Market Roundup
- BOE keeps rates/APP steady, members vote 8-1 (McCafferty) to keep rates steady, market expected 7-2.
- BOE's Carney likely timing of first rate hike drawing closer, timing will be data dependent.
- BOE's Carney policy of MPC is to reinvest QE funds at least until rates rise, will not see QE assets until rates have risen to a level from which they can be materially cut.
- BOE's Carney sterling has not taken away requirement for interest rate hikes ahead.
- BOE's Carney this is not a debt fuelled, consumer recovery.
- BOE QIR GBP appreciation to push down inflation for some time, poses downside risk to near-term path.
- BOE QIR falls in energy prices to bear down on inflation until at least mid-2016.
- Tsipras and Hollande want bailout agreed after August 15.
- US Initial Jobless Claims w/e 270k, f/c 273k, 267k-previous.
- US Jobless Claims 4-Wk Avg w/e 268.25k, 274.75k-previous.
- In blow to Rousseff, Brazil lawmakers approve new wage hikes, BRL weakens to 12 year low.
- Brazil's Rousseff approval rating hits new low (8%), 66% say she should face impeachment.
- BCB says outlook for inflation to converge to 4.5% target at YE '16 has strengthened.
Looking Ahead - Economic Data (GMT)
- 23:30 Australia AIG Construction Index Jul 46-previous
- 01:30 Australia Housing Finance* Jun f/c 5%, -6.10%-previous
- 01:30 Australia Invest Housing Finance* Jun -3.20%-previous
- 23:50 Japan Foreign Reserves Jul 1242.90b-previous
Looking Ahead - Events, Other Releases (GMT)
- 03:00 JP- Bank of Japan Policy Statement/Kuroda Press Conference
Currency Summaries
EUR/USD is supported around 1.0845 levels and currently trading at 1.0928 levels. It has made session high at 1.0936 and lows at 1.0870 levels. The dollar edged lower against euro in choppy trading on Thursday, in a week that has seen the greenback on a generally firmer trend, as investors balanced their positions ahead of Friday's crucial U.S. nonfarm payrolls report. Euro fell initially after US jobs data was released, after the market stabilized the pair bounced to hit session high at 1.0936. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 270,000 for the week ended Aug. 1, the Labor Department said on Thursday. Claims for the prior week were unrevised. It was the 22nd consecutive week that claims held below the 300,000 threshold, which is associated with a strengthening labor market. Economists had expected claims to rise to 273,000 last week. To the upside, immediate resistance can be seen at 1.0945. To the downside, immediate support level is located at 1.0870 levels.
GBP/USD is supported around 1.5460 levels and currently trading at 1.5512 levels. It has made session high at 1.5545 and low at 1.5564 levels. Sterling fell sharply on Thursday after just one Bank of England policymaker voted for higher interest rates at a meeting where the bank warned the strong currency and weak energy prices would keep inflation subdued well into next year. Sterling fell to a low of $1.5471, having traded at $1.5600 beforehand, before recovering to trade at $1.5525, still down 0.5 percent on the day. BoE Governor Mark Carney told a press conference that despite sterling's persistent rise - up 20 percent on a trade-weighted basis since March 2013 - the case for a rate hike was very much intact. Nevertheless, any lingering expectations of a first rate hike occurring this year disappeared, driving investors to sell the currency. However, The Bank of England pointed to a possible increase in interest rates early next year, after only one of its top policymakers backed an immediate move and the Bank forecast a slow pick-up in inflation from zero. To the upside, immediate resistance can be seen at 1.5525. To the downside, immediate support level is located at 1.5480 levels.
USD/JPY is supported around 124.00 levels and currently trading at 124.74 levels. It has made session high at 125.00 and low at 124.25 levels. After hitting session highs at 124.98, the pair started to fall drastically, as investors closed their positions ahead of Friday's crucial U.S. payrolls data. The pair hitting lows at 124.53 rebound to trade around 124.65 levels. Overall, dollar strength has reinforced on expectations that the U.S. Federal Reserve will raise interest rates next month. Investors are bracing for Friday's U.S. employment report, which economists expect to show that 223,000 jobs were created in July. On Thursday, U.S. jobless claims rose from the previous week, but the trend is clearly positive. Thursday's claims report showed the number of people still receiving benefits after an initial week of aid fell 14,000 to 2.26 million in the week ended July 25. The dollar slipped 0.2 percent versus the yen, to 124.67 yen. In the coming Asian session, the Bank of Japan's (BoJ) monetary policy decision is due. The Central Bank of Japan is expected to keep the monetary policy unchanged. To the upside, immediate resistance can be seen at 125.00. To the downside, immediate support level is located at 125.50 levels.
USD/CAD is supported around 1.3100 levels and currently trading at 1.3128 levels. It has made session high at 1.3196 and low at 1.3122 levels. The Canadian dollar was stronger against its U.S. counterpart in Thursday's New York session, after the US Jobless data the pair hit high at 1.3192 later in the mid New York session dollar lost its bullish momentum. The pair dived from 1.3196 to hit daily lows at 1.3100 levels. The Canadian dollar was trading at C$1.3110 to the greenback in the late American hours. Meanwhile, U.S. employment reports and Canadian Employment Change due on Friday. Economists expect the U.S. economy to have added 223,000 jobs in July and for Canada to have added 5,000.A strong print on the U.S. jobs data would bolster the assumption that the U.S. Federal Reserve will hike rates starting in September and make the Canadian dollar less attractive. The Federal Reserve upgraded its assessment of the jobs market, describing employment gains as "solid." The Fed, which is expected to raise interest rates this year for the first time in nearly a decade, also said labor market slack had diminished "since early this year." To the upside, immediate resistance can be seen at 1.3160. To the downside, major support level is located at 1.3100 levels.
Equities Recap
European stocks closed lower on Thursday ahead of US employment payrolls. UK's benchmark FTSE 100 closed lower by 0.1 percent, the pan-European FTSEurofirst 300 closed, down by 0.8 percent, Germany's Dax closed down by 0.4 percent, France's CAC closed down at 0.1 percent, Italy's FTSE MIB closed down by 0.4 percent. Meanwhile, Spain's IBEX 35 was up by 0.2 percent at close.
U.S. stocks closed lower on Thursday in the backdrop of media stocks slump. Dow Jones closed down by 0.67 percent, S&P 500 closed down by 0.76 percent, Nasdaq closed up by 1.62 percent.
Treasuries Recap
Prices of U.S. Treasuries rose on Thursday as cautious traders squared positions ahead of a key U.S. jobs report and reduced inflation fears spurred buying of longer-dated issues.
U.S. 30-year Treasuries prices were last up 25/32 in price to yield 2.90 percent compared with a yield of 2.94 percent late on Wednesday.
Benchmark 10-year notes were last up 10/32 in price to yield 2.23 percent, compared with a yield of 2.27 percent on Wednesday.
Three-year notes were last up 2/32 in price to yield 1.06 percent, down from a yield of 1.08 percent on Wednesday.
Commodities Recap
Oil set multi-month lows on Thursday as investors and traders sought clues about the market's next bottom after a large drop in U.S. crude inventories failed to boost prices.
Brent, the global oil benchmark, settled down 7 cents at $49.52 a barrel, after setting a six-month low at$48.88.U.S. crude finished 49 cents lower at $44.66 after touching a 4-1/2 month bottom at $44.20.
Gold edged higher on Thursday, supported by the retreating U.S. dollar and a tumble in global equities as traders awaited U.S. employment data seen as key to determining when the Federal Reserve may raise interest hikes.
Spot gold was up 0.5 percent at $1,090.11 an ounce by 1759 GMT (1:59 p.m. EST). The metal breached important technical support at $1,100 after a deep rout in late July pushed it as low as $1,077, its weakest since February 2010.
U.S. gold for December delivery rose 0.4 percent to settle at $1,090.10 an ounce.
