• US PPI Final Demand YY Jul 1.9%, 2.2% forecast, 2.0% previous.
• US PPI Final Demand MM Jul -0.1%, 0.1% forecast, 0.1 previous.
• US Initial Jobless Claims w/e 244k, 240k forecast, 241k previous.
• US Jobless Claims 4-Wk Avg w/e 241.00k, 242.00k previous.
• US Continued Jobless Claims w/e 1.951M, 1.960M forecast, 1.967M previous.
• US Treasury posts $43 billion deficit in July.
• Fed's Dudley reinforces Fed expectation of U.S. inflation rebound.
• Dudley: Do not expect inflation to get back to 2% in medium term.
• Blocking abuse of lower small business rate slows US tax overhaul.
• North Korea details plan to fire missiles over Japan, near Guam.
• Trump: North Korea should be “very, very nervous” if it does anything to the United States.
• US destroyer challenges China's claims in the South China Sea.
• OPEC sees higher 2018 oil demand, points to easing glut.
• UK exports disappoint as the economy limps to end of weak first half.
• China economy has 'bottomed out' to enter stable stage, govt adviser says.
• Fitch says bailout will not prevent Brazilian states' 2017 deficits.
• Mexico cenbank holds rate, says sees inflation cooling.
Looking Ahead – Economic Data (GMT)
• 22:30 New Zealand Manufacturing PMI Jul, 56.2% previous
• 02:00 China TR IPSOS PCSI Aug 64.27 previous
• 02:00 Japan TR IPSOS PCSI Aug 41.18 previous
• 02:00 Australia TR IPSOS PCSI Aug 49.70 previous
Looking Ahead – Events, Other Releases (GMT)
• 13:40 Dallas Fed’s Kaplan participates in a Q&A at The University of Texas, Texas
• 15:30 Minneapolis Fed’s Kashkari participates in a Q&A at Minnesota
EUR/USD is likely to find support at 1.1705 levels and currently trading at 1.1758 levels. The pair has made session high at 1.1761 and hit lows at 1.1716 levels. The euro inched higher against the U.S. dollar on Thursday as dollar weakened after news that U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase. The Labor Department said its producer price index for final demand slipped 0.1 percent last month, weighed by decreasing costs for services. That was the largest decline since August 2016 and reversed June's 0.1 percent gain. Though the correlation between the PPI and the consumer price index has weakened, last month's drop in producer prices could worry Fed officials who have long argued that the moderation in inflation was temporary. Fed Chair Janet Yellen told lawmakers last month that “some special factors” were partly responsible for the low inflation readings. Inflation, which has remained below the U.S. central bank's 2 percent target for five years, is being watched for clues on the timing of the next interest rate increase. The euro was 0.18 percent up against the greenback remaining the best-performing G10 currency so far this year with gains of more than 11 percent against the dollar.
GBP/USD is supported in the range of 1.2947 levels and currently trading at 1.2977 levels. It reached session high at 1.3012 and dropped to session low at 1.2967 levels. Sterling fell against the dollar on Thursday as a mixed bag of output and trade data did little to alter investors' downbeat view of an economy struggling to meet Bank of England targets. The pound fell by as much as a third of a percent in early European trade to as low as $1.2952 before recovering some ground after industrial production numbers just topped economists' forecasts. By 1730 GMT it was trading down 0.1 percent at $1.2974. Construction output was weaker than expected and other readings showed Britain's enormous external trade gap expanding further despite the weakening of the pound over the past year. The pound has lost more than 13 percent in trade-weighted terms since last year's decision to leave the European Union but Britain's trade deficit with the rest of the world remains huge. The deficit in goods widened unexpectedly in June, as export volumes suffered their sharpest monthly fall in a year, though they rose 5.0 percent year on year in the second quarter.
USD/CAD is supported at 1.2660 levels and is trading at 1.2727 levels. It has made session high at 1.2735 and lows at 1.2671 levels. The Canadian dollar lost ground against its U.S. counterpart on Thursday as Canadian dollar was under the pressure from geopolitical tensions between the United States and North Korea and dip in oil prices. Oil prices fell on concerns of lingering global oversupply as Russia considered a future output resumption and OPEC boosted its July production numbers. On the data front, New housing prices in Canada rose less than expected in June as the Toronto market was unchanged for the first time in six months following provincial government measures to rein in gains, data from Statistics Canada showed. Investors worry that a cooling in the housing market could weigh on Canada's economy and slow the pace of additional interest rate hikes. The Canadian dollar was trading at C$1.2717 to the greenback. The currency's strongest level of the session was C$1.2669, while it touched its weakest since July 14 at C$1.2735.
USD/JPY is supported around 109.00 levels and currently trading at 109.24 levels. It peaked to hit session high at 109.21 and made session lows at 109.19 levels. The U.S. dollar weakened against the Japanese yen on Thursday as continuing tensions between the United States and North Korea led investors to look for assets viewed as less risky. The dollar was down 0.53 percent against the yen at 109.48 yen, after briefly dropping as low as 109.53. The Japanese currency rallied broadly against most major currencies, including the euro, the kiwi and sterling. The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus, and it being the world's biggest creditor nation, there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty. The dollar also weakened after news that U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.
European shares dropped to their lowest level since late March on Thursday as cyclicals fell and some big stocks went ex-dividend, overshadowing a number of upbeat earnings reports.
The UK's benchmark FTSE 100 closed down by 1.5 percent, FTSEurofirst 300 ended the day up by 1.19 percent, Germany's Dax ended down 1.2, and France’s CAC finished the day down by 0.7 percent.
The S&P 500 index ended Thursday with its biggest one-day drop since May 17 as investors fled riskier assets in response to an exchange of threats between the United States and North Korea.
Dow Jones closed down by 0.92 percent, S&P 500 ended down 1.45 percent, Nasdaq finished the day up by 2.13 percent.
U.S. Treasury long-dated yields dropped to six-week lows on Thursday, pressured by continued tensions between the United States and North Korea as well as weak data that further reduced expectations of an interest rate hike in December.
In late trading, U.S. 10-year yields slipped to 2.208 percent, a six-week low, from 2.242 percent late on Wednesday.
U.S. 30-year bond yields fell to 2.783 percent, from Wednesday's 2.818 percent. During the session, yields fell as low as 2.781 percent, a six-week low.
The price of gold rose on Thursday for the third straight day, reaching a two-month high as another exchange of threats by the United States and North Korea prompted investors to buy bullion as a safe-haven asset.
The spot gold price had gained 0.6 percent at $1,284.71 an ounce by 1:57 p.m. EDT (1757 GMT) after reaching its highest level since June 8 at $1,287.73. It rose 1.3 percent in the previous session, the biggest increase since mid-May. U.S. gold futures for December delivery settled up 0.8 percent at $1,290.10.
Oil prices fell more than 1.5 percent on Thursday, as a bruising day on Wall Street bolstered fears of slowing demand amid lingering concerns over a global oversupply of crude.
U.S. West Texas Intermediate crude settled down 97 cents or 1.96 percent to $48.59 a barrel. Brent crude futures were down 80 cents or 1.52 percent to $51.90 a barrel.
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