Market Roundup
- Pressure on China central bank for bigger yuan depreciation, reported as much as 10-15%.
- China suspends market circuit breaker mechanism, global equities rally.
- Oil ends North American session in negative territory down near 2%, equities & USD falls.
- U.S. jobless claims fall slightly in latest week (277k from 287k last week, 275k consensus).
- Fed's Lacker: Fed projection of 4 hikes must be interpreted with care, wage growth accelerating.
- Fed's Evans (non-voter, dove): sees 2-25bp hikes in '16, global economy not expected to be engine of growth for US.
- U.S. planned job cuts for Dec at lowest since June 2000 - Challenger.
- BoC's Poloz: lower CAD helps adjust to commodity shock, global divergence of monetary pol should be expected.
- Saudi Arabia is considering to list shares of Saudi Aramco -The Economist.
Looking Ahead - Economic Data (GMT)
- 22:30 Australia AIG Construction Index* Dec 50.7-previous
- 23:50 Japan Foreign Reserves*Dec 1233.00b-previous
- 00:30 Australia Retail Sales MM* Nov forecast 0.4%, 0.50%-previous
- 01:30 Japan Overtime Pay* Nov 1.20%-previous
- 05:00 Japan Coincident Indicator MM* Nov 2-previous
- 05:00 Japan Leading Indicator* Nov 130.00%-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0900levels and currently trading at 1.0934 levels. The pair has made session high at 1.0936 and hit lows at 1.0822 levels. The euro surged strongly higher against the dollar on Thursday as growing losses on Wall Street led investors, who had held euro-funded positions in which the low-yielding currency is borrowed and sold in favor in higher-yielding ones, to buy back the euro. The euro booked its best day against the dollar and yen in over a month. It gained 1.4 percent at $1.0927. It recovered from a near nine-month low against the yen and was last up 0.6 percent at 128.45 yen. The euro rose yesterday after minutes from the Federal Reserve's December meeting on Wednesday was released which showed some policymakers were worried inflation may stay at dangerously low levels.
GBP/USD is supported in the range of 1.4525 and currently trading at 1.4621 levels. It reached session high at 1.4622 and hit low at 1.4525 levels. Sterling declined against the dollar on Thursday to its weakest in seven months as traders remained cautious on debate on Brexit. British Prime Minister David Cameron has given green signal for vote on Britain's membership of the European Union by the end of 2017, but last month hinted it could come earlier this year and many investors now expect it by June. A poll on Thursday showed a majority of Britons who have made up their minds would vote to leave the European Union. The pound fell around half a cent to dollar at $1.4572. The euro gained more than a full percentage point in value to 74.57 pence.
USD/JPY is supported around 117.00 levels and currently trading at 117.68 levels. It hit session high at 118.32 and made session lows at 117.60 levels. Japanese yen appreciate further against US dollar on Thursday as investors unnerved by the global market rout due to fears about a weakening yuan and the Chinese economy switched there investments into the yen on Thursday, sending it to the strongest levels against the dollar in over four months. A fresh safe-haven dash into the yen was spurred by a further weakening of the Chinese currency, a move that is seen as an attempt to stimulate the world's second biggest economy. On the data front, Initial claims for state unemployment benefits declined by 10,000 to a seasonally adjusted 277,000 for the week ended Jan. 2, the Labor Department said. The decline partially unwound the prior week's jump, which had lifted claims to their highest level since early July.
USD/CAD is supported at 1.4000 levels and is trading at 1.4103 levels. It has made session high at 1.4167 and made lows at 1.4048 levels. The Canadian dollar made some gains against US dollar on Thursday after a speech by Bank of Canada Governor Stephen Poloz left doubt about a rate cut. Due to the ongoing crude oil prices rout and declining trend in Canadian economy has led to speculation that Canada's central bank may postpone rate cut plans. Poloz said in a speech weakness in the Canadian dollar is the most important factor in helping Canada adjust to low commodity prices, and poloz promised to steer monetary policy independently of the U.S. Federal Reserve. The currency's strongest level of the session was C$1.4051, while it hit its weakest level since July 2003 at C$1.4170.
Equities Recap
European shares fell sharply on Thursday after China accelerated the depreciation of the yuan but were helped off their lows after the Chinese securities regulator said it would suspend its stock market for the day.
UK's benchmark FTSE 100 closed down by 2.00 percent, the pan-European FTSEurofirst 300 ended the day down by 2.33 percent, Germany's Dax closed down at 2.30 percent, and France's CAC finished the day down by 1.7 percent.
U.S. stocks extended recent sharp losses on Thursday, putting the Dow on track for its worst start to a year in more than a century, as market volatility in China and a relentless slide in oil prices rattled investors.
Dow Jones closed down by 2.31 percent, S&P 500 ended the day down by 2.36 percent, Nasdaq finished the day down by 3.03 percent.
Treasuries Recap
Safe-haven U.S. Treasury yields dipped on Thursday on concerns that weakness in Chinese equities could have negative implications for global economic growth and after a drop in oil prices suggested a lack of inflationary pressures.
U.S. 10-year Treasury notes were last up 8/32 in price to yield 2.149 percent, from late Wednesday's yield of 2.177 percent.
U.S. 30-year Treasury bonds were last up 9/32 in price to yield 2.924 percent, from a yield of 2.940 percent late Wednesday.
The latest 30-year yield was up from the session low of 2.885 percent hit in early trading.
U.S. two-year notes were last up 2/32 in price to yield 0.952 percent, from a yield of 0.984 percent late Wednesday and a session low of 0.936 percent.
Commodities Recap
Oil prices fell for a fourth day on Thursday, lurching again to 12-year lows as new financial market tumult in China brought a $30 per barrel handle within view.Brent settled down 48 cents at $33.75, after sliding to a low of $32.16, a level last seen in April 2004.
U.S. crude West Texas Intermediate (WTI) finished down 70 cents at $33.27, after hitting a low of $32.10, the lowest since late 2003.
Gold climbed above $1,100 an ounce for the first time in nine weeks on Thursday as the dollar fell and investors channeled money into safer assets for a fourth straight day after worries about the Chinese economy hit global stocks.
Spot gold rose to a nine-week high of $1,109.94 an ounce at one stage and was up 1.3 percent at $1,108.45 an ounce at 2:03 p.m. EST (1903 GMT).
U.S. gold futures settled up 1.5 percent at $1,107.80 an ounce, also a nine-week high.
