124 levels and currently trading at 1.1137 levels. The pair has made session high at 1.1180 and hit lows at 1.1134 levels. Euro declined against the greenback on Thursday as euro came under selling pressure after a Federal Reserve official said that an interest rate increase this year is appropriate. San Francisco Fed President John Williams told the Washington Post that the U.S. central bank should raise rates this year because of improving labor market conditions and the likelihood that inflation is heading higher. The Fed has been largely silent since releasing a statement after its July 26-27 policy meeting and there has been limited U.S. economic data this week, which gave Williams' comments more weight. The dollar had rallied last Friday after data showed that employers added more jobs than expected in July, but gave up those gains this week as investors see a rate hike in September as a long shot. The U.S. dollar rose 0.24 percent against a basket of six major currencies to 95.878. The greenback gained 0.65 percent against the yen to 101.92 and 0.29 percent against the euro to $1.1142.
GBP/USD is supported in the range of 1.2930 currently trading at 1.2954 levels. It reached session high at 1.2983 and hit low at 1.2951 levels. Sterling slipped to one month low against the dollar on Thursday, as signs of weakness in Britain's housing market weighed on the pair. The latest report from the Royal Institute of Chartered Surveyors added to evidence that the British economy was slowing, which has weighed on the pound since June's vote to leave the European Union. Sterling, which has fallen almost 3 percent since the Bank of England announced a package of policy easing last week, dropped 0.35 percent to $1.2956 and 86.20 pence per euro, its lowest against both since the second week of July. The RICS survey showed housing market activity slowed in the month following the Brexit vote, with gauges of house price growth and transactions falling to their lowest in years. Investors next turn their attention to Friday's release of July U.S. retail sales data, the most significant release of the week. June's numbers far exceeded economists' expectations and a similarly strong report for July could show inflation rising faster than previously expected.
USD/CAD is supported at 1.2900 levels and is trading at 1.2993 levels. It has made session high at 1.3035 and lows at 1.2955 levels. The Canadian dollar rose against its U.S. counterpart on Thursday as pressure on the currency triggered by recent weak domestic data was offset by higher oil prices. Oil rose after comments from the Saudi oil minister about possible action to stabilize prices triggered a round of buying and the International Energy Agency forecast crude markets would tighten in the second half of 2016. Many traders remain skeptical of the outcome of the meeting, expecting a repeat of the Doha meeting in April when talks fell through after Saudi Arabia backed out, citing Iran's refusal to join in a so-called production freeze. The Canadian dollar was last trading at C$1.2988 to the greenback, or 77.04 U.S. cents, stronger than Wednesday's close of C$1.3064, or 76.55 U.S. cents. On the data front, New home prices in Canada rose 0.1 percent in June from the previous month, following a 0.7 percent monthly increase in May, Statistics Canada said. On a year-over-year basis, the index increased 2.5 percent.
AUD/USD is supported around 0.7500 levels and currently trading at 0.7552 levels. It hit session high at 0.7572 and made session lows at 0.7548 levels. The Australian dollar declined slightly against US dollar on Thursday as investors avoided taking major positions ahead of key economic data of this week. Robust U.S. economic data also helped the dollar, with a report showing the number of Americans applying for unemployment benefits fell to 266,000 from 269,000 the previous week. Uncertainty over the outcome of US economic data has added to market worries. A much weaker-than-expected U.S. retail sales report for July may reduce the chances of the Fed hiking rates in September. The Australian dollar initially inched to $0.7722 but retreated slightly to trade at $0.7699.A break above $0.7760 would push it to its highest level since late May. Despite last week's interest rate cut by the Reserve Bank of Australia (RBA) to a record low 1.5 percent, the currency still offers yields that are among the highest compared to other developed countries.
Equities Recap
European shares hit a two-month closing high on Thursday, with companies such as scents and flavors maker Symrise and consumer group Henkel hitting record highs after strong results and encouraging updates.
UK's benchmark FTSE 100 closed up 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.70 percent, Germany's Dax ended up 0.70 percent, France’s CAC finished the day up by 1 percent.
Wall Street stocks ended at record highs on Thursday as surging oil prices and strong earnings from department stores Macy's and Kohl's buoyed investor sentiment.
Dow Jones closed up by 0.63 percent, S&P 500 ended up by 0.47 percent, Nasdaq finished the day up by 0.46 percent.
Treasuries Recap
U.S. Treasury prices fell on Thursday as a top U.S. central bank official said the Federal Reserve should raise the nation's overnight interest rates this year and as oil prices jumped ahead of Friday's U.S. retail sales data.
Benchmark 10-year Treasury notes fell 20/32 in price to yield 1.569 percent, up 7 basis points from late Wednesday.
Commodities Recap
Oil prices jumped the most in a month, rising more than 4 percent on Thursday, after comments from the Saudi oil minister about possible action to stabilize prices triggered a round of buying and the International Energy Agency forecast crude markets would tighten in the second half of 2016.
U.S. crude settled at $43.49 per barrel, up $1.78 or 4.3 percent, while Brent crude closed $1.99 or 4.5 percent higher at $46.04, after both jumped more than 5 percent during the session.
Gold eased below $1,350 an ounce on Thursday as the dollar rose, and the Dow and S&P 500 touched record intraday highs, though uncertainty over the outlook for U.S. monetary policy prevented further losses for the metal.
Spot gold was down 0.4 percent at $1,341.40 an ounce by 2:51 p.m. EDT (1851 GMT). U.S. gold futures for December delivery settled down 0.1 percent at $1,350.
