Market Roundup
• US CPI MM, SA Aug, 0.4%, 0.3% forecast, 0.1% previous.
• US CPI YY, NSA Aug, 1.9%, 1.8% forecast,1.7% previous.
• US Initial Jobless Claims w/e, 284k, 300k forecast, 298k previous.
• US Continued Jobless Claims w/e, 1.944M, 1.985M forecast, 1.940M previous.
• US Core CPI MM, SA Aug, 0.2%, 0.2% forecast,, 0.1% previous.
• US Core CPI YY, NSA Aug, 1.7%, 1.6% forecast, 1.7% previous.
• US CPI Index, NSA Aug, 245.520, 245.340 forecast, 244.790 previous.
• Bank of England paves way for first rate hike in a decade.
• Trump says he is close to a deal with Democrats on immigration.
• Paul Ryan says 'Big Six' won't dictate tax reform.
• As euro zone grows, three ECB rate setters mull stimulus cut.
• CA New Housing price Index Jul, 0.4%, 0.3% forecast,, 0.2% previous.
• Bank of Canada opens discussions on 2021 inflation target.
• US wants NAFTA five-year sunset provision -Commerce's Ross.
• US to extend Iran sanctions relief under nuclear deal –sources.
Looking Ahead - Economic Data (GMT)
• 22:30 New Zealand Manufacturing PMI Aug, 55.4 previous
• 23:00 Japan Reuters Tankan DI Sep, 27 previous
Looking Ahead - Events, Other Releases (GMT)
• 06:00 ECB’s Nouy gives Marjolin Lecture in Helsinki
• 08:50 British-Belgian economist Gertjan Vlieghe gives speech at conf. in London
• N/A EU finmins and central bankers meet in Tallin, Estonia (to September 16)
• N/A Bundesbank’s Claudia Buch speaks at a conf. in Ljubljana
• N/A ECB’s Philip Lane addresses London's Society of Business Economists
Currency Summaries
EUR/USD is likely to find support at 1.1800 levels and currently trading at 1.1905 levels. The pair has made session high at 1.1922 and hit lows at 1.1835 levels. The euro inched higher against the dollar on Thursday as the dollar weakened even though data that showed a faster-than-forecast increase in domestic consumer prices boosted generally depressed expectations for another U.S. rate hike later this year. U.S. consumer prices accelerated in August amid a jump in the cost of gasoline and rental accommodation, signs of firming inflation that could allow further monetary policy tightening by the Federal Reserve. Thursday's data was the last major reading on the economy going into next week’s Federal Open Market Committee meeting. Fed policymakers will meet on Sept. 19-20 and are expected to leave rates unchanged and announce their plan to reduce the central bank's $4.2 trillion holdings of Treasuries and mortgage-backed securities. The dollar index fell 0.43 percent, while the euro rose 0.20 percent to $1.1906. The dollar index is down about 10 percent for the year amid an increasingly uncertain outlook for U.S. monetary and fiscal policy.
GBP/USD is supported in the range of 1.3145 levels and currently trading at 1.3397 levels. It reached session high at 1.3403 and dropped to session low at 1.3148 levels. Sterling rose against the dollar on Thursday after the Bank of England warned it might raise interest rates for the first time in a decade in the "coming months”. Sterling initially dipped on the publication of the Bank's policy decision, as markets reacted to the fact that only two BoE policymakers had voted for an immediate rate hike. There had been some talk beforehand that another rate-setter could shift to that more hawkish camp. But it quickly reversed course to turn higher on the day as investors digested the Bank's statement and brought forward their bets on when the BoE will raise rates. After dipping to $1.3148 initially, sterling jumped as high as $1.3353, up a cent and a half from where it had been trading before the release of the policy decision. Comments from BoE Governor Mark Carney gave sterling an additional boost, pushing the currency as high as $1.3404. That was its highest since September 2016.
USD/CAD is supported at 1.2158 levels and is trading at 1.2177 levels. It has made session high at 1.2237 and lows at 1.2156 levels. The Canadian dollar firmed marginally against the greenback on Thursday and outperformed key currency rivals as oil prices rose and the greenback dipped after U.S. inflation data. The U.S. dollar index was down 0.4 percent against a basket of currencies, making oil cheaper for holders of other currencies. Last week, the dollar index fell to its lowest level since the start of 2015.Oil prices rose, with Brent closing at a five-month high, as the dollar weakened and after a string of reports forecast the market would tighten further as fuel demand increased. The loonie has rallied 13 percent against the greenback since early May, boosted by a rapid expansion this year in the Canadian economy that prompted the Bank of Canada to raise interest rates in July, its first hike in nearly seven years, and again last week. On the data front, Canadian new home prices rose 0.4 percent in July from June, slightly exceeding economists' forecasts for a gain of 0.3 percent. Vancouver saw strong demand from buyers, while prices in Toronto were unchanged for a second straight month following provincial measures to rein in the market, data from Statistics Canada showed. The currency's strongest level of the session was C$1.2160, while it touched its weakest since Sept. 7 at C$1.2240.
USD/JPY is supported around 110.00 levels and currently trading at 110.40 levels. It peaked to hit session high at 111.02 and made session lows at 110.31 levels. The U.S. dollar edged lower against the yen on Thursday as North Korea threatened the United States and Japan, and the dollar softened despite strong U.S. consumer inflation data. The consumer price index, the government's broadest inflation gauge, rose 0.4 percent in August, faster than the 0.3 percent increase forecast among analysts polled. That lifted the CPI's year-over-year increase to 1.9 percent from 1.7 percent in July. But traders said the report did not offer much new information, with many already expecting a strong reading following the previous day's U.S. producer prices data. A string of mixed economic figures has raised doubt over the Fed's rate-hiking plans in recent months, fostering demand for high-yielding emerging market currencies. A North Korean state agency threatened to use nuclear weapons to "sink" Japan and reduce the United States to "ashes and darkness" for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test. The Japanese yen strengthened 0.05 percent versus the greenback at 110.55 per dollar.
Equities Recap
European stocks edged up to a five-week high on Thursday, boosted by energy stocks and retailers, while stronger than expected U.S. inflation data also helped lift sectors with high dollar exposure.
UK's benchmark FTSE 100 closed up by 1.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day up by 0.2 percent.
Rising shares of Boeing pulled the Dow Jones Industrial Average up to a record high on Thursday, while the S&P 500 fell as investors saw higher-than-expected inflation increasing the chances of an interest rate hike.
Dow Jones closed up by 0.22 percent, S&P 500 ended down 0.10 percent, Nasdaq finished the day down by 0.48 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday, with the two-year yield hitting a seven-week peak as domestic consumer prices grew at their briskest pace in seven months, rekindling bets the Federal Reserve would raise interest rates for a third time in 2017.
The benchmark 10-year yield hit a three-week peak at 2.225 percent before retreating to 2.197 percent, up 0.2 basis point from late on Wednesday.
The yield spread between five-year and 30-year Treasuries shrank to 99 basis points, the tightest in about 2-1/2 weeks.
Commodities Recap
Oil prices rose on Thursday, with Brent closing at a five-month high, as the dollar weakened and after a string of reports forecast the market would tighten further as fuel demand increased.
U.S. West Texas Intermediate crude briefly broke above $50 a barrel and settled 59 cents, or 1.2 percent, higher at $49.89, its highest close since July 31.
Brent crude futures gained 31 cents, or 0.6 percent, to settle at $55.47 a barrel, its highest close since April 13.
Gold rebounded from a two-week low on Thursday as North Korea threatened the United States and Japan, and the dollar softened despite strong U.S. consumer inflation data, which could allow further interest rate increases from the Federal Reserve.
Spot gold was up 0.4 percent at $1,328.33 an ounce by 2:03 p.m. EDT (1803 GMT), above an earlier low of $1,315.71, its weakest since Aug. 31.U.S. gold futures for December delivery settled up 0.1 percent at $1,329.30.
