Market Roundup
• ECB sticks to stimulus exit, plays down "bunch of uncertainties".
• If Italy wants ECB help, it needs a bailout first: Draghi.
• UK Labour presses PM May to deliver "end of austerity" claim.
• Trump's own hawks: Fed's newest member Clarida backs higher rates.
• US Sep Durable Goods, 0.8%, -1.0% forecast, 4.4% previous, 4.6% revised.
• US Sep Durable Ex-Transport, 0.1%, 0.5% forecast, 0.0% previous, 0.3% revised.
• US Sep Durable Ex-Defense m/m, -0.6%, 0.1% forecast, 2.5% previous.
• US 20 Oct w/e Initial Jobless Claims, 215K, 214K forecast, 210K previous.
• US 13 Oct w/e Continued Jobless Claims, 1.636M, 1.653M forecast, 1.640 previous, 1.641M revised.
• US Sep Pending Home Sales Chance m/m, 0.5%, -0.1% forecast, -1.8% previous, -1.9% revised.
• CA Aug Average Weekly Earnings Change y/y, 2.87%, 3.02% previous, 3.34% revised.
Looking Ahead - Economic Data (GMT)
• 25 Oct 23:30 Japan Oct CPI Tokyo Ex fresh food, 1% forecast, 1% previous
• 25 Oct 23:30 Japan Oct CPI Overall Tokyo, 1.3% previous
• 25 Oct 23:30 Japan Oct Core CPI Tokyo y/y, 0.5% previous
• 25 Oct 23:30 Japan Oct Core CPI Tokyo m/m, -0.1% previous
Looking Ahead - Events, Other Releases (GMT)
• 25 Oct 23:00 Cleveland Fed's Loretta Mester speaks on the economic outlook and monetary policy before the Money Marketeers of New York University in New York
• 26 Oct 06:15 Norway Central Bank's Oystein Olsen speaks to Norges Bank's Regional network, Region Central Norway in Trondheim, Norway
• 26 Oct 07:35 Norway Central Bank's Jon Nicolaisen and Egil Matsen speak to the Regional network, Region South in Sandefjord, Norway
• 26 Oct 09:35 New York Fed's Simon Potter speaks at conference on "Exiting Unconventional Monetary Policies" in Paris
• 26 Oct 14:00 ECB's Mario Draghi delivers a keynote presentation at a conference on "Understanding inflation dynamics: the role of costs, mark-ups and expectations" in Brussels
• 26 Oct 14:15 ECB's Benoit Coeure speaks at a session during the Euro 50 - CF40 - CIGI meeting in Paris
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1368 levels. The pair has made session high at 1.1433 and hit lows at 1.1355 levels. The euro declined against the dollar on Thursday after European Central Bank President Mario Draghi said the bank would pursue its tightening policy in spite of fears about the monetary union's economic and political future. The ECB reaffirmed that its 2.6 trillion euro ($2.97 trillion) asset purchase program will end this year and that interest rates could rise after next summer. The policy guidance has been consistent since June, even though the economic outlook has darkened while political turmoil in Italy looms over the currency bloc. Although Draghi said he was confident the European Commission and Rome would reach a compromise over Italy's budget plans, he failed to allay concerns about the risk of contagion from surging borrowing costs. The single currency jumped after the central bank's rates announcement, but reversed course after Draghi started speaking again and highlighted the risks around Italy and Brexit. Against the dollar, the euro fell to $1.1361, its lowest since Aug. 16. The single currency was last down 13 basis points on the day. The dollar index hit a two-month high of 96.62, last up 26 basis points from the open.
GBP/USD is supported in the range of 1.2785 levels and currently trading at 1.2815 levels. It reached session high at 1.2905 and dropped to session low at 1.2795 levels. Sterling declined against the dollar on Thursday as the dollar strengthened and relief about British Conservative lawmakers backing Prime Minister Theresa May's Brexit strategy gave way to fresh fears about the risk of a no-deal UK departure from the European Union. The prospect of politics scuppering a divorce deal has weakened sterling in recent days. May received a show of support from her parliamentary party on Wednesday, dampening fears of an immediate challenge to her leadership, but this lifted sterling only briefly.The pound was down half a percent versus the dollar at $1.2815, a seven-week low, and down 0.4 percent against the euro to 88.82 pence, its weakest in three weeks. European Central Bank President Mario Draghi said on Thursday the longer Brexit talks drag on, the more the private sector will have to prepare for the possibility of Britain crashing out without a deal. Investors said they saw no specific driver for the fall in sterling but cited broad-based dollar strength and said that with just over five months until Britain exits the EU the chances of a no-deal outcome were rising.
USD/CAD is supported at 1.3008 levels and is trading at 1.3073 levels. It has made session high at 1.3096 and lows at 1.3052 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as the boost it got from a Bank of Canada interest rate hike on the previous day was unwound. On Wednesday, the loonie touched its strongest intraday level in one-week at 1.2969 after the Bank of Canada raised interest rates and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus. Money markets expect the central bank to hike again by January. The price of oil, one of Canada's major exports, bounced back from an early sell-off after Asian and European stock markets plunged in the wake of Wall Street's biggest daily decline since 2011. On the data front, Canadian average weekly earnings of nonfarm payroll employees rose 2.9 percent year-over-year in August, while the number of nonfarm payroll employees was up 24,600 in August from July, according to data released on Thursday. The Canadian dollar was last trading 0.2 percent lower at 1.3067 to the greenback. The currency traded in a range of 1.3015 to 1.3096.
USD/JPY is supported around 112.24 levels and currently trading at 112.45 levels. It peaked to hit session high at 112.60 and made session lows at 112.38 levels. The dollar weakened against the Japanese yen on Thursday as investors sought safety following a wave of selling across stock markets, although moves in currency markets were modest and suggested investors were far from panicking. Concerns about a slowdown in China, tensions between the European Union and Italy regarding Italy’s spending plans and some weak U.S. corporate earnings reports have hurt risk sentiment this week. While equity investors were reassured by positive earnings from Microsoft Corp and strong advertising revenues from Twitter Inc they also voiced some caution about whether the broader pullback was over. Investors are looking for further strong results for the remaining two thirds of S&P 500 companies that are yet to report, as well as a resumption of share buybacks by companies that have already reported. Investors are also awaiting for third-quarter U.S. GDP data that is due out on Friday. If the reading is lower than expectations investors will worry about economic growth but if it is much higher they will fear a faster pace of U.S. interest rate hikes.
Equities Recap
Euro zone shares ended a choppy session well in positive territory on Thursday as positive corporate results in France and a late boost from a weakening euro a boon for exporters lifted the market.
The UK's benchmark FTSE 100 closed up by 0.6 percent, FTSEurofirst 300 ended the day up by 0.50 percent, Germany's Dax ended up by 1.1 percent, and France’s CAC finished the down by 1.6 percent.
U.S. stocks jumped on Thursday, giving the Nasdaq its biggest daily gain since March, as Microsoft's upbeat earnings spurred a rebound in technology names and investors snapped up oversold shares.
Dow Jones closed up by 1.67 percent, S&P 500 ended up 1.90 percent, Nasdaq finished the day up by 3.02 percent.
Treasuries Recap
U.S. Treasury yields rose from three-week lows on Thursday as equities gained, though anxiety about ongoing stock volatility was seen supporting a bid for safe-haven U.S. government debt.
Benchmark 10-year Treasury yields dropped to 3.09 percent on Wednesday, the lowest since Oct. 3, before rising to 3.14 percent on Thursday.
Commodities Recap
Oil prices rose 1 percent on Thursday, following the U.S. stock market higher a day after Wall Street's biggest drop since 2011 and as Saudi Arabia's energy minister signaled major producers may have to intervene in crude markets to support prices.
Brent crude futures rose 72 cents to settle at $76.89 per barrel as U.S. equities rose amid strong corporate earnings. The global benchmark has lost almost $10 a barrel since hitting a high of $86.74 on Oct. 3.U.S. crude 1 settled at $67.33, up 51 cents.
Gold prices fell on Thursday on a strong dollar and a rebound of stocks following a multi-day sell-off globally, taking steam out of bullion's momentum.
Spot gold was down 0.3 percent at $1,229.43 an ounce by 13:57 p.m. EDT (1757 GMT).Prices had risen to $1,239.22 earlier, near a more than three-month high of $1,239.68 hit on Tuesday as the stock market sell-off spurred interest in gold, considered a safer investment. U.S. gold futures settled up $1.3, or 0.11 percent, at $1,232.40
