Market Roundup
• Chinese yuan hits 11-year low vs dollar, fans trade worries
• US manufacturing contracts for first time since 2009
• Fed's Harker, George don't see need to cut rates
• US Continuing Jobless Claims 1,674K,1,700K forecast,-1,728K previous
• US Initial Jobless Claims 209k,216k forecast,-221k previous
• US Jobless Claims 4-Week Avg 214.50K,-214.00K previous
• Canada Jun Wholesale Sales (MoM) 0.6%,-0.2%,-1.9%
• Russia Central Bank reserves 528.4B,527.1B previous
• US Aug Manufacturing PMI 49.9, 50.5 forecast, 50.4 previous
• US Aug Markit Composite PMI 50.9, 52.6 previous
• US Aug Services PMI -50.9, 52.9 forecast,53.0 previous
• US Aug KC Fed Composite Index -6, -1 previous
Looking Ahead - Economic Data (GMT)
• New Zealand Core Retail Sales (QoQ) 0.2 % forecast, 0.7 previous
• New Zealand Retail Sales (QoQ) (Q2) 0.1 % forecast, 0.7 previous
• New Zealand Retail Sales Quarterly Vs. Year Ago (Q2) 3.3 previous
• Japan Jul National Core CPI (YoY) 0.6% forecast 0.6% previous
• Japan Jul National CPI (YoY) 0.5% forecast 0.7% previous
Looking Ahead - Events, Other Releases (GMT)
• 10:00 Fed Chair Powell Speaks
Tentative Jackson Hole Symposium
Currency Summaries
EUR/USD: The euro edged lower against dollar on Thursday, as an uptick in euro zone business growth was offset by another decline in China’s currency.Euro zone business growth picked up in August, as services expanded and manufacturing contracted at a slower pace. But trade war fears knocked future expectations to their weakest in over six years, a survey showed. Investors also sold European currencies after the Chinese yuan fell to a 11-year low against the dollar, indicating trade tension between the world’s two biggest economies remained a major issue. The euro slipped 0.1% to $1.1072, nearing an Aug. 1 low of $1.1027. The dollar, measured against a basket of currencies, was down 0.06% to 98.20 .Immediate resistance can be seen at 1.1119 (9 DMA), an upside break can trigger rise towards 1.1138 (21 DMA).On the downside, immediate support is seen at 1.1063(Daily low), a break below could take the pair towards 1.1000 (Psychological level).
GBP/USD: The British pound rose against dollar on Thursday ,after German Chancellor Angela Merkel said a solution to the Irish border issue could be found before the Oct. 31 deadline for Britain to leave the European Union.Sterling, trading around $1.2160 earlier, rocketed to as high as $1.2265, before settling around $1.2217, up 0.8% on the day. The pound has fallen heavily in recent weeks on fears British Prime Minister Boris Johnson will take Britain out of the EU without a transition deal.However, with investors having bet heavily against the currency, any sign of a breakthrough in Britain’s efforts to convince the EU to renegotiate the deal is likely to send the pound jumping. Immediate resistance can be seen at 1.2276 (Daily high), an upside break can trigger rise towards 1.2300 (Psychological level).On the downside, immediate support is seen at 1.2167 (5 DMA), a break below could take the pair towards 1.2117 (11 DMA).
USD/CAD: The Canadian dollar edged higher against its U.S. counterpart on Thursday, adding to the previous day’s gains, as oil prices increased and investors awaited the Federal Reserve chairman’s speech.The price of oil, one of Canada’s major exports, rose on a drop in U.S. crude inventories and OPEC-led supply cuts, although worries about the global economy capped gains. U.S. crude oil futures were up 1% at $56.11 a barrel.Fed Chairman Jerome Powell’s speech on Friday in Jackson Hole, Wyoming, could indicate whether the U.S. central bank will continue to cut interest rates, which could also help guide expectations about the Bank of Canada’s interest rate decision. The Canadian dollar was last trading 0.1% higher at 1.3283 to the greenback. Immediate resistance can be seen at 1.3367 (Higher Bollinger Band), an upside break can trigger rise towards 1.3400 (Psychological level).On the downside, immediate support is seen at 1.3249 ( Aug 23rd low), a break below could take the pair towards 1.3171 (50 DMA).
USD/JPY: The U.S. dollar weakened against Japanese yen on Thursday,as investors braced for a possible announcement or statement from the Federal Reserve at this week’s Jackson Hole, Wyoming event that would help address the worsening global economic outlook. Market participants expect the Fed announcement could be a stimulus measure, or an affirmation that the U.S. central bank is on a steady path to ease interest rates, a scenario viewed as negative for the dollar.Fed Chairman Jerome Powell will speak on Friday and expectations are building that he will clarify Fed minutes released on Wednesday and deliver a dovish speech that would soothe market worries about the prospect of recession. The dollar rose 0.21% against the yen to 106.39 yen.Strong resistance can be seen at 106.69 (Daily High), an upside break can trigger rise towards 107.00 (Psychological level).On the downside, immediate support is seen at 106.00 (Psychological level), a break below could take the pair towards 105.65 (Aug 14th low).
Equities Recap
Euro-zone equities swung into negative territory on Thursday afternoon after Bloomberg reported the Bundesbank ruled out fiscal stimulus measures right now, dealing a blow to hopes that Europe’s top economy would consider boosting spending.
The UK's benchmark FTSE 100 closed down by 1.05 percent, Germany's Dax ended up by 0.47 percent, and France’s CAC finished thebdown by 0.87 percent.
U.S. stocks closed higher on Thursday, as strong results from retailers including Nordstrom reinforced confidence in consumer demand, while investors look ahead to Fed Chief Jerome Powell’s speech for more clues on future interest rate moves.
Dow Jones closed up by 0.19 percent, S&P 500 ended down 0.05 percent, Nasdaq finished the day down by 0.36 percent.
Treasuries Recap
Treasury yields rose on Thursday after two Federal Reserve officials said they saw no reason to cut interest rates without new economic deterioration,a day after Fed meeting minutes showed policymakers disagreed on the U.S. central bank's rate cut last month.
Benchmark 10-year notes fell 6/32 in price to yield 1.598%, up from 1.577% late on Wednesday. The 2-year, 10-year curve was last inverted by 0.50 of a basis point.
Commodities Recap
Gold prices dipped on Thursday as investors locked in profits, with the focus shifting to Friday’s speech by U.S. Federal Reserve Chairman Jerome Powell at the Jackson Hole meeting for clarity on the direction of monetary policy.
Spot gold was down 0.5% at $1,494.09 an ounce by 1212 GMT, while U.S. gold futures slipped 0.8% to $1,503 an ounce.
Oil prices weakened on Thursday as worries about the global economy weighed and equity markets were under pressure as uncertainty over the outlook for U.S. interest rate cuts left investors on edge.
Brent crude fell 47 cents, or 0.8%, to $59.83 a barrel by 12:34 p.m. ET (1634 GMT), while U.S. West Texas Intermediate crude fell 44 cents, or 0.8%, to $55.24.
