Market Roundup
• US initial jobless claims -12k to 234k from 246k previous, near 43-year low; 4-wk avg (244.25k claims lowest since 1973.
• US Wholesales inventories ‘unchanged’ at 1% in Dec as per forecast, sales +2.6% v 0.5% forecast, 0.5% previous.
• Fed's Bullard: rates can remain low through 2017, feels 1 hike needed in ’17, no imminent decision on when to decrease balance sheet, so far no undue inflation building.
• Fed’s Evans: Will discuss halting portfolio reinvestments after a few more hikes, USD 1.5trn one possible target for balance sheet size.
• Mexican central bank hikes 50bps to 6.25%, cites rising inflation; sees balance of risks to inflation & growth deteriorating.
• Germany's ‘16 trade surplus sets record, may fuel U.S. tensions; Trump ally has accused Germany of exploiting weak euro.
• IMF’s Rice: sees no firm evidence that currency wars are nearing.
• Bashed French bonds bounce back, yields fall to 2-wk low, Other EZ yields pull back from multi-month highs.
Looking Ahead - Economic Data (GMT)
• 00:30 Australian Housing Finance* Dec forecast 1%, 0.9%-previous
• 00:30 Australian Invest Housing Finance* Dec 4.9%- previous
• 23:50 Japan Corp Goods Price MM* Jan forecast 0.2%, 0.6%- previous
• 23:50 Japan Corp Goods Price YY* Jan forecast 0%, -1.2%- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan Bank of Japan Deputy Governor Hiroshi Nakaso to meet with business leaders
Currency Summaries
EUR/USD is likely to find support at 1.0619 levels and currently trading at 1.0661 levels. The pair has made session high at 1.0693 and hit lows at 1.0649 levels. The euro declined against the U.S. dollar on Thursday as greenback was boosted after comments from U.S. President Donald Trump that he would be releasing his phenomenal tax plan in the next few weeks. Investors have been waiting impatiently for details on Trump's campaign trail pledges to inject the U.S. economy with large-scale fiscal stimulus through additional spending and tax cuts. Trump said his administration will be announcing something phenomenal in terms of tax over the next two or three weeks during a meeting with airline executives on Thursday. The greenback was also bolstered by U.S. data showing initial jobless claims unexpectedly fell last week to a near 43-year low, while inventories at wholesalers surged in December for a second straight month. Investors had in recent weeks been pondering the potential impact of the protectionist policies of President Trump and the threat of similar policies resulting from upcoming European elections in France and Germany. The euro was down 0.4 percent against the dollar at $1.0656.
GBP/USD is supported in the range of 1.2410 levels and currently trading at 1.2499 levels. It reached session high at 1.2581 and dropped to session low at 1.2489 levels. Britain's pound initially inched higher against greenback in the early US session on upbeat British housing data but reversed course after comments by U.S. President Donald Trump on taxation strengthened the dollar. The pound has been rocked by weaker signals on the economy over the past week, suggesting British consumers are finally beginning to feel the pain generated by an almost 20 percent fall in the currency that should push domestic prices higher. Data earlier this week also showed the first falls in house prices since August, but Thursday's Royal Institution of Chartered Surveyors (RICS) price index bucked expectations for a further modest loss of pace. That sent the pound as high as $1.2582 in early US session before Trump's promise of a "phenomenal" announcement on tax to support U.S. growth and investment boosted dollar. Sterling was just 0.2 percent lower on the day at $1.2500 and 0.2 percent stronger at 85.10 pence per euro.
USD/CAD is supported at 1.3030 levels and is trading at 1.3144 levels. It has made session high at 1.3151 and lows at 1.3093 levels. The Canadian dollar declined slightly against its US counterpart on Thursday as greenback was boosted by comments from U.S. President Donald Trump and a Federal Reserve policymaker. U.S. crude oil futures rose 1.26 percent, or 33 cents, to settle at $53.00 per barrel, extending gains to the second day, supported by an unexpected drawdown in U.S. gasoline inventories. Bank of Canada Deputy Governor Lawrence Schembri said on Thursday. Official interest rates in Canada are low enough to stimulate growth and close the output gap by the middle of 2018. The dollar had gained more than 5 percent against a basket of major currencies in the six weeks after Trump's election but has given back some of those gains since as Trump has focused more on trade and immigration than fiscal stimulus. On the data front, Canadian new home prices rose 0.1 percent in December from the previous month. The Canadian dollar was last trading at C$1.3138 to the greenback, weaker than Wednesday's close of C$1.3131.
AUD/USD is supported around 0.7583 levels and currently trading at 0.7623 levels. It hit session high at 0.7663 and made session lows at 0.7618 levels. Australian dollar declined against US dollar on Thursday as the Australian dollar was weighted down after robust U.S. economic data pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise U.S. interest rates. The data showing rising U.S. wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits also pushed up the dollar and U.S. bond yields. The Aussie was down 0.1 percent at $0.7628, drifting away from a three-month peak of $0.7696.Meanwhile, Australia's top central banker laid out an optimistic vision on Thursday for the next couple of years, predicting solid economic growth, a further expansion in resource exports and a welcome pick-up in inflation. The upbeat take from Reserve Bank of Australia (RBA) Governor Philip Lowe underlined why financial markets are pricing in only a slim chance of another cut in interest rates following two policy easings last year.
Equities Recap
European shares ended at their highest level in two weeks on Thursday, with some major companies such as France's second-biggest listed bank Societe Generale and oil major Total advancing after their results.
UK's benchmark FTSE 100 closed up by 0.6 percent, the pan-European FTSEurofirst 300 ended the day up by 0.89 percent, Germany's Dax ended up by 0.9 percent, France’s CAC finished the day up by 1.3 percent.
Wall Street's three main indexes surged to fresh record highs on Thursday after President Donald Trump said he would make a major tax announcement in a few weeks.
Dow Jones closed up by 0.58 percent, S&P 500 ended up 0.57 percent, Nasdaq finished the day up by 0.56 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday as optimism wrapped markets following comments from President Donald Trump that he would reveal plans for U.S. tax reform in the coming weeks.
U.S. 30-year yields fell to a three-week low of 2.945 percent Wednesday, while five-year yields touched a two-month low of 1.794 percent Wednesday.
Benchmark 10-year notes fell 16/32 in price to yield 2.393 percent, more than 5 basis points higher than their late Wednesday levels.
Commodities Recap
Oil prices held onto gains on Thursday with U.S. prices rising on evidence that gasoline demand could strengthen in the world's biggest oil market, although bloated crude supplies meant that fuel markets remain under pressure.
Benchmark Brent crude settled up 51 cents at $55.63 per barrel. U.S. light crude settled 66 cents higher at $53 a barrel.
Gold slipped on Thursday from a three-month high in the previous session after robust U.S. economic data pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise U.S. interest rates.
Spot gold was down 0.85 percent at $1,231.03 an ounce by 3:53 p.m. EST (2053 GMT), while U.S. gold futures settled down 0.2 percent at $1,236.80.
