Market Roundup
• UK holds rate steady, BoE ditches rate cut signal after Brexit hit to sterling, Pound rises, government bond prices fall.
• UK court: Brexit needs parliament's approval, complicates govt plans,
Government to appeal against High Court ruling.
• US jobless claims 265k v 258k forecast, rise to near 3-month high; 4-week avg to 257.75k from 253k.
• US Q3 labor costs +0.3% v 1.3% forecast, productivity +3.1% v 2% forecast, -0.2% previous.
• US Markit Comp final PMI unchanged at 54.9, Svcs unchanged at 54.8.
• US factory orders +0.3% in Sept; order books shrink.
• US ISM N-Mfg PMI 54.8 v 56 forecast, N-Mfg employment index 53.1 v 57.2 previous, prices paid 56.6 v 54.0 previous.
• Weidmann: Risks of ultra-easy ECB policy increasingly clear.
• Latin American currencies seesaw on US election uncertainty, Clinton shows slight lead in US election; MXN ST vol steady by highs.
• Oil dips on U.S. inventory surge, doubts on OPEC resolve; Market hit 5-week lows on Wednesday on U.S. stock build
Looking Ahead - Economic Data (GMT)
• 00:30 Australia Retail Sales MM* Sep forecast 0.4%, 0.40%-previous
• 00:30 Australia Retail Trade* Q3 forecast 0.4%, 0.40%- previous
• 23:50 Japan Foreign Bond Investment w/e 773.6b- previous
• 23:50 Japan Foreign Invest JP Stock w/e 85.3b- previous
Looking Ahead - Events, Other Releases (GMT)
• 00:30 Australia- Reserve Bank of Australia statement on monetary policy
Currency Summaries
EUR/USD is likely to find support at 1.1058 levels and currently trading at 1.1107 levels. The pair has made session high at 1.1120 and hit lows at 1.1058 levels. The euro rose against dollar on Thursday as recent dollar rise was halted after soft US non -manufacturing data raised concerns about the health of the world's biggest economy. U.S. services industry activity cooled in October amid a slowdown in new orders and hiring, suggesting a moderation in economic growth early in the fourth quarter. The Institute for Supply Management (ISM) said its non-manufacturing index fell 2.3 percentage points to a reading of 54.8 percent in October. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of the economy. Investors have been unnerved in recent days by signs that the U.S. presidential race between Democrat Hillary Clinton and Republican Donald Trump was tightening just days before the vote on Tuesday. The U.S. dollar hovered near multi-week lows against a basket of major currencies, on uncertainty surrounding the outcome of the U.S. presidential election, ending a morning reprieve that saw the dollar stabilize.
GBP/USD is supported in the range of 1.2400 and currently trading at 1.2461 levels. It reached session high at 1.2495 and hit low at 1.2416 levels. British pound rose sharply against the greenback on Thursday to hit four-week high as UK's High Court ruled that the government needed parliamentary approval to trigger Brexit and the Bank of England scrapped plans to cut interest rates. The court ruling offered hope to markets worried that Prime Minister Theresa May's cabinet is set on an economically disruptive "hard Brexit". Data showed UK service sector in October increase, according to a survey which further dimmed the chance of a Bank of England interest rate cut on Thursday. The Markit/CIPS UK Services Purchasing Managers Index (PMI) rose to 54.5 from 52.6 in September, marking its highest level since January and topping all forecasts of economists that pointed to a slight fall to 52.4. Sterling climbed as much as 1.5 percent to hit $1.2494, its strongest since Oct. 7 - the day a "flash crash" briefly sent it plunging 10 percent in a matter of minutes .By 1630 GMT it had eased back to $1.2440, but that still left it over 1 percent up on the day and on track for its best week in eight months after a more than 2 percent climb.
USD/CAD is supported at 1.3360 levels and is trading at 1.3387 levels. It has made session high at 1.3401 and lows at 1.3375 levels. The Canadian dollar strengthened slightly against its U.S. counterpart on Thursday as dollar declined on soft US non-manufacturing data and risk appetite stabilized ahead of domestic employment and trade data on Friday. Canadian dollar also found strength after British court ruled that parliament must approve a government decision to trigger Britain's exit from the European Union. Oil prices extended their recent slide as investors fretted over a record weekly surge in U.S. crude inventories and many remained skeptical about whether OPEC will actually implement its planned output cap. Canada's employment and trade reports are due on Friday and will be watched closely by investors for clues on the interest rate outlook after the Bank of Canada acknowledged recently it had considered a rate cut at its policy meeting. The Canadian dollar was last trading at C$1.3395 to the greenback, or 74.70 U.S. cents, slightly stronger than Wednesday's close of C$1.3395, or 74.65 U.S. cents.
USD/JPY is supported around 102.80 levels and currently trading at 104.41 levels. It peaked to hit session high at 103.48 and made session lows at 103.00 levels. The U.S. dollar declined against the yen on Thursday on as demand for the safe-haven currencies increased after weak US non-manufacturing data depressed the appetite for the greenback. Also uncertainty heading into next week's U.S. Presidential election gave support to the front-end of the market as investors sought out the safety haven assets. Democrat Hillary Clinton maintained her narrow lead over Republican rival Donald Trump just days ahead of the Nov. 8 election, according to two polls released on Thursday. Overall, Clinton has been viewed as the candidate of the status quo, while many fear that a victory for Trump would carry global risks to trade and growth. The dollar was last down just 0.14 percent against the yen at 103.15 yen after earlier falling 0.7 percent to a one-month low of 102.56 yen. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.09 percent on the day at 97.308. But that was an improvement from an earlier 0.3 percent drop to a more than three-week low of 97.041.
Equities Recap
European shares ended flat on Thursday, giving up early gains as a London court ruling complicated the Brexit process, boosting the pound and sending British blue chips to a five-week low.
UK's benchmark FTSE 100 closed down by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.07 percent, Germany's Dax ended down by 0.4 percent, France’s CAC finished the day flat.
The S&P 500 fell for an eighth straight session on Thursday, its longest losing streak since the 2008 financial crisis, as Facebook shares weighed and investors grappled with uncertainty over next week's U.S. presidential election.
Dow Jones closed down by 0.15 percent, S&P 500 ended down 0.44 percent, Nasdaq finished the day down by 0.93 percent.
Treasuries Recap
Longer-dated U.S. Treasury prices fell on Thursday after the Bank of England indicated that inflation is likely to rise further, while uncertainty over next week's U.S.
Presidential election propped up shorter-dated debt.
Benchmark 10-year notes ended down 5/32 in price to yield 1.82 percent, up from 1.80 percent late on Wednesday.
The yield curve between five-year notes and 30-year bonds steepened to 134 basis points on Thursday, the steepest since June 27.
The curve between two-year notes and 10-year notes also steepened to as much as 101 basis points, the largest yield gap since May 12.
Commodities Recap
Oil prices settled down more than 1 percent on Thursday as investors reeled from a record weekly surge in U.S. crude inventories, and remained skeptical about whether OPEC can actually implement its planned output cap.
U.S. crude fell 68 cents, or 1.5 percent, to settle at $44.66 per barrel. At one point, oil had fallen more than $1 a barrel and hit a session low of $44.37.
Brent crude was down 51 cents, or 1.1 percent, at $46.35 a barrel. It hit a session low of 45.99.
Gold edged higher on Thursday in response to a lower dollar and also uncertainty about the outcome of a tight U.S. presidential race.
Spot gold, lower initially, rose 0.4 percent to $1,302.17 an ounce by 2:52 p.m. EDT (1852 GMT), remaining below Wednesday's one-month high of $1,307.76.
U.S. gold futures settled down 0.4 percent at $1,303.30 per ounce.
