Market Roundup
- U.S. jobless claims rise more than expected, 285k vs 280k forecast.
- U.S. Q4 non-farm productivity falls 3.0 pct, labor costs rise 4.5%.
- U.S. December factory orders post biggest drop (-2.9%) in a year.
- Fed's Kaplan (Dallas): energy situation may get worse before getting better, is watching USD.
- BOE keeps rate (0.5%) & APP (GBP 375bn) steady, vote to hold rate steady was unanimous.
- BOE's McCafferty dials back his vote for higher rates, sparks early GBP selloff.
- Sterling firms as BoE's Carney says next rate move likely to be a hike.
- BOE cuts growth outlook, says nominal wage growth being pushed down by low CPI.
- BOE's Carney: All BoE rate setters still expect next rate move will be a hike, MPC has not discussed cuts or use of negative rates.
- BOE's Carney says MPC doesn't expect to sell gilt holdings until rates are around 2%.
- ECB's Mersch: we may be entering a world where established macroeconomic relationships no longer hold with the regularity we once thought.
- U.S. oil, gas industry sheds 100,000 jobs in slump (between Oct '14 and Jan '16): Kemp.
- Morgan Stanley lowers 2016 Brent price forecast to USD 30 from 49.
Looking Ahead - Economic Data (GMT)
- 22:30 Australia AIG Construction Index * Jan 46.8-previous
- 23:50 Japan Foreign Reserves*Jan 1233.20b- previous
- 00:30 Australia Retail Sales MM* Dec forecast 0.5%, 0.40%- previous
- 00:30 Australia Retail Trade* Q4 forecast 0.9%, 0.60%- previous
- 05:00 Japan Coincident Indicator MM* Dec -1.7- previous
- 05:00 Japan Leading Indicator*Dec -0.3- previous
Looking Ahead - Events, Other Releases (GMT)
- 00:30 Australia- Reserve Bank of Australia releases quarterly statement on monetary policy
Currency Summaries
EUR/USD is likely to find support at 1.1140 levels and currently trading at 1.1214 levels. The pair has made session high at 1.1221 and hit lows at 1.1155 levels. The U.S. dollar extended decline against euro on Thursday as investors sold off the greenback for the second on continued skepticism that the Federal Reserve would not be able to hike interest rates this year. Many expected that divergence in monetary policy between Fed and ECB and Bank of Japan would strengthen dollar. However, dollar reversed course after dovish comments from New York Fed William Dudley to MNI on Wednesday and recent weak U.S. economic data. The euro rose jumped more than 1 percent to hit highest in 15 weeks at $1.1239 against the dollar, while the dollar fell more than 1 percent to a two-week low against the yen of 116.525 yen.
GBP/USD is supported in the range of 1.4512 and currently trading at 1.4587 levels. It reached session high at 1.4671 and hit low at 1.4556 levels. The British pound rose against dollar on Thursday, putting its strongest performance against greenback since October 2009, after Bank of England chief Mark Carney put an end to rate hike talk. The British pound had earlier dipped, declining by 1 percent against the euro hitting two-week low after minutes from the BoE's latest policy meeting showed the lone central banker changed his view on interest rate hike. In the early European session pound was trading up 0.1 percent on the day at $1.4610. It had earlier touched $1.4672, its strongest since early January, after the dollar fell on U.S. data showing jobless claims rising more than expected. The currency has also been helped by signs of a deal with Brussels later this month giving Prime Minister David Cameron some help in keeping Britain in the European Union at a referendum. Against the euro, sterling was 0.6 percent down on the day at 76.55 pence, having earlier touched 77.02.
USD/CAD is supported at 1.3600 levels and is trading at 1.3750 levels. It has made session high at 1.3757 and lows at 1.3638 levels. The Canadian dollar jumped to 8 week high against US dollar on Thursday as the crude oil rebounded for the second day and on growing skeptism that Federal Reserve would not hike interest rates due to weak global economic growth. The currency has rallied more than 7 percent since Jan. 20, helped by expectations that the Bank of Canada will not cut rates in the near term. The U.S. dollar declined sharply against major pairs after a collapse in expectations of a further rise in U.S. interest rates this year brought down the dollar to its biggest daily fall in over two months on Wednesday. On the data front, Canadian employment data for January and trade data for December are due on Friday, meanwhile, US is set to release jobs data. The currency's strongest level of the session was C$1.3934, while its weakest was C$1.3757.
AUD/USD is supported around 0.7145 levels and currently trading at 0.7195 levels. It hit session high at 0.7248 and made session lows at 0.7191 levels. The Australian dollar held ground near one-month highs against US dollar on Thursday after a sharp fall in dollar for the second consecutive day and a strong rebound in oil prices ignited renewed risk appetite. US dollar was broadly weaker on the day as the dollar was sold off across the board on speculation the Federal Reserve will not hike interest rate this year. Reserve Bank of Australia will be concerned slightly as the central bank had been banking on a weak currency to stimulate the economy. Reserve Bank of Australia releases its quarterly statement on monetary policy on Friday and is expected to leave the door open to further cuts in interest rates if needed. The Australian dollar was up at $0.7198, after a 1.8 percent rally overnight saw it punch through major resistance around $0.7140 amid heavy short-covering.
Equities Recap
European shares declined on Thursday as weak U.S. data fueled concerns that U.S economy may be slowing down, with export-oriented auto stocks leading the decline and Credit Suisse tumbling after reporting a full-year loss.
UK's benchmark FTSE 100 closed up by 1.11 percent, the pan-European FTSEurofirst 300 ended the day down by 0.16 percent, Germany's Dax closed down at 0.35 percent, and France's CAC finished the day flat.
US stocks closed mildly higher on Thursday after wavering between gains and losses ,as Wall Street mediated on a batch of weaker than economic reports
Dow Jones closed up by 0.48percent, S&P 500 ended the day up by 0.15 percent, Nasdaq finished the day up by 0.09 percent.
Treasuries Recap
U.S. Treasuries' yields closed lower on Thursday as data showed weaker U.S. growth and investors closed trades ahead of Friday's closely watched employment report.
Benchmark 10-year notes gained 6/32 in price to yield 1.886 percent, down from 1.88 percent late on Wednesday. The yields have tumbled from 2.30 percent this year.
The five-year, 30-year yield curve steepened to a three-month high of 145 basis points on Thursday, and is up from a nine-month low of 122 basis points on Dec. 28.
Commodities Recap
Oil declined in volatile trade on Thursday as doubts arised whether oil producers would agree to cut output.Brent futures settled 1.6 percent, or 58 cents, lower at $34.46 a barrel, after trading between $34.15 and$35.84.
U.S. crude also ended lower, down 56 cents, or 1.7 percent, at $31.72 after swinging between $31.53 and $33.60.
Gold gained sharply for the second straight day on Thursday, reaching three-month highs as the dollar continued to decline on concerns that the U.S. Federal Reserve will not raise interest rates this year due to global economic and financial headwinds.
Spot gold was up more than 1 percent at $1,155 an ounce at 2:20 p.m. EST (1920 GMT), after touching $1,156.60 earlier in the session, its highest since Oct. 29. That built on Wednesday's 1.2 percent rise.
U.S. gold futures for April delivery settled up 1.4 percent at $1,157.5 an ounce.
