Market Roundup
• US ADP private sector adds 172k jobs in June beats forecast 159k.
• US jobless claims beat, 254k v 270k forecast, underscores labor market strength.
• Fitch: Macroeconomic volatility likely to force Fed to delay further rate hikes and increases likelihood of a "lower for longer" interest rate scenario.
• ECB Minutes: risks still tilted to downside though more balanced than before.
• ECB Minutes: Protracted period of low inflation a continued concern.
• U.S. crude inventories fall for seventh straight week, crude ends lower by 5%.
• UK Conservatives to choose either May or Leadsom to succeed PM Cameron, bookies favor May.
• UK banks spared downgrades by S&P in mass outlook cull ( HSBC, Lloyd’s, outlook cut to negative from stable).
• S&P - "Believe that the UK economy is now entering a correction phase".
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Bank Lending YY Jun 2.20%-previous
• 23:50 Japan Current Account NSA JPY* May forecast 1750.0b, 1878.5b- previous
• 00:00 Japan Overtime Pay May 1.0%- previous
• -- :-- JP Economy Watchers Poll* Jun 43- previous
Looking Ahead - Events, Other Releases (GMT)
No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1054 levels. The pair has made session high at 1.1100 and hit lows at 1.1054 levels. The euro declined against the dollar on Thursday following upbeat U.S. employment data. U.S. private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week, suggesting a rebound in job growth after May's paltry gains. The ADP national employment report showed that 172,000 jobs were added in the private sector in June, surpassing economists' expectation of 159,000. Thursday's reports underscored the economy's strength and supported views that the United States would weather the impact of last month's British referendum to leave the European Union. The U.S. central bank's policymakers decided in June that interest rate hikes should stay on hold until they have a handle on the consequences of Britain's vote to leave the European Union, the minutes of the Federal Open Market Committee showed. Traders are awaiting further clues on the outlook for Federal Reserve policy from Friday's U.S. non-farm payrolls (NFP) data, seen as a barometer of the economy's health.
GBP/USD is supported in the range of 1.2830 currently trading at 1.2900 levels. It reached session high at 1.3030 and hit low at 1.2875 levels. Sterling declined sharply against the dollar on Thursday as more signs of political and economic turbulence after Britain's vote to leave the European Union weighted on the pair. The British pound which fell below $1.30 against the U.S. dollar for the first time since 1985 on Wednesday again turned lower. It was last down 0.3 percent to $1.2898.Sterling is down more than 14 percent since Britain voted to exit the European Union on June 23, with some analysts expecting it to drop to $1.20 in coming months as the Bank of England prepares to ease monetary policy. Investors focus now shifts to Friday's payrolls report, especially after a shockingly weak May report raised concerns about the recovery of the economy and threw the Fed off track from its plans to raise rates in the near term.
USD/CAD is supported at 1.2900 levels and is trading at 1.3015 levels. It has made session high at 1.3020 and lows at 1.2870 levels. The Canadian dollar declined against its U.S. counterpart on Thursday as Canadian dollar was weighted down after oil prices slumped 5 percent, wiping out early gains, after the U.S. government reported that the drop in weekly crude stockpiles was close to analysts' forecasts, but far less than the decline expected by market optimists. U.S. private payrolls increased more than expected in June and fewer Americans applied for unemployment benefits last week, suggesting a rebound in job growth after May's paltry gains, two separate reports showed. That added to services industry data from Wednesday that showed surging new orders and hiring, suggesting the U.S. economy regained speed in the second quarter. Meanwhile, the value of Canadian building permits issued in May unexpectedly dropped by 1.9 percent from April, Statistics Canada data indicated on Thursday.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7477 levels. It hit session high at 0.7522 and made session lows at 0.7471 levels. The Australian dollar declined against its U.S. counterpart on Thursday as commodities related currencies received a bump from falling oil prices and positive U.S. data, though U.S. equities and long-dated Treasury yields fell amid investor caution ahead of Friday's non-farm payrolls report. The Aussie dollar last traded at $0.7483, having declined from a $0.7510 after the release of US economic data. The main data in the coming is U.S. non-farm payrolls numbers due on Friday, which is expected to show employers in the world's largest economy added 175,000 jobs last month. Traders said even positive data from Friday's jobs report was unlikely to sway the Federal Reserve to hike interest rates this year given global growth concerns.
Equities Recap
European shares rose on Thursday after a three-day losing streak, buoyed by gains in major consumer goods stocks such as Associated British Foods and Danone.
UK's benchmark FTSE 100 closed up 1.3 percent, the pan-European FTSEurofirst 300 ended the day up by 1.04 percent, Germany's DAX ended up by 0.6 percent, France’s CAC finished the day up by 0.9 percent.
The S&P 500 and Dow industrials slipped on Thursday, weighed by energy shares, but gains in Costco and tech shares lifted the Nasdaq Composite.
Dow Jones closed down by 0.14 percent, S&P 500 ended up by 0.10 percent, Nasdaq finished the day up by 0.35 percent.
Treasuries Recap
U.S. 30-year Treasury yields dipped slightly while other maturities were little changed on Thursday on nervousness ahead of Friday's U.S. non-farm payrolls report for June and its potential short-term impact on Federal Reserve rate hike expectations.
U.S. 30-year Treasuries were last up 10/32 in price to yield 2.138 percent, while benchmark 10-year Treasuries were last unchanged in price to yield 1.385 percent.
Commodities Recap
Gold slips as U.S. jobs data supports the dollar, ending a six-day rally that pushed the precious metal to more than a two-year high on concerns about Britain's vote to leave the European Union.
Spot gold was off 0.2 pct at $1,360.26 an ounce by 2:41 p.m. EDT (1841 GMT), down from Wednesday's peak of $1,374.91, the highest since March 2014.
U.S. gold futures for August delivery settled down $5, or 0.4 percent, at $1,362.10 per ounce.
Oil prices fell 5 percent to two-month lows on Thursday after the U.S. government reported a weekly crude draw within analysts' forecasts that disappointed market bulls expecting larger declines.
Brent crude futures settled down $2.40, or 5 % percent, at $46.40 per barrel. That was the biggest percentage loss for Brent in a day since Feb. 9.
The session low of $46.15 marked a bottom for Brent since May 11 and tripped the technical support of $46.69 held since June 27.
U.S. crude futures settled down $2.29, or 4.8 percent, at $45.14. They hit a two-month low of $44.87 earlier, tripping the June 27 bottom and support of $45.83.
