Market Roundup
• China stands its ground after Trump amps up tariff threats.
• Rouble falls as U.S. senators target Russian debt.
• Bank of England raises rates above crisis lows, signals no rush for next hike.
• US Jul 28 w/e Initial Jobless Claims, 218k, 220k forecast, 217k previous.
• US Jul 28 w/e Jobless Claims 4-Wk Avg, 214.5k forecast, 218.0k previous.
• US Jul 21 w/e Continued Jobless Claims, 1.724 mln, 1.750 mln forecast t, 1.745 mln previous, 1.747 mln revised.
• US Jun Factory Orders m/m, 0.7%, 0.7% forecast, 0.4% previous.
• US Jun Durable Goods m/m, 0.8%, 1.0% previous.
• Manafort's bookkeeper says unaware of foreign financial holdings.
• Ambitious EU-UK trade deal possible after Brexit, need Ireland solution first –EU.
• Mexico's cenbank holds rate steady, still wary on inflation.
Looking Ahead - Economic Data (GMT)
• 2 Aug 22:30 Australia Jul AIG Services Index, 63.0 previous
• 3 Aug 00:30 Japan Jul Services PMI, 51.4 previous
• 3 Aug 01:30 Australia Jun Retail Sales m/m, 0.3% forecast, 0.4% previous
• 3 Aug 01:30 Australia Q2 Retail Trade, 0.8% forecast, 0.2% previous
• 3 Aug 01:45 China Jul Caixin Services PMI, 53.9 previous
Looking Ahead - Events, Other Releases (GMT)
• 2 Aug 23:50 Bank of Japan releases Minutes of Monetary Policy Meeting held on June 14 and 15
• 3 Aug 01:30 Speech by Bank of Japan Deputy Governor Masayoshi Amamiya at a meeting with business leaders in
Currency Summaries
EUR/USD is likely to find support at 1.1500 levels and currently trading at 1.1585 levels. The pair has made session high at 1.1632 and hit lows at 1.1582 levels. The euro slipped lower against the U.S. dollar on Thursday as a flare-up in trade tensions between the United States and China drove traders to buy the U.S. currency. The U.S. currency was also bolstered by an upbeat assessment from the U.S. Federal Reserve on Wednesday. The Fed kept interest rates unchanged but characterized the economy as strong, continuing the central bank on track to increase borrowing costs in September. U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said on Wednesday. China on Thursday urged the United States to "calm down" and return to reason. Investors in the currency market will be looking to July employment data, due on Friday, for the next catalyst for the greenback. According to survey of economists, nonfarm payrolls likely rose by 190,000 jobs in July after increasing by 213,000 in June. The dollar index, which measures the greenback against a basket of six other currencies, was up 0.51 percent at 95.109, the highest since July 20. The euro was down 0.57 percent to $1.1585.
GBP/USD is supported in the range of 1.2991 levels and currently trading at 1.3018 levels. It reached session high at 1.3063 and dropped to session low at 1.3012 levels. Britain's pound declined sharply against the dollar on Thursday despite the Bank of England lifting interest rates from crisis-era lows, after Governor Mark Carney said monetary policy needed to "walk not run" and expressed concern about the risks of a cliff-edge Brexit. The move raising 25 basis points to 0.75 percent was widely expected, although the unanimous decision of the BoE's nine rate-setters was not. The market initially took that unanimity as a more hawkish-than-expected sign. But sterling later succumbed to selling pressure and dropped as much as 0.8 percent to $1.3016, down from around $1.31 before Carney had started his news conference. A stronger dollar added to the pound's struggles. Given the lack of certainty about the sort of trading deal Britain can secure with the European Union, and with inflation forecast to fall towards its two percent target over the next three years, Carney reiterated that the bank would raise rates only gradually and to a limited extent. The currency also fell against the euro, by 0.4 percent to as low as 89.25 pence from an earlier flat position. Sterling has lost almost 10 percent of its value since hitting a post Brexit-referendum high in April, amid worries that Britain will fail to secure a trade deal before it exits the EU in March.
USD/CAD is supported at 1.2974 levels and is trading at 1.3022 levels. It has made session high at 1.3030 and lows at 1.2994 levels. The Canadian dollar edged lower against its U.S. counterpart on Thursday as concerns of a global trade war kept investors away from market. Stocks fell globally, while the U.S. dollar rose against a basket of major currencies and the Chinese yuan after U.S. administration officials said on Wednesday that President Donald Trump was proposing a 25 percent tariff on $200 billion worth of Chinese imports. On Wednesday, the loonie touched its strongest in nearly seven weeks at C$1.2975. It was boosted by recent domestic data that has added to bets for another interest rate hike this year from the Bank of Canada and signs of progress in talks to update a trade pact between Canada, the United States and Mexico. The United States and Mexico are getting close to a deal on the key issue of autos content rules at negotiations to renew the North American Free Trade Agreement, Mexican and Canadian officials said on Wednesday. Oil prices strengthened after an industry report suggested U.S. crude stockpiles would soon begin to decline again after a surprise rise in the latest week. The Canadian dollar was last trading 0.1 percent lower at C$1.3022 to the greenback. The currency traded in a narrow range of C$1.2993 to C$1.3036.
AUD/USD is supported around 0.7341 levels and currently trading at 0.7362 levels. It hit session high at 0.7383 and made session lows at 0.7353 levels. The Australian dollar dipped against its U.S. counterpart on Thursday as concerns of a global trade war hurt demand for commodity-linked currencies like Australian dollar. The antipodean currency was also under pressure against the greenback after the U.S. Federal Reserve provided an upbeat assessment of the world's biggest economy while staying on course to lift interest rates gradually. The Australian dollar was last down 0.3 percent at $0.7362. It has traded in a $0.7311 to $0.7484 range since mid-June, refusing to break out in either direction. Global financial markets remained focused on the U.S.-driven international trade war, with U.S. administration officials saying on Wednesday that President Donald Trump is proposing a higher 25 percent tariff on $200 billion worth of Chinese imports. The Aussie is often played as a liquid proxy for the Chinese yuan. China is Australia's No.1 trading partner. Official data out earlier showed Australia's trade surplus blew past expectations in June as exports to China boomed to their second highest on record. The data did nothing to help sentiment for the Aussie as traders were more concerned about the deterioration in global trade relations.
Equities Recap
A selloff in European shares extended on Thursday with Germany's DAX taking the brunt of anxieties over trade tensions, while results from industrial group Siemens disappointed but Europe's biggest asset manager, Amundi, impressed the market.
UK's benchmark FTSE 100 closed down 0.97 percent, the pan-European FTSEurofirst 300 ended the day down by 0.85 percent, Germany's Dax ended down by 1.55 percent, France’s CAC finished the day down by 0.62 percent.
The S&P 500 and Nasdaq rose in afternoon trading on Thursday, driven by Apple shares as the iPhone maker became the first publicly traded U.S. company worth a trillion dollars.
Dow Jones closed down by 0.02 percent, S&P 500 ended up by 0.50 percent, Nasdaq finished the day down by 1.25 percent.
Treasuries Recap
U.S. Treasury yields eased on Thursday, a day after 10-year notes hit a 10-week high, as investors sought the safety of government debt with trade tensions between the United States and China escalating once again.
In afternoon trading, U.S. 10-year yields fell to 2.985 percent, from 3.003 percent late on Wednesday.
U.S. 30-year yields were also down at 3.12 percent, from 3.127 percent the previous session.
On the front end of the curve, U.S. 2-year yields slipped to 2.665 percent , from Wednesday's 2.682 percent.
Commodities Recap
Gold inched down to the lowest price in over one year on Thursday after an upbeat assessment of the U.S. economy by the Federal Reserve and new trade tensions between Washington and Beijing boosted the dollar.
Spot gold was down 0.3 percent at $1,211.81 an ounce by 1:53 p.m. EDT (1753 GMT) after falling to $1,210.80, the lowest since July 2017. U.S. gold futures for December delivery settled down 0.6 percent at $1,220.10 an ounce.
Oil prices strengthened Thursday, with U.S. crude gaining nearly 2 percent after traders saw an industry report suggesting domestic crude stockpiles would soon decline again after a surprise rise in the latest week.
Brent crude futures settled up $1.06, or 1.5 percent at $73.45 a barrel. U.S. crude rose $1.30, or 1.9 percent, to $68.96 a barrel.
