Market Roundup
• Drop in U.S. jobless claims (264k v 268k previous) points to labor market strength, despite recent weak US NFP.
• US wholesale inventories (+0.6% v 0.2% previous) biggest gain in 10-mos, sales rise as well (1% v 0.6% previous).
• Atlanta Fed ‘s GDPNow U.S. economy seen growing 2.5 percent in second quarter .
• GS raises Q2 GDP forecast to 3.2% from 2.9%, Barclays to 2.7% from 2.5%; after US inventory data.
• U.S. household net worth rose to $88.1 trillion in Q1 – Fed.
• Canada's Poloz: Export recovery remains uneven; econ still working through low oil despite price recovery.
• Sanders praises Obama, Biden for impartiality, to meet with Clinton soon.
• Mexico annual inflation ticks up in May, still below central bank target, despite weak MXN.
Looking Ahead – Economic Data (GMT)
• 22:45 New Zealand Election Card Retail Sales mth May 0.9%-previous
• 22:45 New Zealand Election Card Retail Sales YY May 7.8%- previous
• 23:50 Japan Corp Goods Price MM May forecast 0.1%, -0.3%- previous
• 23:50 Japan Corp Goods Price YY* May forecast -4.2%, -4.2%- previous
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1290 levels and currently trading at 1.1322 levels. The pair has made session high at 1.1338 and hit lows at 1.1303 levels. The euro declined against dollar on Thursday, as dollar rebounded back against euro, following the prior day's losses tied to reduced bets on a pending U.S. interest rate increase following last week's disappointing jobs report. The greenback's gains were supported by an unexpected drop in domestic jobless claims and a stronger-than-expected rise in wholesale sales in April, soothing some worries about U.S. economic growth decelerating in the second quarter. The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained strength in the labor market despite a sharp slowdown in hiring last month. Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 264,000 for the week ended June 4, the Labor Department said. The drop confounded economists' expectations for an increase to 270,000.Other data on Thursday showed wholesale inventories recording their biggest increase in 10 months in April, prompting economists to raise their second-quarter economic growth estimates.
GBP/USD is supported in the range of 1.4400 levels and currently trading at 1.4490 levels. It reached session high at 1.4497 and hit low at 1.4446 levels. The British pound declined against dollar on Thursday, as investors flocked towards safe havens on worries that Britain will vote to leave the European Union at a referendum in two weeks' time. Though odds offered by betting websites and bookmakers point towards a vote for Britain to remain in the EU, polls have not offered a clear picture of what the outcome of the June 23 ballot might be. Investors worry that a Brexit would weigh on the economies of not just Britain, but the rest of Europe too. With so much uncertainty over both the result of the June 23 referendum and the consequences of a vote to leave, economic data in the run-up to the vote has had less impact than normal. Against the dollar, sterling declined from $1.4492, to hit low on the day at 1.4444 before recovering slightly to trade at 1.4451.
USD/CAD is supported at 1.2654 levels and is trading at 1.2709 levels. It has made session high at 1.2767 and lows at 1.2703 levels. The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices fell and risk appetite faded. Losses for the loonie came one day after it strengthened to a five-week high at C$1.2655 as expectations dwindled that the U.S. Federal Reserve will move to hike interest rates again soon. Oil prices fell as traders took profits after three sessions of gains, though prices remained close to their highest this year thanks to supply disruptions and a decline in U.S. crude inventories. U.S. crude prices were down 1.25 percent to $50.59 a barrel. Slippage in global stocks provided an additional headwind for the risk-sensitive commodity-linked Canadian dollar. European shares fell for a second straight day, dragged down by weakness in banking stocks as bond yields moved lower.
USD/JPY is supported around 106.05 levels and currently trading at 107.08 levels. It peaked to hit session high at 107.17 and made session lows at 106.20 levels. The dollar declined against the yen on Thursday as decline in commodity and stock prices in major world markets increased demand for the yen. The yen gained 1.2 percent against the euro at 120.35 yen after hitting 120.29 yen, which was last seen in April 2013. It was last trading at 107.06 versus the dollar after touching 106.24 yen. The dollar rebounded against other currencies, except for the yen, following the prior day's losses tied to reduced bets on a pending U.S. interest rate increase following last week's disappointing jobs report. British and German sovereign debt yields fell to record lows, driven by concerns about Britain's referendum on European Union membership later this month and the European Central Bank’s commencement of its corporate bond purchase program.
Equities Recap
European shares fell for a second straight day on Thursday, weighed down by weakness among commodities-related stocks, while Essentra plunged after a profit warning.
UK's benchmark FTSE 100 closed down 1.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.95 percent, Germany's Dax ended down 1.3 percent, France’s CAC finished the day down by 1 percent.
Banks led Wall Street lower on Thursday, mirroring global stocks, as oil prices fell and bond markets rallied amid demand for safe haven assets.
Dow Jones closed down by 0.10 percent, S&P 500 ended down by 0.16 percent, Nasdaq finished the day down by 0.32 percent.
Treasuries Recap
U.S. Treasury yields fell to the lowest levels since February on Thursday as falling oil and stock prices increased demand for safe-haven debt amid concerns about global growth.
Thirty-year bonds ended up 23/32 in price to yield 2.48 percent, the lowest level since Feb. 11. Benchmark 10-year notes gained 8/32 in price to yield 1.68 percent, the lowest since Feb. 24.
The U.S. yield curve between two-year and 10-year notes flattened, which is sometimes viewed as an indicator of weakening growth. The curve flattened to 89 basis points, its lowest since 2008.
Commodities Recap
Gold extended its rally to a three-week high on Thursday, supported by falling U.S. Treasury yields and world equity markets, and the outlook for U.S. interest rates.
Spot gold was up 0.6 percent at $1,269.66 an ounce at 3:42 p.m. EDT (1942 GMT), after rising 0.8 percent to $1,271.31, the highest since May 18. U.S. gold futures for August delivery settled down 0.8 percent at $1,272.70.
Oil prices settled down on Thursday, snapping a three-day rally after notching another 2016 high, as a strong dollar sparked profit-taking in crude futures by investors.
Brent crude oil futures settled down 56 cents at $51.95 a barrel, after falling nearly $1 earlier. It hit a 2016 high of $52.86 during the session.
U.S. crude's West Texas Intermediate (WTI) futures fell 67 cents to settle at $50.56, after dropping $1 at the session low. WTI's intraday peak was $51.67, the highest for this year.
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