Market Roundup
• U.S.-China talks on trade war resume as new tariffs kick in.
• Fed's George sees more rate hikes, despite Trump – interviews.
• US 18 Aug w/e Initial Jobless Claims, 210K, 215K forecast, 212K previous.
• US 18 Aug w/e Jobless Claims 4-Wk Avg, 213.75K, 215.50K previous.
• Us 11 Aug w/e Continued Jobless Claims, 1.727M, 1.731M forecast, 1.721M previous.
• US Aug Markit Comp Flash PMI, 55.0, 55.7 previous.
• US Aug Markit Mfg PMI Flash, 54.5, 55.0 forecast, 55.3 previous.
• US Jun Monthly Home Price m/m, 0.2%, 0.2% previous, 0.4% revised.
• Us Jul New Home Sales-Units, 0.627M, 0.645M forecast, 0.631M previous, 0.638M revised.
• US Jul New Home Sales Chg m/m, -1.7%, 2.2% forecast, -5.3% previous, -2.4% revised.
• Sessions hits back at Trump over Justice Dept criticism.
• National Enquirer execs granted U.S. immunity in Cohen probe -Vanity Fair.
• No-deal Brexit will bring tangle of red tape, Britain warns companies.
• Mexico says pushing for NAFTA deal as soon as possible.
Looking Ahead - Economic Data (GMT)
• 23 Aug 22:45 New Zealand Jul, Trade Balance, -113.0M previous
• 23 Aug 22:45 New Zealand Jul, Trade- Imports, 5.02B previous
• 23 Aug 22:45 New Zealand Jul, Trade - Exports, 4.91B previous
• 23 Aug 23:30 Japan Jul, CPI Core Nationwide y/y, 0.8% previous, 0.9% forecast
• 23 Aug 23:30 Japan Jul, CPI Overall Nationwide, 0.7% previous
• 23 Aug 23:30 Japan Jul, CPI Ex Fresh Fd and Eng, 0.2% previous
Looking Ahead - Events, Other Releases (GMT)
• 06:30 Speech by Kerstin af Jochnick, Riksbank's First Deputy Governor : The role of central bank money on tomorrow's payment market – Stockholm
• 10:45 German Finance Minister Olaf Scholz speaks to reporters after hosting a meeting with his counterparts from Austria and Switzerland-Hamburg, Germany
• 14:00 Federal Reserve Chairman Jerome Powell speaks on "Monetary Policy in a Changing Economy" -Jackson Hole, Wyoming
Currency Summaries
EUR/USD is likely to find support at 1.1473 levels and currently trading at 1.1541 levels. The pair has made session high at 1.1591 and hit lows at 1.1528 levels. The euro slipped lower against the U.S. dollar on Thursday as a new round of punitive U.S.-China tariffs boosted the greenback and the annual Federal Reserve conference in Jackson Hole, Wyoming began. The United States and China escalated their months-long trade dispute, implementing 25 percent tariffs on $16 billion worth of each other's goods. That boosted the dollar, which has benefited from President Donald Trump's protectionist policies and from a flight to quality as geopolitical tensions mount. Talks between U.S. and Chinese officials in Washington over trade will continue on Thursday, although most analysts do not expect much headway to be made, with risks growing that the conflict will descend into a growth-sapping tariff war. Minutes from the Federal Reserve's last meeting, released on Wednesday, showed that officials had examined how global trade disputes could affect businesses and households, suggesting that the market's perceived path for monetary tightening could have to change if the trade conflict upsets the U.S. economy. The dollar index gained 0.55 percent to 95.687, moving off a near three-week low of 94.934 reached overnight. The euro was down about 0.55 percent at $1.153, easing from a two-week high of $1.162.
GBP/USD is supported in the range of 1.2727 levels and currently trading at 1.2815 levels. It reached session high at 1.2873 and dropped to session low at 1.2802 levels. Britain's pound declined against the dollar on Thursday as the government stepped up its plans for a no-deal Brexit, once again reviving concerns about the currency's fate if Britain left the European Union without having agreed new trade arrangements. A rallying dollar and expectations Britain could soon be fending for itself without any agreement with the European Union, its biggest trading partner, are punishing the pound. The currency has fallen 11 percent against the dollar since April. With little more than seven months until it leaves the EU on March 29, Britain has yet to reach an agreement with the bloc on the terms of its departure. Sterling plunged to $1.2662 last week, its lowest since June 2017, after several ministers warned that the risk of leaving without an agreement had increased. Many economists say failure to agree exit terms would seriously damage the world's fifth-largest economy as trade with the bloc would be subject to tariffs and regulatory barriers. Supporters of Brexit say there may be some short-term pain for the economy, but that long-term it will prosper when cut free from the EU.
USD/CAD is supported at 1.3000 levels and is trading at 1.3077 levels. It has made session high at 1.3099 and lows at 1.3036 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday, pulling back from a two-week high the day before, as the greenback rose broadly ahead of a speech on Friday by Federal Reserve Chairman Jerome Powell. The U.S. dollar snapped a five-day losing streak, as a new round of U.S.-Chinese punitive trade tariffs boosted the greenback and the annual Federal Reserve conference began in Jackson Hole, Wyoming. On Wednesday, the loonie touched its strongest level in two weeks at C$1.2987 as oil prices jumped and optimism grew about progress in negotiations on the North American Free Trade Agreement. Canada’s foreign minister said on Thursday that Canada would need to agree to any final conclusion on "rules of origin" reached in bilateral talks between the United States and Mexico as part of the modernization of NAFTA. The price of oil, one of Canada's major exports, steadied as the escalating trade war between the United States and China weighed on demand expectations a day after prices jumped on a big draw in U.S. crude inventories. The Canadian dollar was trading 0.6 percent lower at C$1.3080 to the greenback. The currency traded in a range of C$1.2994 to C$1.3099.
USD/JPY is supported around 110.30 levels and currently trading at 111.23 levels. It peaked to hit session high at 111.31 and made session lows at 110.83 levels. The U.S. dollar gained against the Japanese yen on Thursday as a flare-up in trade tensions between the United States and China drove traders to buy the U.S. currency. Investors focus turned on trade tensions as the United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other's goods. That came as mid-level officials from both sides resumed talks in Washington. Investors are further considering whether the guilty plea of Trump's former lawyer Michael Cohen to campaign finance violations on Tuesday and the conviction of former campaign manager Paul Manafort on charges of tax and bank fraud will hurt the president and the Republican Party's prospects in mid-term elections. Markets are awaiting Fed Chairman Jerome Powell's comments on Friday at the central bank's annual meeting in Jackson Hole, Wyoming for any change in its interest rate stance, especially after U.S. President Donald Trump's attack on its monetary policy this week. Kansas City Federal Reserve Bank President Esther George said on Thursday that the Fed will move ahead with rate hikes.
Equities Recap
European shares gradually fell into the red on Thursday after the latest round of U.S.-China tariffs hurt trade-sensitive autos stocks and sentiment suffered as Wall Street indexes slipped into negative territory.
UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.18 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day flat.
Wall Street's major indexes fell on Thursday as trade-sensitive stocks were hit by a fresh round of tariffs in the trade dispute between the United States and China.
Dow Jones closed down by 0.29 percent, S&P 500 ended down by 0.16 percent, Nasdaq finished the day down by 0.13 percent.
Treasuries Recap
U.S. Treasuries were little changed on Thursday ahead of a speech by Federal Reserve Chairman Jerome Powell on Friday, after minutes from the U.S. central bank's most recent meeting showed that further interest rate hikes are likely soon.
Benchmark 10-year notes gained 1/32 on the day to yield 2.821 percent, down from 2.824 percent on Wednesday.
The difference in yield between 2-year and 10-year notes narrowed to 20 basis points, the flattest yield curve since 2007.
Commodities Recap
Gold prices slid on Thursday, under pressure from a stronger dollar as a prominent U.S. Federal Reserve official reaffirmed the central bank's intention to raise interest rates and punitive trade tariffs between the United States and China kicked in.
Spot gold declined 0.7 percent to $1,187.30 per ounce by 1:34 p.m. EDT (1734 GMT). Prices hit their highest since Aug. 13 at $1,201.51 in the previous session.
U.S. gold futures for December delivery settled down $9.30, or 0.8 percent, at $1,194 per ounce, as the dollar rose against a basket of major currencies.
