Market Roundup
• U.S. pending home sales jump to highest level since early 2006 (+5.1% vs 0.6% forecast, 1.6% previous)
• U.S. durable goods surge on transportation (+3.4% vs forecast +0.5%), but business spending weak.
• U.S. jobless claims fall more than expected last week (268k vs 275k forecast, 278k previous).
• Atlanta Fed’s GDPNow: U.S. economy seen growing 2.9% in Q2 from 2.5% May 17 estimate.
• Fed’s Powell Moving too slowly on rates may pose risks beyond inflation including unsustainable prices & credit growth, hike may be appropriate fairly soon.
• Moody's: Believes China’s authorities have tools to prevent a financial crisis from materializing near term.
• Mexico's Videgaray says peso market ordered, liquid, will intervene if central bank detects deviation from fundamentals.
Looking Ahead – Economic Data (GMT)
• 23:30 Japan CPI, Core Nationwide YY Apr forecast -0.004, -0.30%-previous
• 23:30 Japan CPI, Overall Nationwide Apr -0.10%- previous
• 23:30 Japan CPI Core Tokyo YY May forecast-0.4%, -0.30%- previous
• 23:30 Japan CPI, Overall Tokyo* May -0.40%- previous
Looking Ahead – Events, Other Releases (GMT)
• 26-27 May Japan G7 summit
Currency Summaries
EUR/USD is likely to find support at 1.1100 levels and currently trading at 1.1190 levels. The pair has made session high at 1.1216 and hit lows at 1.1168 levels. The dollar drifted lower against euro on Thursday as traders were puzzled over U.S. economic data which showed weakness in business spending plans, denting expectations for a Federal Reserve interest rate increase in June or July. The Commerce Department said orders for long-lasting U.S. manufactured goods surged 3.4 percent last month after increasing 1.9 percent in March. On the other hand, initial jobless claims declined more than forecast last week, and pending home sales jumped to their strongest levels in more than decade in April. The U.S. dollar index, which measures the greenback against a basket of six major rivals, hit 94.938, its lowest level in eight days. The euro rose more than half a percentage point to a session high of $1.1216, rebounding from Wednesday's 10-week low of $1.1126. Investors are looking ahead to a speech by Federal Reserve Chair Janet Yellen on Friday for more clues on the U.S. interest rate outlook. Investor expectations for higher rates have grown since last week's minutes from the central bank's April meeting signaled a June increase was on the table.
GBP/USD is supported in the range of 1.4600 levels and currently trading at 1.4657 levels. It reached session high at 1.4714and hit low at 1.4638 levels. Sterling retreated from three weeks high against the dollar on Thursday after data showed business investment in Britain dropping in annual terms for the first time in three years on uncertainty around the Brexit vote .The Office for National Statistics confirmed the British economy grew 0.4 percent in the January-March period. Business investment fell by 0.4 percent year-on-year in the first quarter after rising 3.0 percent in the fourth quarter of last year. Betting markets suggest Britons will opt to remain in the European Union, most polls are neck to neck, though of late they show that those wanting to stay are edging ahead. Some of the latest opinion polls hint at a robust lead for the “Remain” campaign although traders are wary of a sharp sell-off if there are any indications that the “Leave” camp is gaining ground before the vote. Sterling slipped to $1.4690, having hit a three-week high of $1.4738 earlier on Thursday. It retreated from a 3 -1/2 month high against the euro after the data release.
AUD/USD is supported around 0.7140 levels and currently trading at 0.7222 levels. It hit session high at 0.7245 and made session lows at 0.7207 levels. The Australian dollar inched higher against US dollar on Thursday, as advance in oil prices towards $50 a barrel and slight weak in US dollar supported commodity related currencies. The Australian dollar was squeezed higher to $0.7242, having recovered from a low of $0.7162 touched earlier in the session. On the data front, Australian business investment fell last quarter, severely dragged by the battered mining sector, but a modest upgrade to overall spending plans helped take the sting out of a disappointing report. Figures form Australian Bureau of Statistics on Thursday showed private new investment fell 5.2 percent in the first quarter to inflation- adjusted A$30.6 billion, although analysts had forecasted a smaller 3.0 drop.
USD/CAD is supported at 1.2900 levels and is trading at 1.2975 levels. It has made session high at 1.3005 and lows at 1.2906 levels. The Canadian dollar rallied to one-week highs on Thursday against a U.S. dollar as crude oil prices surged above 50$ per barrel for the first time in nearly seven months. Wildfires in Canada's oil sands, unrest in the Nigerian and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela have knocked out nearly 4 million barrels per day in immediate production, sparking a buying frenzy in crude futures. The loonie's gains come one day after the Bank of Canada was less dovish than some investors had expected. The central bank kept interest rates on hold at 0.50 percent, saying the economy would shrink in the second quarter as a result of damage from recent wildfires in Alberta before rebounding later in the year. Canadian small businesses fell for the fourth month in a row in March, suggesting firms' appetite for investment remained weak and boding poorly for economic growth. PayNet's Canadian small business lending index tumbled to 119.1 in March from 124.3 the month before. An index of lending to medium-sized businesses similarly slumped to 206.5 from 225.0.
Equities Recap
European shares steadied on Thursday, with banks coming under pressure after a surprise rights issue by Spain's Banco Popular raised fears that others in the region may follow to strengthen their balance sheets.
UK's benchmark FTSE 100 closed up by 0.07 percent, the pan-European FTSEurofirst 300 ended the day up by 0.20 percent, Germany's Dax ended up by 0.70 percent, France’s CAC finished the day up by 0.71 percent.
Wall Street ended on Thursday mixed as investors looked for fresh reasons to buy stocks following two straight days of gains.
Dow Jones closed down by 0.14 percent, S&P 500 ended down by 0.03 percent, Nasdaq finished the day up by 0.14 percent.
Treasuries Recap
U.S. Treasury prices rose on Thursday as solid bidding at a $28 billion seven-year note sale kindled bond demand, driving shorter-dated yields down from 10-week highs and upstaging data that supported the view of steady U.S. growth.
Benchmark 10-year Treasury notes were up 10/32 in prices, yielding 1.833 percent, down 4 basis points from late on Wednesday.
The two-year yield was down 4 basis points at 0.875 percent, while the five-year yield slipped 5 basis points at 1.352 percent.
Commodities Recap
Gold lost its early gains on Thursday, hovering just above the prior session's seven-week low as the U.S. was bolstered by hawkish comments from a Federal Reserve president.
Spot gold was down 0.3 percent at $1,220.16 an ounce by 2:27 p.m. EDT (1827 GMT). The metal had fallen to its lowest since April 6 at $1,217.25 on Wednesday.
U.S. gold settled down 0.3 percent at $1,220.40 an ounce.
Oil prices hit $50 a barrel on Thursday for the first time in seven months, then bounced below that level and settled lower on the day as investors worried robust price gains could encourage more output and add to the global glut.
Brent surged as high as $50.51, its highest since early November, then retreated and settled down 15 cents at $49.74 a barrel.
WTI fell 8 cents to settle at $49.48, after reaching $50.21, its highest since early October.
The material has been provided by InstaForex Company – www.instaforex.com