Market Roundup
• Risk hit as Deutsche Bank dips 7%, traditional safe havens USTs, JPY & CHF rise.
• US Q2 GDP growth revised up to +1.4%; Business investment up 1%, Cons spending revised lower.
• US jobless claims rise less than expected, 254k vs 260k forecast, 251k- previous.
• US Q2 PCE unchanged at 2%, Core PCE unchanged at 1.8%, on target v forecast.
• U.S. August pending home sales fall 2.4% vs 0% forecast, inventory remains weak.
• Fed's Lockhart: wants to see more improvement before hiking rates.
• Fed's Harker: backs December rate hike if the economy stays on track.
• ECB's Nowotny: Europe not facing new banking crisis, EUR as a CCY was never in danger.
• Eurozone economic sentiment much better than expected in Sept; 104.9 vs forecast 103.5.
• Iraq's OPEC revolt shows Saudi-Iran oil deal fragility, Iraq's Luaibi complains about OPEC o/p estimates.
• Banxico lifts rate 50bps to 4.75%, will keep extremely vigilant on fx rate 7 pass-through to inflation.
Looking Ahead - Economic Data (GMT)
• 23:30 Japan All Household Spending YY Aug forecast -2.5%, -0.5%-previous
• 23:30 Japan All Household Spending MM Aug forecast -1%, 2.5%- previous
• 23:30 Japan CPI, Core Nationwide YY Aug forecast -0.4%, -0.5%- previous
• 23:30 Japan CPI, Overall Nationwide* Aug -0.4%- previous
• 23:30 Japan Unemployment Rate Aug forecast 3%, 3%- previous
• 23:50 Japan Industrial output prelim mm Aug forecast 0.5%, -0.4%- previous
• 00:00 New Zealand NBNZ Business Outlook Sep 15.5%- previous
• 00:00 New Zealand NBNZ Own Activity Sep 33.7%- previous
• 01:00 Australia HIA New Home Sales m/m Sep -9.7%- previous
• 01:30 Australia Private Sector Credit* Aug 0.4%- previous
• 01:30 Australia Housing Credit* Aug 0.5%- previous
• 01:45 China Caixin Mfg PMI Final Sep forecast, 50.1, 50- previous
• 05:00 Japan Construction Orders YY* Aug -10.9%- previous
• 05:00 Japan Housing Starts YY* Aug forecast 7.1%, 8.9%- previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan- BoJ will release summary of discussions at its rate review on Sept 20-21, when it rebooted its policy framework and shifted its target to interest rates from the pace of money printing
Currency Summaries
EUR/USD is supported at 1.1180 levels and currently trading at 1.1222 levels. The pair has made session high at 1.1249 and hit lows at 1.1196 levels. The euro initially declined against the dollar on Thursday after U.S. second-quarter economic growth and weekly jobless claims but quickly pared its losses after further data showed contracts to buy previously owned U.S. homes dropped in August to their lowest level since January. Deutsche Bank tumbled after a report said clients have withdrawn excess cash and positions held in the largest German lender. But the mood elsewhere was sour as Deutsche Bank, despite saying it was confident clients know its financial position is stable, saw its U.S.-traded shares hit a record low of $11.185. The stock was last down 6.7 percent at $11.48. The euro was last up 0.12 percent against the U.S. dollar at $1.1220, reversing losses sustained earlier in the session. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.06 percent at 95.494.
GBP/USD is supported in the range of 1.2900levels and currently trading at 1.2956 levels. It reached session high at 1.3015 and dropped to session low at 1.2956 levels. The British pound declined against dollar on Thursday as the pair was weighted down on expectations that the Bank of England might further ease monetary policy in coming months. Investors worry that an exit from Europe's single market, triggered by the June vote to leave the EU, will drag Britain into a recession and blow out its ballooning current account deficit, already among the highest in the developed world at about 5 percent of gross domestic product. On Friday, Britain will release second-quarter current account deficit figures and forecasts are for a slight narrowing. But analysts expect foreign investments to be hit as the economy slows in the medium term, widening the external funding gap and potentially dragging the currency lower. Sterling was last trading at $1.2965, having struck a five-week low of $1.2915 on Sept. 23, its lowest since mid-August. The euro was slightly higher at 86.355 pence.
USD/JPY is supported around 100.80 levels and currently trading at 101.07 levels. It peaked to hit session high at 101.84 and made session lows at 100.83 levels. The U.S. dollar initially rose against the yen on Thursday on reduced appetite for the safe-haven currency, but gave up most of the ground as concerns surrounding the European banking sector helped the Japanese yen gain against the greenback. The Japanese yen, which are perceived to be safe-havens, benefited from the worries surrounding Germany's biggest lender. U.S.-listed shares of Deutsche Bank, which is fighting a $14 billion U.S. demand to settle claims over mortgage-backed securities, fell by more than 8 percent after touching record lows in Europe this week. The dollar eased against the yen from a more than 1 percent gain and an eight-day high of 101.84 yen and was last trading at 101.06.
USD/CAD is likely to find support at 1.3047 levels and is trading at 1.3142 levels. It has made intraday high at 1.3184 and lows at 1.3055 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as the buzz from a deal between major oil producers to limit output wore off and investors fretted about the health of Deutsche Bank. Deutsche Bank, whose U.S.-listed shares hit a record low on fresh concerns about the stability of Germany's largest lender, pressured risk-friendly currencies including the Canadian dollar. Oil prices jumped more than 1 percent, adding to a sharp jump on Wednesday, when OPEC said its members had agreed to cut output for the first time in eight years. The Canadian dollar settled at C$1.3149 to the greenback, or 76.05 U.S. cents, weaker than Wednesday's close of C$1.3109, or 76.28 U.S. cents.
Equities Recap
European shares ended flat on Thursday as losses among drugmakers offset energy share gains following an OPEC deal to cut output, while Commerzbank slid after the German lender froze dividend payments.
UK's benchmark FTSE 100 closed up by 1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.09 percent, Germany's Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.3 percent.
Wall Street dropped on Thursday, weighed down by Apple as well as selling in Wells Fargo, Citigroup and other major banks as investors worried about the health of Deutsche Bank.
Dow Jones closed down by 1.07 percent, S&P 500 ended down by 0.93 percent, Nasdaq finished the day down by 0.93 percent.
Treasuries Recap
U.S. Treasury debt yields retreated on Thursday, as risk appetite faded amid fresh concerns about Deutsche Bank triggered by a news report saying a number of funds that clear derivative trades with the German lender have withdrawn excess cash and positions.
In late trading, U.S. benchmark 10-year Treasury notes were up 21/32 in price for a yield of 1.558 percent, down from 1.567 percent late on Wednesday.
U.S. 30-year bonds rose 7/32 in price, yielding 2.277 percent, down from Wednesday's 2.288 percent.
On the front end of the curve, U.S. two-year notes were flat in price for a yield of 0.742 percent, down from 0.754 percent on Wednesday.
Commodities Recap
Gold was up a shade on Thursday after the dollar flip-flopped in the wake of mixed U.S. data and as scepticism grew over whether OPEC members would be able to implement production cuts that could fuel inflation.
Spot gold was up 0.18 percent at $1,323.61 an ounce by 2:02 p.m. EDT (1802 GMT), having touched an overnight high of $1,325.80.U.S. gold futures settled up 0.2 percent at $1,326.
Oil jumped more than 1 percent on Thursday, with Brent nearing $50 a barrel on optimism over OPEC's first planned output cut in eight years, although gains were limited by doubts the reduction would make a substantial dent in the global crude glut.
Brent crude settled up 55 cents, or 1.1 percent, at $49.24 a barrel. It hit a three-week high at $49.81.
U.S. West Texas Intermediate crude rose 78 cents, or 1.7 percent, to settle at $47.83 after touching a one-month high at $48.32.
