- EUR/USD peaked at 1.1495 before Nowotny led drop to 1.1425 levels.
- ECB's Nowotny - quite obvious additional sets of instruments necessary.
- German Automotive watchdog, KBA, orders VW to recall 2.4mln vehicles.
- As FX markets turn choppy, demand for M&A-related hedging revives.
- Japan calls upon BlackRock in bid to encourage corporate investment.
- Japan's Mitsui Life plans to increase foreign bond holdings by Y50-60bln Oct-March.
- Japan October Reuters Tankan manufacturing index +7, matches May '13 low.
- Australia September employment -5.1k, jobless 6.2%, +5k and 6.3% expected.
- (0830 ET/1230 GMT) US September CPI, -0.2% m/m, -0.1% y/y eyed; last -0.1%, +0.2%.
- (0830 ET/1230 GMT) US September core, +0.1% m/m, +1.8% y/y eyed; last +0.1%, +1.8%.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 270k eyed; last 263k.
- (0830 ET/1230 GMT) US October NY Fed Empire State mfg index, -8.00 eyed; last -14.67.
- (1000 ET/1400 GMT) US October Philly Fed business sentiment index, -1.0 eyed; last -6.0.
- (1100 ET/1500 GMT) Peru's Economy likely grew 3.0 percent in August.
- (1130 ET/1530 GMT) US September Cleveland Fed CPI; last +0.2%.
- (1700 ET/2100 GMT) Chile Central bank meets to set interest rates.
Key Events Ahead
- (1030 ET/1430 GMT) FRB St. Louis's Bullard gives opening remarks at policy conf; St. Louis.
- (1030 ET/1430 GMT) NY Fed Dudley speaks at Brookings Institution Washington, DC event.
- (1630 ET/2030 GMT) Cleveland Fed Mester speech at NYU Stern School of Business.
FX Recap
USD: The euro's move after ECB's Nowotny's comments gave the dollar some respite, in broader terms; it was still playing around 7-week lows against a basket of currencies. The dollar index was last trading 0.1 percent stronger at 93.845. But the yen was around half a percent stronger, reaching an eight-week high of 118.10 in early European trade.
EUR/USD: The euro has retreated as ECB's Nowotny said it was now "obvious" the bank must do more to stimulate the euro zone economy. It was down a third of a percent on the day at $1.1438, having risen as high as $1.1495, its strongest since Aug. 26. The ECB policymaker noted that the central bank needs to adopt additional sets of instruments, including structural tools, in an effort to bring inflation levels back on track. Looking ahead, markets await the US data releases and Fed speaks for further cues on pair amid a data-deficient EUR calendar. It made intraday high at 1.1493 and low at 1.1424 levels. Initial support is seen around at 1.1015 and resistance at 1.1560 levels. Option expiries are at 1.1300 (312M), 1.1365 (324M).
USD/JPY: Japan's industrial output declined for the second month in a row in August, final official data showed on Thursday, suggesting the economy remains on a sluggish recovery path. Industrial output fell 1.2% over the month in August, the final data from the Ministry of Economy, Trade and Industry (METI) showed on Thursday, confirming the preliminary results. Looking ahead, the dollar-yen pair awaits the US economic data including the crucial US CPI and Philly Fed manufacturing figures for further cues on the Fed interest rates outlook. Pair made intraday high at 119.15 and low at 118.09 levels. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 118.50 (400M), 119.00 (368M), 120.00 (501M).
GBP/USD: Sterling hit $1.55 for the first time in three weeks on Thursday before turning flat at $1.5490 on the day, as investors bet that neither the BoE nor the U.S. Fed would raise interest rates in the next few months. It climbed 0.3 percent to trade at 73.90 pence versus the euro. The pair failed for the fourth time since pre-European open to extend gains beyond the solid barrier placed at 1.55 handle. This may be due to minor-recovery in the greenback, which caps the upside in the cable. Pair made intraday high at 1.5506 and low at 1.5457 levels. Initial support is seen at 1.5107 and resistance is seen around 1.5725 levels.
NZD/USD: A recent strong run in the New Zealand dollar continued on Thursday, as fundamentals looked increasingly brighter for the New Zealand economy. Earlier today a measure of consumer sentiment pointed to a strong jump in confidence levels among New Zealanders this month. The ANZ Consumer Confidence Index rose 3.7% in October to 114.9 points from 110.8 in September. Pair made intraday high at 0.6896 and low at 0.6781 levels. Initial support is seen at 0.6235 and resistance at 0.6721 levels.
AUD/USD: The Australian dollar retraced some of its earlier gains on the release of Australian labour market data which came in below expectations. Australia's jobless rate held at 6.2% last month, according to the Australian Bureau of Statistics, despite job growth declining by 5,100. Analysts anticipated that the unemployment rate would be stable in September, but thought the economy would add around 7,000 jobs. Pair made intraday high at 0.7362 levels and low around 0.7296 levels. Initial support is seen at 0.6908 and resistance at 0.7438 levels. Option expiries are at 0.7200 (537M), 0.7250 (492M), 0.7300 (912M).
Equities Recap
European shares continued a three-day slide on the prospects of more central bank support. The FTSEurofirst 300 inched up 1 percent after Asian bourses, which are also supported by hopes of stimulus from China and Japan, had hit their highest since mid- August.
Japan's Nikkei gained 1.3 percent, as the second successive fall in Japanese manufacturers' kept the pressure firmly on policymakers to deploy fresh stimulus there. China's CSI300 index closed up 2.4 pct at 3,486.82 points, MSCI's broadest index of Asia-Pacific shares outside Japan increased 1.9 percent, Shanghai shares advanced 1.4 percent, Australian shares nudged up 0.7 percent and South Korea's Kospi rose 1.2 percent.
Commodities Recap
Oil dropped and was hoveirng near $49 per barrel and remained weak after a jump in U.S. stockpiles shown in industry data the day before. Brent eased 6 cents to $49.09 a barrel by 0753 GMT. U.S. crude dropped 42 cents to $46.22 a barrel after settling down 2 cents to $46.64.
Gold remained stable on Thursday as a recovery in the dollar pulled it from the previous session's 3-1/2 month high, but remained supported by expectations that the Fed will hold off raising interest rates this year. Spot gold reduced by 0.1 percent to $1,183.36 an ounce at 0930 GMT, while U.S. gold futures for December delivery were up $3.60 an ounce at $1,183.40.
Treasuries Recap
The prospect of a longer delay to Fed rate hikes boosted U.S. Treasuries, which saw the benchmark 10-year yield dropped by 1.9690 percent.
German 10-year yields were under downward pressure due to the expectations of further monetary easing by the ECB, the yields were slightly changed at 0.55 percent.
UK Gilts opened just 2 ticks lower than the settlement of 119.21, as predicted, tracking the core market reaction to a modest equity bounce in Asia.
JGB prices ended the day lower, increased yields up by 0.5bp to 1.5bp from yesterday in the 5-yr and longer zone. Yields on the current 10-yr and 30-yr JGBs briefly fell down to 0.30% and 1.33%, respectively in early trades. The current 20-yr JGBs also temporarily slipped to 1.055%.
New Zealand government bonds rose, sending yields 12.5 ticks lower at the long end of the curve. Australian government bond futures were split, with 3-year bond contract off 3 ticks at 98.200. The 10-year contract added 3 ticks to 97.4100, while the 20-year contract was up 4 ticks to 96.8900.
