Market Roundup
• US jobless claims rise to more than one-year high (294k vs forecast 270k, 274k previous), 4-wk avg higher.
• US import prices rise as cost of petroleum products jumps (0.3% v 0.5% forecast), export prices beat.
• Fed’s Rosengren: Looming Brexit vote no automatic reason not to raise rates, concerned low US rates encouraging speculative behavior in commercial RE market.
• Fed’s Mester: risks around Fed forecast s should not paralyze policymakers; market based measures of inflation affected by volatility, lack of liquidity.
• BOE’s Carney: MPC will act more cautiously than usual to data, data less likely to be informative in light of Brexit referendum.
• ECB’s Smets: Euro Zone wage growth showing downward trend; announced measures need time to work but ECB would act again if necessary in case of negative shocks.
• Germany’s Schaeuble: there will be no renegotiation, out vote cannot be used to get a better deal, there is a future for EU even without the UK.
• Brazil's Temer to rebalance government finances, name Meirelles as finance minister.
• Brazil's Rousseff vows to fight on after Senate vote to suspend her.
• Fitch: ECB impetus driving surge in European corporate issuance.
Looking Ahead - Economic Data (GMT)
• 22:45 New Zealand Retail Sales Volumes QQ Q1 forecast 1%, 1.20%-previous
• 22:45 New Zealand Retail Quarterly Vs Year Ago Q1 forecast 3.9%, 5.30%- previous
Looking Ahead - Events, Other Releases (GMT)
• 00:40 New Zealand Finance Minister Bill English delivers a pre-budget speech for the Wellington Chamber of Commerce.
• 03:30 Japan BoJ Governor Haruhiko Kuroda to speak at an event hosted by Jiji news agency.
Currency Summaries
EUR/USD is likely to find support at 1.1348 levels and currently trading at 1.1374 levels. The pair has made session high at 1.1408 and hit lows at 1.1370 levels. The euro initial in the US session rose against dollar after data showed initial claims for state unemployment benefits increased for the week ended May 7, but fell after a Federal Reserve official said the U.S. central bank should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter. Markets had been reckoning that a solid U.S. economy could prompt the Fed to raise rates in June. However, last week’s weak nonfarm payrolls data poured cold water on expectations of a near-term U.S. rate hike. Data on Thursday showed that the number of Americans filing for unemployment benefits in the latest week rose to a more than one-year high. The Labor Department said, initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015.
GBP/USD is supported in the range of 1.4370 levels and currently trading at 1.4443 levels. It reached session high at 1.4529 and dropped to session low at 1.4435 levels. Sterling rose to a six-day high against the dollar after Bank of England policymakers voted unanimously to keep rates on hold, pouring cold water on talk that one or two committee members might vote in favour of a cut. In a quarterly inflation report published at the same time, the Bank of England stepped up warnings about the risks if Britain votes to leave the European Union in a referendum next month, saying sterling could fall sharply and unemployment could rise. Meanwhile, The BoE cut its growth forecast for this year to 2.0 percent from 2.2 percent in February, reflecting how uncertainty about the referendum is already weighing on the economy. The pound rose to $1.4529 in the early US session, above its two-week low of $1.4375 touched on Monday. But retreated towards 1.4443 levels in the mid-morning US session after dollar rose across the board after comments from US Federal Reserve official.
USD/CAD is supported at 1.2734 levels and is trading at 1.2842 levels. It has made session high at 1.2858 and lows at 1.2770 levels. The Canadian dollar was steady against its U.S. counterpart on Thursday, although some gains were pared as oil pulled back from its highest levels, while Federal Reserve officials were less cautious on U.S. interest rate hikes. Oil rose to six-month highs as investors weighed a forecast for tighter global supplies against signs of another storage build at the hub for U.S. crude futures. On the data front, Canadian new home prices rose 0.2 percent in March, topping analysts' expectations of 0.1 percent, while the number of job vacancies in Canada fell in the fourth quarter of last year. The Canadian dollar ended at C$1.2834 to the greenback, or 77.92 U.S. cents, stronger than Wednesday's close of C$1.2851, or 77.81 U.S. cents.
USD/JPY is supported around 108.20 levels and currently trading at 109.01 levels. It peaked to hit session high at 109.36 and made session lows at 108.19 levels. The Japanese yen fell to a two-week low against the dollar on Thursday, as the yen was pressured by speculation that the Bank of Japan could expand its monetary stimulus as soon as next month. Bank of Japan's Kuroda said the BOJ won't hesitate to take further easing steps if necessary, adding that there was still large downside risks to Japan's economy. The BOJ introduced negative interest rates earlier this year, but that has had little impact on the yen or economic data. The Japanese currency has surged more than 9 percent against the dollar in 2016 despite a series of monetary easing measures in Japan, which is in a deflationary spiral. That has fuelled a slew of intervention talk from Japanese officials, resulting in a 1.7 percent drop in the value of the yen so far this week. The dollar rose 0.4 percent to 109.08 yen in late US session, after earlier hitting a two-week peak of 109.39 yen and recovering from a 18-month low of 105.55 yen on May 3.
Equities Recap
European stocks fell on Thursday after a choppy session, weighed down by some disappointing earnings updates, while Bayer and BASF dropped on reports they could be interested in buying Monsanto.
UK's benchmark FTSE 100 closed down by 0.99 percent, the pan-European FTSEurofirst 300 ended the day down by 0.58 percent, Germany's Dax ended down by 1.18 percent, France’s CAC finished the day down by 0.53 percent.
U.S. stocks ended mixed on Thursday, as the S&P 500 ended flat, after Apple fell to a two-year low and healthcare stock also tumbled.
Dow Jones closed up by 0.08 percent, S&P 500 ended flat, Nasdaq finished the day down by 0.48 percent.
Treasuries Recap
U.S. Treasury prices fell on Thursday after a Federal Reserve official said the U.S. central bank should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter, noting that markets are too pessimistic on the economy.
Benchmark 10-year notes ended down 9/32 in price to yield 1.76 percent, up from 1.73 percent late on Wednesday. The yields have fallen from 1.94 percent on April 26.
Commodities Recap
Oil prices rose 1 percent in volatile trade on Thursday, with U.S. crude hitting six-month highs as investors weighed a forecast for tighter global supplies against signs of another storage build at the hub for U.S. crude futures.
Brent crude futures settled up 48 cents at $48.08 per barrel.
U.S. crude's West Texas Intermediate (WTI) futures rose 47 cents to settle at $46.70. It hit a six-month high of $47.02.
Gold fell on Thursday as a strengthening dollar prompted some buyers to cash in gains after its biggest daily rise this month, briefly paring losses after downbeat U.S. jobs data.
Spot gold was down 0.6 percent at $1,269.76 an ounce at 2:44 p.m. EDT (1844 GMT). The metal had touched a 15-month high last week at $1,303.60, before slipping back below $1,300.
U.S. gold futures for June delivery settled down 0.3 percent at $1,271.20.
