Market Roundup
• BoE: cuts rate 25bps as forecast, restarts QE, to add GBP 60bn including GBP 10bn of non-financial corporate (18-month term begins mid-Sep).
• BoE: most members likely to back further rate cut to near zero in ’16 if incoming data consistent with the forecast.
• BoE: MPC votes 9-0 to launch term funding scheme to support up to GBP 100bn of lending.
• BoE: forecast 2016 GDP growth at 2%, ’17 GDP 0.8% from 2.3%, ’2018 GDP 1.8% from 2.3%.
• BoE’s Carney: didn’t cut rates below 25bps because BoE able to stimulate in other ways.
• BoE’s Carney: does not want to see depo rate go below zero. doesn’t see merit in helicopter money.
• UK’s Hammond: prepared to take any necessary steps to support the economy, no lower limit to Gilt yields for BoE to buy them under APP scheme.
• U.S. jobless claims rise marginally, 269k up 3kvs 265k forecast; factory orders decline 1.5% in June.
• Eurozone/US bond yields fall after Britain restarts monetary easing.
• Atlanta fed’s GDPNow: US economy seen growing 3.7% in Q3 vs 3.6% Aug 3.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Construction Index Jul 53.2-previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1102 levels and currently trading at 1.1127 levels. The pair has made session high at 1.1149 and hit lows at 1.1111 levels. The euro declined against the dollar on Thursday as investors continued to balance positions ahead of Friday's crucial U.S. nonfarm payrolls report for July. Data showed U.S. jobless claims rose marginally in July. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 269,000 for the week ended July 30, the Labor Department said. Economists had forecast initial claims slipping to 265,000 in the latest week. The claims data had little impact on the market, ahead of Non-farm payrolls data. According to economists, nonfarm payrolls likely increased by a healthy 180,000 jobs in July after surging 287,000 the prior month. June's jump in job gains was viewed as unsustainable given anemic economic growth.
GBP/USD is supported in the range of 1.3054 currently trading at 1.3114 levels. It reached session high at 1.3155 and hit low at 1.3101 levels. Sterling slipped sharply lower against the dollar on Thursday after the Bank of England cut interest rates and restarted bond purchases in a move to mitigate the impact of Britain's vote to exit the European Union. The BoE cut rates 25 basis points to 0.25 percent and said it would buy 60 billion pounds of government debt to ease the blow from Britain's June 23 vote to leave the European Union. The Bank said most BoE policymakers expected to cut the rate even closer to zero later this year. Sterling sank 1.5 percent against the dollar in the first half hour after the decision and as BoE Governor Mark Carney started speaking. It was last down 1.4 percent at $1.3109.
USD/CAD is supported at 1.2985 levels and is trading at 1.3019 levels. It has made session high at 1.3054 and lows at 1.2995 levels. The Canadian dollar rose in the US session against its U.S. counterpart as higher oil prices and monetary policy easing by the Bank of England supported commodities related currencies. Oil prices edged nearly 3 percent as U.S. crude advanced firmly above the $40-per-barrel mark on short-covering and after a modest stockpile drop at the delivery hub for U.S. crude futures. Traders were braced for U.S. monthly jobs data due to be released on Friday, which may shift expectations for U.S. interest rates. Canada's international trade data for June and employment report for July are also awaited on Friday.
AUD/USD is supported around 0.7565 levels and currently trading at 0.7626 levels. It hit session high at 0.7640 and made session lows at 0.7596 levels. The Australian dollar held near recent peak against the dollar on Thursday as higher oil prices and cautious approach by investors ahead of U.S. monthly jobs data on Friday supported Aussie bulls. Earlier in the Asian session, the Aussie shrugged off disappointing retail sales data which only underscored the conditions that prompted the Reserve Bank of Australia (RBA) to cut rates earlier this week. Retail sales rose just 0.1 percent in June, well short of forecasts of a 0.4 percent increase. Adjusted for inflation, sales for the whole June quarter increased by 0.4 percent, the smallest rise in two years and a likely drag on economic growth in the quarter. The Australian dollar fell briefly following the data but was up 0.3 percent to $0.7627 in the late US session.
Equities Recap
European stocks closed higher in Thursday's trading session, as stocks rallied after the U.K. lowered its interest rates for the first time in seven years.
UK's benchmark FTSE 100 closed up by 1.52 percent, the pan-European FTSEurofirst 300 ended the day up by 0.64 percent, Germany's Dax ended up by 0.48 percent, France’s CAC finished the day up by 0.41 percent.
U.S. stocks wavered Thursday and finished barely higher as an interest rate cut by the Bank of England, a move intended to shore up the British economy, wasn't enough to get investors out of their recent cautious mode.
Dow Jones closed down by 0.02 percent, S&P 500 ended up by 0.02 percent, Nasdaq finished the day up by 0.13 percent.
Treasuries Recap
U.S. Treasury yields fell on Thursday, with some short- and medium-term issues hitting their lowest levels in more than three weeks, after the Bank of England cut interest rates for the first time since 2009 and said it would buy government bonds.
Yields on Treasuries maturing in two, three and five years hit their lowest levels in more than three weeks of 0.643 percent, 0.745 percent, and 1.017 percent, respectively. Yields move inversely to prices.
Benchmark 10-year U.S. yields hit their lowest level in three days at 1.484 percent, while 30-year Treasuries prices rose more than a full point, their yields also hitting a three-day low of 2.233 percent.
Commodities Recap
Oil prices rose nearly 3 percent on Thursday, with U.S. crude advancing firmly above the $40-per-barrel mark on short-covering and after a modest stockpile drop at the delivery hub for U.S. crude futures.
Brent crude settled up $1.19, or 2.8 percent, at $44.29 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.10, or 2.7 percent, to settle at $41.93 per barrel.
Gold prices turned higher on Thursday after the Bank of England cut interest rates for the first time since 2009, though gains were muted by strength in the dollar after the previous day's upbeat U.S. jobs data.
Spot gold was up 0.3 percent at $1,361.14 an ounce by 3:00 p.m. EDT (1900 GMT), off an earlier low of $1,348.50, while U.S. gold futures for December delivery settled up 0.2 percent at $1,367.40.
