Market Roundup
- US equities pare early gains near session end.
- Oil soars over 10 percent as deep shorts scramble for cover.
- Gold down for 4th day as U.S. data boosts stocks, dollar.
- Latin America stocks jump most in nearly 4 years, currencies up.
- China eases property invest rules for foreigners, expands debt-for-bond swap plan to 3.2 trillion yuan.
- China central bank official: Don’t blame yuan devaluation for global market rout, yuan to resume appreciation in 2-3 years.
- Fed’s Esther George says “this week’s events complicate the rate picture”.
- Fed’s Esther George says normalization process needs to begin.
- ECB’s Coeure: The EUR is an irreversible act not simply a fixed exchange rate system, vital in short term that banking union be finalized.
- US GDP 2nd Estimate Q2 3.7%, forecast- 3.2%, 2.3%-previous.
- US Core PCE Prices Prelim Q2 1.8%, forecast-1.8%, 1.8%-previous.
- US Initial Jobless Claims w/e 271k, forecast- 274k, 277k-previous.
- US Continued Jobless Claims w/e 2.269m, forecast- 2.250m, 2.256m-previous.
Looking Ahead – Economic Data (GMT)
- 23:30 Japan All Household Spending YY Jul forecast- 1.3%, -2%-previous
- 23:30 Japan All Household Spending MM Jul forecast- 2.2%, -3%-previous
- 23:30 Japan CPI, Core Nationwide YY Jul forecast -0.2%, 0.1%-previous
- 23:30 Japan CPI, Overall Nationwide* Jul 0.4%-previous
- 23:30 Japan CPI Core Tokyo YY* Aug forecast -0.2%, -0.1%-previous
- 23:30 Japan CPI, Overall Tokyo* Aug 0.2%-previous
- 23:30 Japan Jobs/Applicants Ratio Jul forecast -1.19, 1.19-previous
- 23:30 Japan Unemployment Rate Jul forecast- 3.4%, 3.4%-previous
- 23:50 Japan Retail Sales YY Jul forecast- 1.1%, 0.9%-previous
Looking Ahead – Events, Other Releases (GMT)
- US Jackson Hole Economic Policy Symposium “Inflation Dynamics and Monetary Policy” (to Aug. 29)
Currency Summaries
EUR/USD is likely to find support at 1.1208 levels and currently trading at 1.1251 levels. The pair has made session high at 1.1288 and hit lows at 1.1196 levels. The dollar edged higher against Euro for a third straight session on Thursday, bolstered by economic data showing a much stronger U.S. economy than had been thought and by gains in global equities, which benefited from improving risk sentiment. U.S. data showing falling jobless claims and a faster growth rate than had initially been estimated in the world’s largest economy underpinned the dollar. The outlook on rate hike, however, did little to change the view that the Federal Reserve would delay raising interest rates given recent market turmoil and a slowdown in China’s economy. The euro was 0.5 percent lower against the dollar at $1.1259, well below this week’s seven-month high of $1.1715. A recent spike in risk aversion had triggered short-covering in the yen and the euro, which are popular funding currencies for carry trades. Such trades involve selling low-yielding currencies to buy higher-yielding currencies and assets. To the upside, immediate resistance can be seen at 1.1312. To the downside, immediate support level is located at 1.1220 levels.
GBP/USD is supported in the range of 1.5340 levels and currently trading at 1.5411 levels. It reached session high at 1.5435 and dropped to session low at 1.5368 levels. Sterling fell to a 1-1/2-month low against the dollar on Thursday after data showing the United States grew robustly in the second quarter, boosting a view that U.S. interest rates could rise this year. Investors are still uncertain about when the Bank of England will raise interest rates, given recent volatility in global stock markets. Sterling fell to $1.5398 after the data, it’s lowest since July 10, and down 0.4 percent on the day. It is on track for its biggest weekly loss since early May. Focus now turns to an annual conference in Jackson Hole, Wyoming, attended by many of the world’s top central bankers. BoE Governor Mark Carney is a panelist at the symposium on Saturday where global inflation dynamics will be discussed. Traders will keenly be watching the central bankers view on rate hike particular from Fed’s and BoE officials. To the upside, immediate resistance can be seen at 1.5415. To the downside, immediate support level is located at 1.5332 levels.
USD/JPY is supported around 120.44 levels and currently trading at 121.20 levels. It has hit session high at 121.37 and made session lows at 120.40 levels. The US Dollar edged higher against Japanese yen on Thursday, as the dollar continued to recover against the Japanese yen backed by upbeat economic data after falling to 7-month low against yen, on Monday. The yen had jumped in recent days as investors have fled to assets perceived to be safer, with global markets sinking on worries over China which devalued the yuan. The pair edged higher after Markets boosted by strong U.S. data, comments from Fed’s Dudley Eyes on central banker meeting in Jackson Hole on late Friday. Annual U.S. gross domestic product growth was revised to 3.7 percent from the 2.3 percent rate reported last month and last week’s jobless claims fell more than expected by printing 271k against the forecast 274k. The dollar was up 0.4 percent at 120.36 yen, well above a seven-month low of 116.15 yen struck this week. To the upside, immediate resistance can be seen at 121.46. To the downside, immediate support level is located at 120.70 levels.
USD/CAD is supported at 1.3170 levels and is trading at 1.3208 levels. It has made session high at 1.3279 and lows at 1.3177 levels. The Canadian dollar firmed against its U.S. counterpart on Thursday, as crude prices surged following a global equities rally and an unexpected drop in U.S. oil inventories. The loonie, which fell to 11-year lows earlier this week as investors rushed to safety on worries about slowing growth in China, also was stronger against other major currencies. The strength came even as the greenback rose following upbeat U.S. data that showed the economy grew faster than initially thought during the second quarter. The data was reassuring to investors and central bank officials preoccupied by worries over China’s impact on the global economy. The currency’s strongest level of the session was C$1.3276, while its weakest level was C$1.3182. To the upside, immediate resistance can be seen at 1.3206. To the downside, immediate support level is located at 1.3180 levels.
Equities Recap
European shares rose on Thursday, recouping all their losses this week, with gains across the board after market expectations of a U.S. rate hike were pushed back and as economic growth figures were revised sharply upwards.
UK’s benchmark FTSE 100 closed up by 3.7 percent, the pan-European FTSEurofirst 300 ended the day up by 3.7 percent, Germany’s Dax ended up by 3.4 percent, France’s CAC finished the day up by 3.6 percent.
U.S. stocks extended their rally on Thursday, raising hopes that the worst was behind the market, after further evidence that the U.S. economy was on a solid footing.
Dow Jones closed up by 2.27 percent, S&P 500 ended up by 2.43 percent, Nasdaq finished the day up by 2.43 percent.
Treasuries Recap
Most U.S. Treasuries prices were modestly lower on Thursday, as a rally on Wall Street and a surprisingly large upward revision on U.S. economic growth in the second quarter revived some bets the Federal Reserve would raise rates by year-end.
Benchmark 10-year Treasuries notes were down 4/32 in price to yield 2.179 percent, up more than 1 basis point from Wednesday, while two-year notes 1/32 to yield 0.688 percent, up 2 basis points on the day.
Commodities Recap
Gold eased on Thursday, headed for its biggest weekly rout since March, as upbeat U.S. growth and jobs data drove up stocks and the dollar, though uncertainty over the timing of a U.S. rate rise held losses in check.
Spot gold was down 0.2 percent at $1,122.86 an ounce at 1829 GMT (2:29 p.m. EST) after seeing its biggest down day in five weeks on Wednesday. U.S. gold futures for December delivery finished down $2 an ounce at $1,122.60.
Oil rocketed as much as 10 percent higher on Thursday, posting its biggest one-day rally since 2009 as recovering equity markets and news of diminished crude supplies set off a short-covering surge by bearish traders.
Front month Brent crude for October more than reversed a week’s worth of losses, rising $4.42 to settle at $47.56 a barrel, marking a 10.25 percent rise. Gains accelerated toward the close, locking in the biggest one-day jump since late 2008, when prices were bouncing back after the financial crisis. The contract traded on Monday at a March 2009 low of $42. settled up 10.3 percent to $47.56.
The material has been provided by InstaForex Company – www.instaforex.com