Market Roundup
- U.S. jobless claims drop; imported inflation remains weak (import prices -1.8% in Aug).
- Greek bailout review in October to pave way for debt talks, added to Euro bid.
- Brazil’s Levy: government discussing measures to fix budget, determined to achieve ’16 budget surplus target.
- Brazil’s currency, stock futures drop on S&P downgrade to junk.
- Fitch still sees elements supporting Brazil’s investment grade, direction of ratings is negative.
- Brazil IPCA Inflation Index beats forecast, BCB minutes see inflation back near target at YE ’16.
- Other big EM names in crosshairs after Brazil downgrade, S&P IQ says CDS marts eye Russia, Turkey & Venezuela as potential downgrades.
Looking Ahead – Economic Data (GMT)
- 22.30 New Zealand Manufacturing PMI* Aug 53.5-previous
- 22.45 New Zealand Food Price Index* Aug 0.6%-previous
- 03:00 New Zealand RBNZ Offshore Holdings* Aug 64.3%-previous
- 23:50 Japan Business Survey Index* Q3 -6.0-previous
- 02:00 Japan TR IPSOS PCSI Sep 42.30-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1231 levels and currently trading at 1.1277 levels. The pair has made session high at 1.1296 and hit lows at 1.1260 levels. The dollar softened against euro on Thursday as global stock markets turned down and economic data sent contrary signals about whether the U.S. Federal Reserve would raise U.S. interest rates as early as next week. Investors are divided over whether a rate hike is likely, though market prices indicate declining anticipation that liftoff is imminent. Expectations that the U.S. central bank will act have fallen since the Fed gave no strong indication in the minutes of its July meeting that a September rate increase was likely. Low inflation is also seen as complicating the Fed’s ability to raise interest rates. Producer price data on Friday will next be in focus for any new signs of rising price pressures. The dollar was last down 0.08 percent against the euro at $1.1213. To the upside, immediate resistance can be seen at 1.1293. To the downside, immediate support level is located at 1.1241 levels.
GBP/USD is supported in the range of 1.5425 levels and currently trading at 1.5448 levels. It reached session high at 1.5475 and dropped to session low at 1.5438 levels. Sterling hit a two-week high against the dollar on Thursday after details from the Bank of England’s latest policy meeting appeared to show policymakers were less concerned about the domestic impact of turmoil in global markets. Many investors had expected a dovish set of minutes given recent weak British data and growing worries in financial markets over global growth and increased volatility stemming from China’s yuan devaluation in August to support its economy. Meanwhile, Bank of England policymakers voted 8-1 to keep rates at a record-low 0.5 percent this month, as expected, they judged it was too soon to decide if China-inspired turmoil in markets would have much of an impact on Britain. The minutes sent sterling up to $1.5449, its highest since Aug. 27, 0.5 percent ahead on the day. It was trading at $1.5435 in afternoon trade, still up 0.4 percent on the day. To the upside, immediate resistance can be seen at 1.5475. To the downside, immediate support level is located at 1.5428 levels.
USD/JPY is supported around 120.28 levels and currently trading at 120.63 levels. It peaked to hit session high at 120.93and made session lows at 120.49levels. The dollar slipped against Japanese yen on Thursday, after series of economic data released from US market came mixed. Jobless claims filed in the week ended September 5 fell 6k to 275k, matching the consensus estimate. The four-week average rose to 275.8k, nearly unchanged from the prior week’s 275.5k. Continued claims for the August 29 week were 2,260 k, a 1k increase over the prior week’s revised 2,259 k level (previously 2,257 k). The four-week average of continued claims eased to 2,260 k as well, the lowest in four weeks but consistent with longer term moving averages. The pair slipped to hit session lows at 120.40 in early New York session but recovered some ground to trade at 120.63 in the late trading hours. To the upside, immediate resistance can be seen at 120.80. To the downside, immediate support level is located at 120.34 levels. USD/CAD is supported at 1.3150 levels and is trading at 1.3232 levels. It has made session high at 1.3226 and lows at 1.3175 levels. The Canadian dollar was flat versus its U.S. counterpart on Thursday as domestic data showed industrial capacity use fell for a second straight quarter with low oil prices and a slower economy expected to weigh on the currency in coming weeks. On the data front, New-home prices in Canada rose in July, driven by gains in Toronto’s robust housing market, data from Statistics Canada showed on Thursday. The new housing price index rose by 0.1 percent, slightly short of analysts’ forecasts for a gain of 0.2 percent. Compared with the year before, prices were up 1.3 percent. The Canadian dollar traded in the range of C$1.3174 and C$1.3277 to the greenback in the US session. To the upside, immediate resistance can be seen at 1.3276. To the downside, immediate support level is located at 1.3227 levels.
Equities Recap
European shares retreated on Thursday as companies exposed to Brazil came under selling pressure after Standard & Poor’s downgraded the country’s credit rating to “junk”.
UK’s benchmark FTSE 100 closed down by 1.1 percent, the pan-European FTSEurofirst 300 ended the day down by 1.4 percent, Germany’s Dax ended down by 0.9 percent, France’s CAC finished the day down by 1.4 percent.
U.S. stocks ended higher on Thursday, supported by gains in Apple and biotech shares, but nervousness ahead of a much-anticipated Federal Reserve meeting next week limited the advance. Dow Jones closed up by 0.45 percent, S&P 500 ended up by 0.50 percent Nasdaq finished the day up 0.82 percent.
Treasuries Recap
U.S. Treasury yields rose on Thursday as stocks gained, reducing demand for safe haven assets, even after the government sold new 30-year bonds to strong demand.
Benchmark 10-year notes were last down 15/32 in price to yield 2.23 percent, up from 2.18 percent late on Wednesday.
Commodities Recap
Oil prices rallied on Thursday, with U.S. crude settling up 4 percent as indications of strong demand for gasoline overshadowed a report showing increased U.S. crude inventories.
The U.S. crude front-month contract settled up $1.77, or 4 percent, at $45.92 a barrel, after briefly topping $ front-month for Brent, the global oil benchmark, settled up $1.31, or 2.8 percent, at $48.89 a barrel.
Gold rose from four-week lows on Thursday as European stocks snapped a three-day run of gains, but traders remained cautious as they awaited fresh clues on the timing of a U.S. rate hike.
Spot gold was up 0.5 percent at $1,110.65 an ounce at 2:40 p.m. EDT (1840 GMT), while U.S. gold futures for December delivery settled up 0.7 percent at $1,109.30 an ounce.
The material has been provided by InstaForex Company – www.instaforex.com