Market Roundup
• US w/e Initial Jobless Claims, 222k, 215k forecast, 211k previous.
• US w/e Continued Jobless Claims, 1.707 mln, 1.780 mln forecast, 1.790 mln previous.
• US w/e Jobless Claims 4-Wk Avg, 213.25k, 216.00k previous.
• US Apr Leading Index Chg MM, 0.4%, 0.4% forecast, 0.3% previous.
• US May Philly Fed Business Index, 34.4, 21.0 forecast, 23.2 previous.
• US May Philly Fed 6M Index, 38.70, 40.70 previous.
• US May Philly Fed Capex Indx, 21.60, 29.80 previous.
• US May Philly Fed Employment, 30.20, 27.10 previous.
• US May Philly Fed Prices Paid, 52.60, 56.40 previous.
• US May Philly Fed New Orders, 40.60, 18.40 previous.
• U.S. household debt edges up to $13.21 trln in Q1 -N.Y. Fed.
• CA Mar Securities Cdns C$, -1.90 bln, 6.35 bln previous.
• CA Mar Securities Foreign C$, 6.15 bln, 3.96 bln previous.
• U.S., China launch trade talks to avert tariff war, economic damage.
• Macron rules out trade war over Iran deal as firms head for exit .
• If it happens, it happens: Trump says not told anything on N.Korea summit.
• Canada 'positive' on NAFTA, Mexico says deal possible by end-May.
• Argentine peso stabilizes under 25 per dollar line drawn by central bank.
Looking Ahead - Economic Data (GMT)
• 17 May 23:30 Japan Apr CPI, Core Nationwide YY, 0.8% forecast, 0.9% previous
• 17 May 23:30 Japan Apr CPI, Overall Nationwide, 1.1% previous
• 17 May 23:30 Japan Apr CPI Index Excluding Fresh Food, 100.6 previous
Looking Ahead - Events, Other Releases (GMT)
• 07:00 Cleveland Fed's Loretta Mester speaks on "Macroprudential and Monetary Policy" before the Third Annual ECB Macroprudential Policy and Research Conference in Frankfurt
• 13:15 Dallas Fed's Robert Kaplan participates in a session before the 12th Annual University of Texas at Dallas Project Management Symposium in Richardson, Texas
• 13:15 Fed's Lael Brainard speaks on "Community Reinvestment Act Modernization" before the Association for Neighborhood and Housing Development 8th Annual Community Development Conference in New York
Currency Summaries
EUR/USD is likely to find support at 1.1733 levels and currently trading at 1.1796 levels. The pair has made session high at 1.1811 and hit lows at 1.1782 levels. The euro declined to a five-month against the greenback on Thursday as investors fretted about the demands of populist parties likely to form Italy's next government and as a fresh rise in U.S. Treasury bond yields increased demand for the dollar. The euro has slumped six cents from more than $1.24 in the space of three weeks after a huge dollar rally. Investors are betting that U.S. interest rates will need to rise further to curb inflation while other central banks are postponing monetary tightening. That has forced investors who took big positions against the dollar anticipating it would fall in 2018 to rush to unwind and cover their positions, pushing the greenback even higher. The euro slid 0.2 percent to $1.1792, slightly above the $1.1763 2018 low it hit on Wednesday. The euro is also suffering from reports Italy's anti-establishment 5-Star Movement and the anti-immigrant League, which are working to draft a coalition programme, may ask the European Central Bank to forgive 250 billion euros of debt. But broader Italian markets held up better on Thursday as investors played down the broader impact on euro zone political stability and questioned whether the Italian parties would really follow through on such plans.
GBP/USD is supported in the range of 1.3448 levels and currently trading at 1.3509 levels. It reached session high at 1.3524 and dropped to session low at 1.3480 levels. Sterling enjoyed a brief rally against dollar on Thursday after reports that Britain would tell Brussels it was prepared to stay in the European Union's customs union beyond a Brexit transitional arrangement. Cabinet ministers are deadlocked over a future deal with the bloc. The Telegraph newspaper said Britain would tell Brussels it was prepared to stay in the union beyond the end of a post-Brexit transition period in 2020.That helped sterling rise half a percent to a two-day high though the currency later relinquished most of its gains as the dollar strengthened. Prime Minister Theresa May said on Thursday Britain would leave the EU customs union after Brexit but a source said London was considering applying the bloc's external tariffs for a period beyond December 2020. Sterling was last up 0.1 percent versus the dollar at $1.3509 and up 0.2 percent versus the euro at 87.34 pence, close to a three-week high of 87.15 hit earlier in the session. The pound's jump, though brief, suggests the currency remains vulnerable to Brexit's tos and fros, even as the UK economy has shown signs of strengthening.
USD/CAD is supported at 1.2727 levels and is trading at 1.2800 levels. It has made session high at 1.2821 and lows at 1.2749 levels. The Canadian dollar was little changed against its U.S. counterpart on Thursday, pulling back from an earlier near one-week high as oil prices rose and investors weighed prospects of a deadline passing to reach a NAFTA trade pact deal. The price of oil, one of Canada's major exports, climbed to a 3-1/2-year high on concerns that Iranian exports could fall due to renewed U.S. sanctions and reduce supply in an already tightening market. U.S. crude prices were up 0.6 percent at $71.88 a barrel. U.S. House of Representatives Speaker Paul Ryan has said the Republican-controlled Congress would need to be notified of a new North American Free Trade Agreement deal by Thursday to give lawmakers a chance to approve it before a newly elected Congress takes over in January. On Wednesday, Bank of Canada Deputy Governor Lawrence Schembri said uncertainty about NAFTA renegotiations is one of the reasons the central bank has kept interest rates low, because concern about U.S. trade policy is dragging down business investment. The Canadian dollar was little changed at C$1.2800 to the greenback. The currency touched its strongest since May 11 at C$1.2749.
USD/JPY is supported around 110.21 levels and currently trading at 110.71 levels. It peaked to hit session high at 110.81 and made session lows at 110.59 levels. The dollar climbed to a four-month peak against the yen on Thursday as dollar was bolstered by the rise in U.S. Treasury yields that suggests a more upbeat outlook for the world's largest economy. U.S. benchmark 10-year yields hit a high of 3.122 percent on Thursday, the highest in nearly seven years. Since the beginning of the year, U.S. 10-year yields have increased by more than 50 basis points, on track for their largest rise in eight years. Rising yields reflect continued optimism about the U.S. economy, reinforcing expectations that the Federal Reserve would raise borrowing rates at least two more times this year. The dollar rose to its strongest level versus the Japanese yen since Jan. 23 at 110.80 yen. It was last trading at 110.78, up 0.3 percent on the day. The dollar index rose 0.1 percent to 93.462, below its 2018 high of 93.632. The dollar has climbed nearly 4 percent this quarter on expectations the U.S. Federal Reserve will lift U.S. interest rates further this year to curb inflation, at a time when other central banks are still keeping monetary policy loose. On the data front, new applications for U.S. jobless benefits rose more than forecast last week after hitting their lowest level since 1969 in late April. On the other hand, Mid-Atlantic business activity rose to its strongest in a year, based on an index from the Philadelphia Federal Reserve.
Equities Recap
European shares rose on Thursday to a fresh 3-1/2 month high as oil stocks rallied and online supermarket Ocado shot up after it signed a game-changing deal in the United States.
UK's benchmark FTSE 100 closed up by 0.59 percent, the pan-European FTSEurofirst 300 ended the day up by 0.50 percent, Germany's Dax ended up by 0.8 percent, France’s CAC finished the day up by 0.8 percent.
Wall Street ended lower after a choppy trading session on Thursday, as investors grappled with escalating trade tensions and rising oil prices.
Dow Jones closed down by 0.22 percent, S&P 500 ended down by 0.08 percent, Nasdaq finished the day down by 0.23 percent.
Treasuries Recap
U.S. 10-year Treasury yields rose to a near seven-year peak on Thursday, extending this week's bond market selloff, as traders and investors have not reached a consensus on whether it was time to buy or if the market was vulnerable to more selling.
Benchmark 10-year Treasury notes yielded 3.109 percent, up over 1 basis point from late on Wednesday. The yield touched 3.122 percent earlier Thursday, which was the highest since July 2011.
Commodities Recap
Gold was flat after sliding to a fresh 2018 low on Thursday as another rise in U.S. bond yields and concerns over political risk in Italy held the dollar index near its 2018 peak.
Spot gold was flat at $1,290.51 per ounce by 1:37 p.m. EDT (1737 GMT), off an earlier 4-1/2-month low of $1,285.41. U.S. gold futures for June delivery settled down $2.10, or 0.2 percent, at $1,289.40 per ounce.
Oil prices pulled back Thursday after climbing above $80 a barrel for the first time since November 2014, as dollar strength and strong U.S. crude production pumped the brakes on a rally driven by geopolitical concerns.
Brent crude futures reached an intraday high of $80.33 a barrel before turning netgative to trade down 4 cents at $79.24 a barrel by 1:57 p.m. EDT (1857 GMT).
U.S. West Texas Intermediate (WTI) crude futures were down 15 cents at $71.34 after also hitting their highest since November 2014, at $72.30 a barrel.
