Market Roundup
- U.S. jobless claims rise, to 6-mos high, in latest week (293k vs forecast 278k).
- ECB's Draghi: GC has the power, the willingness, the determination to act.
- ECB's Draghi: Expects expect rates to remain at present or lower levels for an extended period of time, necessary to review & possibly reconsider monetary policy stance at next meeting (March).
- ECB's Draghi: the expected path of annual HICP inflation in 2016 is now significantly lower compared with the outlook in early December.
- China's Vice President Li Yuanchao: China willing to keep intervening in stock market.
- USD rises after ECB chief hints at more easing, Yields inch lower in choppy trade; oil still main driver.
- Davos - Lew says U.S. committed to economic leadership role.
- Davos - IMF's Lagarde says China's structural reforms are "massive undertaking".
- Davos -China has means to support economy, especially on fiscal side-(Fang Xinghai, Vice Chair CRSC).
- Davos - Mexico's Carstens says peso slump overdone, prefers rules based intervention.
- Electronic trading may pose risks to bond liquidity at times of stress: BIS.
Looking Ahead - Economic Data (GMT)
- 02:00 Japan Nikkei Mfg PMI Flash Jan 52.6-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0850 levels and currently trading at 1.0887 levels. The pair has made session high at 1.0901 and hit lows at 1.0777 levels. The dollar turned negative against the euro on Thursday, reversing early gains in the US session, greenback hit its highest against the euro in two weeks and gave up earlier ground made against euro in the late trading hours. The euro rose 0.1 percent against the dollar, recovering from earlier losses that was triggered by comments from European Central Bank President Mario Draghi, who said the bank could launch additional stimulus at its next meeting on March in the session the euro fell sharply against the dollar and hit a 9-month trough against the EURJPY after European Central Bank chief Mario Draghi opened the door to further monetary stimulus in March. The dollar, which measures the U.S. currency against a basket of six other major rivals, was largely flat, falling 0.05 percent to 99.025. The index rose to 99.799 during Draghi's speech, its highest since Dec. 3. The currency's strongest level of the session was $1.0905, while it hit its weakest since April 2003 at $1.0805.
GBP/USD is supported in the range of 1.4073 and currently trading at 1.4239 levels. It reached session high at 1.4245 and hit low at 1.4073 levels. Sterling declined to fresh seven-year low against the dollar on Thursday as a brutal sell-off that started a month ago accelerated amid diminishing prospects of a near-term interest rate hike in Britain. Sterling slipped down 10 percent since early December fell 0.8 percent to $1.4080, its lowest since mid-2010, however in the late American trading hours sterling recovered most losses suffered earlier to dollar trade at $1.4220. Earlier this week, sterling had come under pressure after the head of the Bank of England warned of more damage to come from a slowing Chinese economy and said he had no set timetable for raising interest rates. Investors are now expecting a rate hike in around two years, having factored in a move in late 2016 or early 2017 just two weeks ago.
USD/JPY is supported around 115.90 levels and currently trading at 116.88 levels. It peaked to hit session high at 117.02 and made session lows at 116.20 levels. The dollar declined against the Japanese yen on Thursday after data showed the number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended Jan. 16, the highest reading since early July, the Labor Department said. It was the second straight week of gains which exceeded forecasted figures at 278,000. Another report showed factory activity in the mid-Atlantic region improved in January as shipments rebounded. The Philadelphia Federal Reserve said its general activity index rose to -3.5 this month from a reading of -10.2 in December. The dollar gained against the Japanese yen rising 0.45 percent and moving comfortably above 117 yen on the day. The greenback had fallen to 115.97 in overnight trading, its lowest since January 2015.
USD/CAD is supported at 1.4200 levels and is trading at 1.4288 levels. It has made session high at 1.4327 and lows at 1.4225 levels. The Canadian dollar gained against its U.S. counterpart on Thursday, making recovery from a 12-year low after the Bank of Canada surprised many analysts by not cutting interest rates on Wednesday. The Bank of Canada left its benchmark policy rate on hold at 0.50 percent despite declining oil prices and turmoil in global market. Drawing some attention, the bank highlighted the risk that a large and fast depreciation in the Canadian dollar could boost inflation expectations. Crude oil prices however remained near 12-year lows on persistent concerns about oversupply and the outlook for demand. The currency's strongest level of the session was C$1.4394, while its weakest was C$1.4228. On Wednesday, it hit its weakest level since April 2003 at C$1.4689.
Equities Recap
European stocks dropped on Wednesday as a relentless slide in oil prices hit world markets, with a leading European index falling to a 15-month low.
Britain's blue-chip FTSE 100 index ended up by 1.62 percent, France's benchmark CAC-40 index was up by 1.86 percent, Germany's DAX ended up 1.91 percent, meanwhile the pan-European FTSEurofirst 300 index was up by 1.95 percent.
Wall Street staged a modest rally on Thursday as oil prices recorded their biggest gain this year and ECB President Mario Draghi raised hopes of further stimulus.
Dow Jones closed up by 0.72 percent, S&P 500 ended up by 0.50 percent, Nasdaq finished the day down by 0.01 percent.
Treasuries Recap
U.S. Treasuries prices extended their earlier drop on Thursday after weak investor demand at a $15 billion auction of 10-year Treasury Inflation Protected Securities resulted in their highest yield since May 2011.
In the late trading, benchmark 10-year treasury notes were down 11/32 in price with a yield of 2.021 percent, up 4 basis points on the day.
The 10 year yield climbed from 1.939 percent on Wednesday which was the lowest since early October.
The 30-year bond was down as much as 1 point in price with a yield of 2.808 percent. It was last down 24/32 in price, yielding 2.793 percent, up 4 basis points from late on Wednesday.
Commodities Recap
Gold declined on Thursday after posting its biggest one-day gain in two weeks the day before, as hints of further stimulus from the European Central Bank hurt the euro and a rebound in global stocks curbed risk aversion.
Spot gold was down 0.1 percent at $1,099.70 an ounce at 3:13 p.m. EST (2013 GMT), after falling 0.8 percent to $1,092.15. It pared losses as the U.S. dollar turned lower.
Oil prices inched up over $1 a barrel rebounding from 12-year lows on Thursday, their biggest daily gain this year, as rallying financial markets gave some bearish traders reason to take profits on short positions.
Benchmark Brent futures for March delivery rose $1.37 to settle at $29.25 a barrel, a 4.9 percent gain.
U.S. crude rose $1.18 to settle 4.2 percent higher at $29.53 per barrel.Brent rose as much as 7 percent during the session to $29.84, while WTI rose as much as 6.7 percent to $30.25.
