Market Roundup
- U.S. jobless claims rise (+7k to 284k); labor market still healthy 45th consecutive month below 300k.
- U.S. import prices plunge on lower petroleum costs; import prices fell 8.2% in '15 largest decrease since 2008.
- Oil prices bounce (+2%), boosting energy shares, U.S. stocks; USTs & gold drop.
- Fed's Bullard: cites "worrisome" drop in inflation expectations, still regards lower oil bullish for US economy.
- IMF spokesman: if China's own growth target slips recommends fiscal stimulus as 1st line of defense.
- BOE policymakers vote 8-1 to hold rates at 0.5%; McCafferty voted to hike 25bps.
- BOE policy minutes say outlook similar to Nov inflation report, weak oil means inflation set to rise more gradually than forecast.
- ECB Minutes: EZ recovery moderate & fragile, downward drift in inflation expectations could be difficult to reverse.
- ECB Minutes: risks to ECB inflation f/c on the downside, 10bp cut in Dec left room for more cuts if necessary, some GC members suggested bigger monthly purchases or frontloading.
- German econ grew at strongest rate (+1.7%) in 4-yrs in '15, pvt consumption strongest since 2000.
- Argentina says will first settle with bondholders in New York, then Europe; congress will have to approve any preliminary deal.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Foreign Bond Investment w/e 85.9b-previous
- 23:50 JP Foreign Investment JP Stock w/e 135.7b- previous
- 00:30 Australia Housing Finance*Nov * forecast -0.5%, -0.50%- previous
- 00:30 Australia Invest Housing Finance* Nov -6.10%- previous
- 02:00 Japan TR IPSOS PCSI* Jan 42.20- previous
- 02:00 Australia TR IPSOS PCSI* Jan 49- previous
- 02:00 China TR IPSOS PCSI* Jan 63.80- previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0800 levels and currently trading at 1.0866 levels. The pair has made session high at 1.0919 and hit lows at 1.0832 levels. US dollar gained against euro on Thursday, bolstered by gains in the U.S. stock market and crude oil rebounded from 12 year low, indicating that the Federal Reserve may not hold back its plan to raise interest rates several times this year. In late morning trading, the euro fell 0.3 percent against the dollar at $1.0838. It was flat versus the yen at 128.03 yen. The dollar rose 0.3 percent against the yen to 117.99 yen. Meanwhile, the ECB holds a policy meeting next week with the session expected to be relatively uneventful. The big test comes when the ECB releases its initial 2018 growth and inflation forecasts on March 10. Meanwhile,the number of Americans filing for unemployment benefits unexpectedly rose last week, but remained at levels associated with a healthy labor market. The Labor Department said. Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended Jan. 9.
GBP/USD is supported in the range of 1.4350 and currently trading at 1.4413 levels. It reached session high at 1.4446 and hit low at 1.4358 levels. Sterling declined for the third straight session against US dollar on Thursday, however the pair made slight rally towards 1.4430 levels after the release of minutes that showed no change in Bank of England policymakers' views on interest rate hike following recent global economic slowed down and falling commodity prices. Sterling, however, remains at the top of many banks' lists of currencies most likely to fall this year as expectations that it will swiftly follow the Federal Reserve in raising interest rates. Concerns about a referendum on Britain's membership of the European Union have weighed on sterling in recent weeks. Prime Minister David Cameron has promised a referendum by the end of 2017, though it may come as early as June this year. Sterling was down 0.1 percent at $1.4380, having fallen to $1.4358 in early European trade, a level not seen since June 2010.
AUD/USD is supported around 0.6909 levels and currently trading at 0.6980 levels. It hit session high at 0.6997 and made session lows at 0.6936 levels. The Australian dollar slid to multi-month lows on Thursday as broad commodities and equities selloff revived worries about global growth. The Australian dollar dropped to $0.6920 in the early European session, it's weakest since September however downside was limited as the pair found support at 0.6910 and rebounded back in US session to trade around 0.6980 levels. Aussie has skidded nearly 5 percent this year on worries that China could be losing its grip on managing the slowdown of its economy. Meanwhile, data released in the earlier Asian market showed Australian employment dipped just a fraction in December, a surprisingly robust result given the exceptional growth over the previous two months, the jobless rate held at a 19-month low of 5.8 percent, when analysts had expected a tick higher, while full-time employment increased a healthy 17,600.
USD/CAD is supported at 1.4300 levels and is trading at 1.4371 levels. It has made session high at 1.4395 and lows at 1.4334 levels. The Canadian dollar declined to hit fresh 12-year low against US dollar on Thursday amid speculation that Bank of Canada will cut its interest rate at the next meetings, however Canadian dollar gained back some losses after crude oil rebounded from 12 year lows. The chances of a rate cut in the next meeting has increased to 50 percent from 22 percent after a speech last week by Bank of Canada Governor Stephen Poloz, while the market has nearly fully discounted a rate cut by April. Oil prices rebounded, but remained near 12-year lows after Iran unleashed its oil in already oversupplied market and with few signs of improving demand in a fragile global economy. The currency's strongest level of the session was C$1.4335, while it hit its weakest since April 2003 at C$1.4398.
Equities Recap
European equities slumped to a 13-month trough on Thursday, with the automobile sector taking maximum hit as Renault shares tumbled following inspections at three of its sites in an emissions probe.
Britain's blue-chip FTSE 100 index declined 0.5 percent , France's benchmark CAC-40 index was down 1.4 percent, Germany's DAX ended down 1.4 percent ,Meanwhile the pan-European FTSEurofirst 300 index lost 1.33 percent
U.S. stocks rebounded on Thursday as as oil prices rebounded from 12-year lows led broad gains in U.S. shares. Dow Jones closed up by 1.38 percent, S&P 500 ended up by 1.65 percent, Nasdaq finished the day up by 1.93 percent.
Treasuries Recap
Yields on U.S. Treasuries rose on Thursday as energy stocks led a rebound in equities, reducing appetite for safe-haven U.S. government debt.
Benchmark 10-year notes were last down 8/32 in price to yield 2.0904 percent, up from 2.066 percent late on Wednesday.
The 30-year bond price fell 28/32 for a yield of 2.890 percent, up from 2.847 percent on Wednesday.
Commodities Recap
Gold fell sharply to a 1-1/2-week low on Thursday, pressured by a U.S. Federal Reserve president's comments about potentially rethinking further rate hikes, triggering technical sell signals while shrugging off a rebound from 12-year lows in oil prices.
Spot gold was down 1.5 percent at $1,076.35 an ounce by 3:10 p.m. EST (2010 GMT), its weakest session since Dec. 17 after falling 2 percent to $1,071, the lowest since Jan. 4.
U.S. gold futures for February delivery settled down 1.2 percent at $1,073.60 an ounce.
Oil rebounded on Thursday, snapping an eight-day rout, as investors covered short positions but the market settled not far from 12-year lows on worries Iran may add barrels to a glutted global market sooner than expected.
Brent settled up 72 cents, or 2.4 percent, at $31.03 a barrel. Earlier in the session, it rose to $31.23 after falling to $29.73, its weakest since February 2004. Over the past eight sessions, Brent had lost about $7 a barrel, almost 20 percent.
U.S. crude's West Texas Intermediate (WTI) also settled up 72 cents, or 2.4 percent, at $31.20. It hit a 12-year low of $29.93 earlier this week.
