Market Roundup
• US Oct CPI m/m +0.4% v 0.3% previous y/y 1.6% v 1.5% previous.
• Weekly jobless claims fall to 43-yr low (235k v 257k forecast) data bolsters Fed Dec rate hike.
• Philly Fed business index 7.6 v 8.0 forecast, prices paid & new order rise.
• Fed’s Yellen: Fed could raise interest rates 'relatively soon', gradually; sees strengthening growth, improving labor markets & inflation moving up.
• Fed’s Yellen: Fed prepared to adjust its outlook as the new administration takes shape.
• Atlanta Fed’s GDPNow: US economy seen growing 3.6% in Q4 vs 3.3% on Nov 15.
• Germany’s Schaeuble: on Brexit, there is no menu there is only the whole menu or none.
• ECB’s Mersch: ECB rates may be bottoming out but premature to talk about ECB reducing stimulus.
• EU agrees larger 2017 budget after marathon talks, Italy abstains.
• Euro yields fall after BOJ fires warning shot, Italy-German yield widest in over 2-yrs ahead of referendum.
• SNB's Maechler: CHF to weaken, question is when; Pair has been remarkably stable since Trump victory.
• Fonterra raises Farmgate milk forecast to NZD6/Kg of milk solids.
• Banxico hikes 50bps to 5.25%, eyes FX rate and pass-through to inflation.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is supported at 1.0553 levels and currently trading at 1.0627 levels. The pair has made session high at 1.0699 and hit lows at 1.0619 levels. The euro declined against the dollar on Thursday as the dollar gained strength after upbeat U.S. economic data and comments by U.S. Federal Reserve Chair Janet Yellen that bolstered the case for hiking interest rates next month. Federal Reserve Chair Janet Yellen told the Joint Economic Committee of Congress a rise in rates was likely relatively soon and saw no evidence of an acceleration in inflation or interest rates next year. U.S. consumer prices recorded their biggest increase in six months in October on rising gasoline costs and rents, suggesting a pickup in inflation that potentially clears the way for the Federal Reserve to raise interest rates in December. Prospects for a rate hike next month also got a boost from other data on Thursday showing first-time applications for unemployment benefits tumbling to a 43-year low last week and housing starts surging to a nine-year high in October. The euro was last trading near an 11-1/2-month low against the dollar at $1.0620, down 0.6 percent on the day.
GBP/USD is supported in the range of 1.2377 levels and currently trading at 1.2419 levels. It reached session high at 1.2466 and dropped to session low at 1.2408 levels. Sterling declined against dollar on Thursday after upbeat US economic data indicated that U.S. labor market is tightening and inflation is beginning to gain traction and as investors focused on the political risks facing Europe in the coming months. Earlier in the European session, the UK retail sales data gave the sterling a boost,but the upside was limited as economic data has played second fiddle to politics on currency markets in recent months. Sterling will be most sensitive to developments in the Brexit process. Likewise, the euro will be most sensitive to any developments suggesting the wave of populism that brought the Brexit vote and the U.S. election of Donald Trump is spreading into Europe and threatening to break up the euro zone. Sterling was last trading at $1.2410, having reached as high as $1.2507 after the retail sales data.
USD/CAD is likely to find support at 1.3450 levels and is trading at 1.3521 levels. It has made intraday high at 1.3525 and lows at 1.3426 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as oil declined and a jump in U.S. inflation boosted dollar left the door open to a Federal Reserve interest rate hike next month. U.S. consumer prices recorded their biggest increase in six months in October, suggesting a pickup in inflation that potentially clears the way for the Federal Reserve to raise interest rates in December. Oil prices settled slightly lower as much as 1 percent in the after-market session as a stronger dollar outweighed expectations of an OPEC deal to limit production. On the data front, Canadian small businesses slowed modestly in September, though borrowing picked up for medium-sized firms, a report showed, suggesting overall economic conditions were improving. The Canadian dollar was last trading at C$1.3524 to the greenback, weaker than Wednesday's close of C$1.3441.
USD/JPY is supported around 109.20 levels and currently trading at 110.13 levels. It peaked to hit session high at 110.20 and made session lows at 109.74 levels. The U.S. dollar rose sharply against the yen on Thursday as demand for greenback increased after data showed U.S. labor market is tightening and inflation is beginning to gain traction, which prompted investors to sell government debt. U.S. consumer prices posted their biggest increase in six months, while housing starts surged to a 9-year high and jobless claims fell to the lowest level since November 1973. The data releases came shortly after the publication of prepared remarks from Federal Reserve Chair Janet Yellen, who said U.S. overnight interest rates could be raised "relatively soon" if economic data keeps pointing to an improving labor market and rising inflation. She reiterated those statements in Congressional testimony during which she said the election of Donald Trump as U.S. president had done nothing to change the Fed's plans for a near-term rate increase.
Equities Recap
European equities edged higher on Thursday as basic resources stocks bounced back, while South African financial services group Investec climbed to a six-month high after reporting a jump in half-year profits.
UK's benchmark FTSE 100 closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 0.61 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day up by 0.5 percent.
The benchmark S&P 500 index rose to within a hair of its record high on Thursday as bank stocks got a boost from bets on higher interest rates and consumer discretionary stocks were helped by economic data and earnings.
Dow Jones closed up by 0.17percent, S&P 500 ended up 0.46 percent, Nasdaq finished the day up by 0.74 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday after data suggested the U.S. labor market is tightening and inflation is beginning to gain traction, which prompted investors to sell government debt.
The 10-year note fell 16/32 in price to yield 2.281 percent. The 30-year bond fell 1-10/32 in price to yield 2.992 percent. Yields on the 2-year note hit their highest since Jan. 5, rising to 1.034 percent.
Commodities Recap
Gold fell to a 5-1/2-month low on Thursday, giving up earlier gains as the dollar index tapped a 13-1/2-year high on strong U.S. economic data and comments by U.S. Federal Reserve Chair Janet Yellen that bolstered the case for hiking interest rates next month.
Spot gold was down 0.8 percent at $1,215.50 an ounce by 2:31 p.m. EST (1931 GMT), after falling to $1,210.73, the lowest since June 3.
U.S. gold futures settled down 0.6 percent at $1,216.90 per ounce.
Oil prices settled slightly lower on Thursday, then fell as much as 1 percent in the after-market session as a stronger dollar outweighed expectations of an OPEC deal to limit production.
Brent crude settled down 14 cents a barrel at $46.49, before falling further to $46.12 by 3:21 p.m. (2021 GMT), down 51 cents, or 1.1 percent.
U.S. West Texas Intermediate crude closed 15 cents lower at $45.42. It fell in post-settlement by 56 cents, or 1.2 percent, to $45,01.
