- EUR/USD rise limited to 1.1244 from 1.1205 ahead of ECB.
- GBP/USD undermined by weaker than expected PMI data, tests 1.5235 levels.
- CHF remains under pressured. USD/CHF made 0.9706 highs, EUR/CHF at 1.0902 top.
- UK August Markit/CIPS Service PMI 55.6 vs previous 57.4. 57.6 expected.
- Euro zone August Markit Service final PMI 54.4 vs previous 54.3. 54.3 expected.
- Euro zone August Markit Composite final 54.3 vs previous 54.1. 54.1 expected.
- Euro zone July Retail sales 0.4% m/m, 2.7% y/y vs previous -0.2%/1.7% revised. 0.6%/2.0%.
- Riksbank keeps rates on hold at -0.35%.
- EUR/SEK sold in wake of news trading 9.3800 low from 9.4800.
- BOJ Kiuch - Japan won't hit inflation goal even by early 2018.
- (0730 ET/1130 GMT) US August Challenger layoffs; last 105.7k.
- (0830 ET/1230 GMT) Canada's trade balance.
- (0830 ET/1230 GMT) US weekly initial jobless claims, 275k eyed; last 271k.
- (0830 ET/1230 GMT) US July trade balance, $42.4 bln deficit eyed; last $43.8 bln deficit.
- (0830 ET/1230 GMT) US Continued Claims (August 22 week) consensus 2.250 mn, previous 2.269 mn.
- (0900 ET/1300 GMT) Financial firm Markit releases August Purchasing Managers Index for Brazilian Services.
- (0900 ET/1300 GMT) Mexico's national statistics agency releases June data for gross fixed investment, which is expected to have advanced 6.70 percent, compared with 2.30 percent a year earlier.
- (0945 ET/1345 GMT) US August Markit PMI services/composite final; flash 55.2, 55.0.
- (1000 ET/1400 GMT) US August ISM PMI non-manufacturing, 58.1 eyed; last 60.3.
Key Events Ahead
- (0745 ET/1145 GMT) ECB policy announcement, no -0.2% depo/0.05% 7-day refi rate changes eyed.
- (0830 ET/1230 GMT) ECB President Draghi press conference.
- (0945 ET/1345 GMT) Fed Trade operation 30-yr Ginnie Mae (max $950 mn).
- (1145 ET/1545 GMT) Fed Trade operation 15-yr Fannie Mae/Freddie Mac (max $600 mn).
FX Recap
EUR/USD is supported above 1.1200 levels and currently trading at 1.1225 levels. It has made intraday high at 1.1242 and low at 1.1204 levels. The French services PMI for August came out at 50.6 and sharply worsened from July's 52.0, while the same gauge for Germany improved from 53.8 to 54.9, Markit advised on Thursday. Moreover, Italy, Spain and euro zone in total delivered better-than-expected results for the reported period. Retail sales in the euro area returned to growth in July on a monthly basis, albeit slightly missing estimates, the EU's statistical office Euro stat reported on Thursday. Retailer turnover in the 19-nation bloc added 0.4% month-on-month in the seventh month of the year, after falling a downwardly revised 0.2% in the previous month. Focus turns to ECB interest rate decision for the further directions. Initial support is seen around at 1.1015 and resistance at 1.1363 levels. Option expiry is at 1.1100 (875M).
USD/JPY is supported above 120.00 levels and posted a high of 120.68 levels. It has made intraday low at 120.19 and currently trading at 120.34 levels. The Japanese yen fell victim to a ripened taste for risk on Thursday, with the US dollar continuing its upwards climb as Chinese equity markets closed for a four-day break. Traders continued to take on more risk on Thursday as the safe-haven Japanese yen was sold off against the more-risky US dollar. Initial resistance is seen at 123.20 and support is seen at 118.42 levels. Option expiries are at 120.45 (305M), 121.00 (403M), 121.75 (765M).
GBP/USD is supported below $1.5300 levels. It made an intraday high at 1.5312 and low at 1.5232 levels. Pair is currently trading at 1.5275 levels. Sterling dropped against the dollar after the British services sector grew at its weakest pace in more than two years in August. The services PMI fell to 55.6 from 57.4 in July, well below consensus forecasts of a 57.6 reading. Sterling fell to $1.5248, down 0.3 percent on the day, having traded at $1.5263 beforehand. The euro inched up to trade at 73.65 pence, compared with 73.60 beforehand. Initial support is seen at 1.5220 and resistance is seen around 1.5436 levels.
NZDUSD is supported above 0.6300 levels and trading at 0.6348 levels and made intraday low at 0.6329 and high at 0.6372 levels. The Kiwi shed a part of early gains and remains bid as the New Zealand benefitted from the release of June-quarter building data which beat market expectations. Total building activity amounted to over $4 billion in the June quarter, up 8% on the same quarter in 2014, and the highest value ever recorded since the series began 50 years ago. The value of all building activity rose 1.6% over the quarter, beating market estimates of a 0.5% increase. Moreover, the NZD/USD pair remains lifted with returning risk sentiment after Chinese markets rebounded somewhat yesterday while the recent upbeat Fonterra's auction results also continues to support the Kiwi. Initial support is seen at 0.6195 and resistance at 0.6511 levels.
AUD/USD is supported around 0.7000 levels and trading at 0.7007 levels. It has made intraday high at 0.7060 levels and low at 0.6991 levels. The Australian dollar retreated against its US dollar on Thursday after retail sales data from the outback nation disappointed. Retail sales fell 0.1% in July after rising a revised 0.6% in June; Australian Bureau of Statistics (ABS) data showed on Thursday, however, the market forecast was for a 0.4% rise in sales in July. Moreover, Australia's trade balance has deteriorated lately as the nation runs some pretty large trade deficits as a result of the big falls in commodity prices. Coming in with a deficit of $2.46 billion the trade deficit was much better than the market forecast of a deficit of $3.1 billion. Initial support is seen at 0.6945 and resistance at 0.7122 levels.
Equities Recap
World stocks lifted by the strong rally in U.S stocks the previous day, but investors were cautious ahead of a European Central Bank policy meeting and the latest U.S. jobs data.
The FTSEuroFirst leading index of 300 shares rose 1.5 pct at 1,417 points in early deals, Germany's DAX was up 1.8 pct at 10,231 points, France's CAC 40 climbed 1.6 pct and Britain's FTSE 100 inched higher 1.5 percent.
Japan's Nikkei gained 0.7 pct, but weakness in Australia and falls in Asian currencies drove the MSCI's broadest index of Asia-Pacific shares outside Japan down 0.2 percent.
Commodities Recap
Crude oil prices softened on Thursday after a surprise build in U.S. inventory levels and on a firm dollar, although stronger equity markets helped support commodities. Brent was 20 cents lower at $50.30 a barrel by 0840 GMT, having gained 94 cents in the previous session. U.S. crude was just 5 cents lower at $46.20 a barrel, up from the day's low of $45.65, after settling up 84 cents on Wednesday.
Gold added to overnight losses on Thursday, hurt by a stronger dollar and as investors awaited a key U.S. jobs report to gauge the timing of a Federal Reserve rate hike. Spot gold eased 0.1 percent to $1,132.45 an ounce by 0637 GMT, after dropping 0.5 percent on Wednesday. U.S. gold slipped about $1 to $1,132.20.
Treasuries Recap
The 10-year German Bund yield was unchanged at 0.79 percent, while the comparable 10-year U.S. yield was one basis point lower at 2.18 percent while most other euro zone equivalents were slightly lower on the day.
UK Gilts opened 6 ticks higher than the settlement of 117.29 as caution underpinned ahead of the ECB meeting and press conference later today. Not much threat to the recent ranges on 10-year cash. Yield spread between gilts and bunds tightened by 1 bp after UK services PMI.
JGB finished ended the day marginally mixed, with the 10s/30s curve flattening modestly by 1.5bp on the day. JGB prices opened slightly lower, sending yields up 0.5bp from yesterday in the 5-yr to 30-yr zone, on the back of weaker US TSY overnight and higher Tokyo stocks today. In early morning trading, several regional banks sporadically bought the current 10-yr JGBs at par and lower, or at 0.40% -0.405% to average down their costs, vs 0.421% for the average accepted yield in last Tuesday's 10-yr auction.
New Zealand government bonds eased, pushing yields as much as 2.5 basis points higher along the yield curve. Australian government bond futures were steady, with the 3-year bond contract unchanged at 98.210. The 10-year contract was down half a tick at 97.2750.
