Market Roundup
• US GDP Final Q1 1.4% vs 1.2% forecast, 1.2% previous.
• US Core PCE Prices Final Q1 2% vs 2.1% forecast, 2.1% previous.
• US Initial Jobless claims w/e 244k vs 240k forecast, 242k previous.
• US Jobless Claims 4-wk Avg 242.25k, 245k previous.
• US Continued Jobless Claims w/e 1.948m vs 1.940m forecast,1.942m previous.
• Fed's Bullard: September seems more likely to announce balance sheet adjustment.
• Bullard: we have been raising rates in view of relatively weak growth, downside inflation surprises.
• Bullard: inflation breakevens suggest Fed is being too hawkish.
• Congress must raise debt ceiling by mid-October –CBO.
• Morgan Stanley raises U.S. Q2 GDP view to 3.2% from 3%.
• White.House Economic Adviser Cohn: Trump administration will get to tax reform
in Sept.
• BoE’s Haldane: interest rates policy should be set to prevent entrenched inflation – BBC.
• Mexico's finmin: will use central bank surplus to cut peso debt by 5.62 bln
pesos during Q3.
• Brazil cuts inflation target to 4% in 2018, 1st cut in over a decade.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan CPI, Core Nationwide YY May 0.4% forecst, 0.3% previous
• 23:30 Japan CPI, Overall Nationwide YY May, 0.4% previous
• 23:30 Japan All Household Spending MM May 0.2 forecst, 0.5% previous
• 23:30 Japan Unemployment Rate 2.8% forecst, 2.8% previous
• 23:30 Japan Industrial Output Prelim May -3.2% forecst, 4.0% previous
• 01:00 China NBS Manufacturing PMI Jun 51.0 forecst, 51.2 previous
• 01:30 Australia Private Sector Credit MM May, 0.4% previous
• 01:30 Australia Housing Credit MM May, 0.5% previous
• 22:45 New Zealand Business Consents MM May, -7.6% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1388 levels and currently trading at 1.1436 levels. The pair has made session high at 1.1444 and hit lows at 1.1388 levels. Euro inched higher against dollar on Thursday as growing expectations of more hawkish monetary policies in Europe and skepticism of another Federal Reserve interest rate increase this year weakened dollar. The euro jetted to $1.1434, its highest since May 11, 2016, with European Central Bank sources' attempt on Wednesday to moderate the message from Tuesday's speech by President Mario Draghi falling largely on deaf ears. The U.S. dollar briefly edged up after the release of the data before retracing earlier losses against a basket of currencies. Prices of U.S. Treasuries were trading lower and stocks on Wall Street were down sharply. First-quarter economic growth was boosted by an upward revision to consumer spending, which accounts for more than two-thirds of U.S. economic activity. Consumer spending rose at a 1.1 percent pace, the weakest reading since the second quarter of 2013 but almost double the 0.6 percent reported last month. The euro was last 0.4 percent higher against the dollar at $1.1424. The dollar index, which measures the greenback against a basket of six major rivals, was down 0.3 percent at 95.727 after touching a roughly nine-month low of 95.685.
GBP/USD is supported in the range of 1.2956 levels and currently trading at 1.2994 levels. It reached session high at 1.2950 and dropped to session low at 1.2637 levels. Sterling rose against the dollar on Thursday as sterling was boosted after investors took stock of increasing signs the Bank of England is looking at tightening monetary policy. After losing more than 2 percent against the dollar when Prime Minister Theresa May lost her parliamentary majority in the June 8 election, the pound has recovered as BoE officials bent towards raising record low interest rates. The Bank's Governor Mark Carney said on Wednesday that a rise in rates was likely to be needed as the economy came closer to running at full capacity, and that the Bank would debate this in the coming months. Sterling strengthened to $1.3004, briefly rising as high as $1.3007 after Haldane told the BBC the bank needed to look seriously at raising rates. It was last up 0.4 percent on the day at $1.2984 and 0.1 percent higher at 87.90pence per euro. Politics remained on investors' radars, ahead of a parliamentary vote on Prime Minister Theresa May's policy programme, watered down after her election setback and growing pressure over her Brexit and austerity plans.
USD/CAD is supported at 1.2920 levels and is trading at 1.3002 levels. It has made session high at 1.3040 and lows at 1.2975 levels. The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil extended its rally, while investors braced for an interest rate hike from the Bank of Canada as soon as next month. Gains for the loonie came after it scored on Wednesday its biggest advance in three months, boosted by hawkish comments from Bank of Canada Governor Stephen Poloz. Chances of a rate hike next month have increased to 44 percent from just 20 percent after subdued inflation data on Friday, data from the overnight index swaps market shows. U.S. oil futures edged up after hitting a two-week high, extending a rally into a sixth straight session after a decline in weekly U.S. crude production temporarily alleviated concerns about deepening oversupply. Brent ticked lower. The Canadian dollar was trading at C$1.3000 to the greenback, or 76.73 U.S. cents, up 0.1 percent. The currency's weakest level of the session was C$1.3044, while it touched its strongest since Feb. 3 at C$1.2975.
AUD/USD is supported around 0.7627 levels and currently trading at 0.7680 levels. It hit session high at 0.7686 and made session lows at 0.7651 levels. The Australian dollar rose against US dollar on Thursday as Australian dollar was boosted by higher commodity prices and weak dollar. The Australian dollar finally surpassed stubborn chart resistance around $0.7636 to hit a high of $0.7664, a level not seen since March 30.The Aussie has been trudging higher since the beginning of June and is on track for its best monthly performance since January. Also supporting the currency is a bounce in the price of iron ore, Australia's single biggest export earner. The Dalian ore contract has rallied 14 percent from its lows in mid-June. The Federal Reserve hiked interest rates this month and left the door open for a further increase later in the year. A batch of mixed economic data recently has given investors' pause as to whether the Fed would be able to stay on its planned tightening path. St Louis Fed President James Bullard said on Thursday that there is nothing left for the Fed to do on interest rates and the natural next step for the central bank would be to start trimming its balance sheet.
Equities Recap
European shares logged their biggest one-day loss in nine months on Thursday as interest rate-sensitive sectors were hit by a rising hawkish chorus from central banks globally.
UK's benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day down by 1.35 percent, Germany's Dax ended down by 1.9 percent, France’s CAC finished the day down by 1.9 percent.
Wall Street fell sharply on Thursday, with the S&P 500 and the Dow industrials suffering their worst daily percentage drops in about six weeks, as a recent decline in technology shares deepened and outweighed strength in bank shares.
Dow Jones closed down by 0.78 percent, S&P 500 ended down 0.85 percent, Nasdaq finished the day down by 1.44 percent.
Treasuries Recap
Benchmark U.S. Treasury yields rose to six-week highs on Thursday on the likelihood that central banks in Europe will become less accommodative, before bonds pared price losses as stocks declined.
Benchmark 10-year notes fell 14/32 in price to yield 2.27 percent, after earlier rising to 2.30 percent, the highest since May 17.
Commodities Recap
Gold prices fell on Thursday as signs that central banks may scale back their ultra-loose monetary policy pushed bond yields higher on both sides of the Atlantic, though a decline in the dollar to its lows for the year lent support.
Spot gold was down 0.3 percent at $1,245.34 an ounce by 2:25 p.m. EDT (1825 GMT), while U.S. gold futures for August delivery settled down 0.3 percent at $1,245.80.
Oil futures ended slightly higher on Thursday, extending crude's rally to a sixth straight session after a decline in weekly U.S. crude production temporarily eased concerns about deepening oversupply.
U.S. crude futures settled up 19 cents at $44.93 a barrel after hitting a two-week high of $45.45 in late-morning trading. Brent crude futures ended up 11 cents at $47.42 a barrel, after touching a two-week high of $48.03 earlier in the session.
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