Market Roundup
• US Initial jobless claims 238k v 247k forecast, 257k –previous.
• US jobless claims 4-wk Avg 243k, 242.25k – previous.
• US international trade ($) MM -43.7 bln v -44.5 bln, -43.6 bln – previous.
• US Productivity prelim -0.6% v 0.0% forecast, 1.8% - previous.
• US Durable goods, R MM* 0.9%, 0.7% - previous.
• US factory orders MM* 0.2% v 0.4% forecast, 1.2% - previous.
• U.S. economy seen growing 4.2% in Q2 vs +4.3% estimate may 4 - Atlanta Fed's GDPnow model.
• US house narrowly passes republican bill dismantling Obamacare and replacing it with new healthcare program .
• US senate passes $1.2 trillion spending bill, funds government through September.
• US house approves sanctions on North Korea.
• ECB's Praet says continued monetary policy support for demand remains key to inflation convergence.
• EU'S Tusk says Brexit talks difficult enough if emotions get out of hand will become impossible.
• Bank of France's Villeroy says return of the ECU as a currency would create "grave inconveniences" versus the euro.
• Short-dated French yields tumbled after poll found Macron more convincing in the debate last night.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG construction index 51.2 - previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- ASEAN Finance and Central Bank Deputies' Meeting
Currency Summaries
EUR/USD is likely to find support at 1.0915 levels and currently trading at 1.0975 levels. The pair has made session high at 1.0977 and hit lows at 1.0923 levels. Euro rose hit six-month high against the dollar on Thursday as the single currency was boosted as traders looked beyond the French elections to the potential for the European Central Bank to signal further reduction in bond-buying. The euro jumped to $1.0980 its highest since Nov. 10, 2016, as investors looked to a more hawkish ECB in June after centrist Emmanuel Macron consolidated his position to win France's presidential race. On the data front, New applications for U.S. jobless benefits fell more than expected last week and the number of Americans on unemployment rolls hit a 17-year low. Other data showed a jump in labor costs, raising expectations that wages would continue to increase and help boost inflation to the Fed’s 2 percent target. The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.2 percent at 98.979. Investors were awaiting Friday's monthly U.S. non-farm payrolls report for greater clues on the Fed's rate hike trajectory through the end of the year. Economists expect U.S. employers to have added 185,000 jobs in April, up from 98,000 in March.
GBP/USD is supported in the range of 1.2800 levels and currently trading at 1.2918 levels. It reached session high at 1.2923 and dropped to session low at 1.2890 levels. Sterling surged against dollar on Thursday as more upbeat UK services data bolstered the case for the Bank of England to raise interest rates sooner rather than later. The Markit/CIPS Services Purchasing Managers' Index (PMI), a closely watched gauge of Britain's services industry, rose to a four-month high of 55.8 in April, above all forecasts in a Reuters poll of economists. The reading was the second strongest since mid-2015 and a boost for Prime Minister Theresa May who is seeking to persuade voters that the opposition Labour Party cannot be trusted to run the economy after a parliamentary election on June 8. The pound was up 0.4 percent on Thursday at 1.2919 per dollar and approaching a seven-month high of 1.2965 hit last week on market optimism around the election. The services sector PMI followed better-than-expected manufacturing and construction surveys. Taken together, they indicate the economy is growing at a quarterly pace of 0.6 percent at the start of the second quarter, double the pace of the first quarter.
USD/CAD is supported at 1.3679 levels and is trading at 1.3765 levels. It has made session high at 1.3774 and lows at 1.3710 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as commodity related Canadian dollar was pressured by fall in oil price and the dollar firmed on US rate hike expectations. New applications for U.S. jobless benefits fell sharply last week and the number of Americans on unemployment rolls hit a 17-year low, pointing to a tightening labor market that could allow the Federal Reserve to raise interest rates next month. Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 238,000 for the week ended April 29, the Labor Department said. Oil prices tumbled to the lowest since late November on signs that OPEC and other producing countries would not take more drastic steps to reduce the world's persistent glut of crude. The Canadian dollar was trading at C$1.3721 to the greenback, or 72.88 U.S. cents, up 0.1 percent. The currency pair traded in a range of C$1.3701 to C$1.3776.
AUD/USD is supported around 0.7350 levels and currently trading at 0.7400 levels. It hit session high at 0.7429 and made session lows at 0.7380 levels. The Australian dollar declined hit four month low against US dollar on Thursday as Australian dollar pressured by lower commodity prices and firmer dollar across the board. The dollar firmed after Federal Reserve kept its benchmark overnight interest rate unchanged and said it expected labor market conditions would "strengthen somewhat further. Officials at the U.S. central bank also viewed the pedestrian 0.7 percent annualized economic growth pace in the first quarter as likely "transitory" and expected economic activity to expand at a "moderate" pace. Much of the Aussie weakness came after the Fed made positive comments on the job market, reinforcing expectations of a rate hike in June. Also undermining the Aussie was a sharp 6.5 percent fall in iron ore on Wednesday. Iron ore is Australia's top export earner. The Australian dollar skidded to $0.7380, its lowest since mid-January, having dropped around a U.S. cent and a half on Wednesday. It has lost 1 percent so far this week, largely due to a shakeout in Aussie long positions.
Equities Recap
European shares powered ahead on Thursday as earnings, economic data and politics aligned to boost the market to further highs.
UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.62 percent, Germany's Dax ended up by 0.8 percent, France’s CAC finished the day up by 1.2 percent.
Wall Street ended flat on Thursday as a steep fall in the energy sector countered some solid earnings reports, with major stock indexes little changed after the U.S. House of Representatives passed major healthcare legislation.
Dow Jones closed down by 0.4 percent, S&P 500 ended up by 0.06 percent, Nasdaq finished the day up by 0.04 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday after strong labor data reinforced expectations the Federal Reserve was likely to raise interest rates again in June, and as investors waited on Friday's highly anticipated jobs report for April.
Benchmark 10-year notes last fell 12/32 in price to yield 2.3523 percent, from 2.309 percent late on Wednesday.
Commodities Recap
Gold prices fell to the lowest in more than six weeks on Thursday, on expectations of further U.S. interest rate increases this year and receding political uncertainty in Europe.
Spot gold was down 0.8 percent at $1,227.94 an ounce by 3:02 p.m. EDT (1902 GMT) after touching $1,225.20, the lowest since March 17, and extending losses below the 50- and 200-day moving averages. U.S. gold futures settled down 1.6 percent at $1,228.60.
Oil prices tumbled about 5 percent on Thursday, breaking below $50 a barrel to the lowest since late November on signs that OPEC and other producing countries would not take more drastic steps to reduce the world's stubbornly persistent glut of crude.
U.S. crude fell 4.9 percent to $45.50 per barrel and Brent was at $48.39, down 4.73 percent on the day.
