The euro fell for the first time in four days against the dollar as U.S. jobless claims dropped to the lowest since July 2008 last week. It pared the slide as U.S. stocks trimmed losses on speculation Egyptian President Hosni Mubarak will step down. Australia’s dollar slumped after an unexpected drop in full-time employment. Atlanta Federal Reserve Bank President Dennis Lockhart said he saw improving confidence in the U.S. economy.
“We had a lot of disappointment in economic data overnight, and that has contributed to the risk aversion you see in the market,” Kathy Lien, director of foreign-exchange research at online currency trader GFT Forex in New York. “Based on the latest jobless report, the Fed has less to worry about and investors have a stronger reason to buy into the U.S. recovery story.”
The greenback trimmed its advance amid speculation Mubarak will meet protestors’ demand to step down. The Standard & Poor’s 500 Index was down 0.1 percent after earlier falling 0.7 percent. Mubarak will decide “within hours” whether to resign, Cabinet spokesman Magdi Rady said in a phone interview.
Nomura says recent jobless claims volatility "primarily reflected weather and seasonal adjustment problems. Claims may also have been moderately depressed this week due to storms, and could correct higher in next week's report. Nevertheless, looking through the week-to-week volatility, claims appear to be trending lower."
Though they were a bit slow to arrive, buyers have stepped in to provide a supportive bid that has helped stocks pare their losses.
Overall declines among the major equity averages are now modest. Despite the improved tone, materials stocks make up the only major sector that has made a move into positive territory. As a group materials stocks are up 0.3%.
Among materials plays, steel stocks are particularly strong. They are up 1.3% after dropping 2.4% in the prior session. AK Steel (AKS 15.79, +0.27) is a primary leader in the pack.
Sellers are still in control. So far there hasn't been any sign that participants want to buy the pullback.
The greenback continues to gain ground against a collection of competing currencies. It is now up 0.8%, which puts it in close reach of the two-week high that it set this past Monday.
Monthly wholesale inventory data were just released, but no real reaction has been made to the report. Overall inventories for December increased 1.0%, which is a sharp increase from the flat figure that was reported for the prior month.
Declining Sectors: Tech (-1.1%), Consumer Staples (-0.7%), Financial (-0.4%), Telecom (-0.4%), Industrials (-0.4%), Energy -(0.3%), Consumer Discretionary (-0.3%), Health Care (-0.3%), Materials (-0.2%), Utilities (-0.1%)
UK Nov-Jan GDP -0.1% Vs -0.5% In Oct-Dec
U.S. stocks were headed for early losses Thursday, as investors responded to disappointing quarterly reports from Cisco Systems, PepsiCo and Credit Suisse.
On Wednesday, the Dow inched higher for an eighth straight session of gains. But the S&P 500 and Nasdaq finished lower, as investors took a breather from their recent streak.
Companies: Shares of Cisco Systems (CSCO) slipped 8% in premarket trading after the network equipment maker posted a quarterly profit late Wednesday that fell from year-earlier results, although they beat Wall Street's forecasts.
Credit Suisse (CS) was under pressure after the financial services company reported quarterly results that disappointed investors. The bank's asset management division also adjusted its target for return on equity this year, citing the "new regulatory environment." U.S.-listed shares were down 5% ahead of the opening bell.
PepsiCo (PEP) said fourth-quarter earnings fell 6% to 85 cents per share and issued a disappointing outlook.
Whole Foods was up almost 10% in premarket trading after the grocery chain reported first-quarter results that beat expectations and raised its sales and earnings outlook for the year.
Analysts surveyed by Thomson Reuters expect Philip Morris (PM) to report earnings per share of 96 cents on revenue of $7.27 billion.
After the closing bell, analysts expect Kraft Foods (KFT) to report earnings per share of 46 cents on $13.47 billion in revenue.
Economy: A weekly government report showed that the number of Americans filing first-time claims for unemployment benefits fell to 383,000 last week -- the lowest number in two-and-a-half years.
Oil for March delivery slipped 40 cents to $86.30 a barrel.
Gold futures for April delivery fell $8.10 to $1,357.30 an ounce.
The price on the benchmark 10-year U.S. Treasury was steady, leaving the yield unchanged from Wednesday at 3.64%.
Chewing up exporter offers amongst others to a high of Y82.88 and taking out some stops in the process. Recent talk of some large stops Y82.90/00, ahead of bids on approach to Y83.15/20.
09:30 UK Industrial production (December) 0.5% 0.9% 0.4%
09:30 UK Industrial production (December) Y/Y 3.6% 4.1% 3.3%
09:30 UK Manufacturing output (December) -0.1% 0.3% 0.6%
09:30 UK Manufacturing output (December) Y/Y 4.4% 5.3% 5.6%
12:00 UK BoE meeting announcement 0.50% 0.50% 0.50%
The dollar rose as global stocks declined, boosting demand for the safety of the world’s main reserve currency.
The euro dropped for the first time in four days versus the greenback on speculation Bundesbank President Axel Weber’s exit from the race to succeed European Central Bank President Jean- Claude Trichet will delay an attempt to contain inflation by boosting borrowing costs.
Weber would leave his job as president of the German central bank about a year before his term expires in April 2012, said the person who talked to him yesterday. Weber’s resignation would open the field to replace Trichet as head of the world’s second-most-powerful central bank.
“He’s by far the most outspoken hawk on the ECB, so on the margin this probably reduces the likelihood of more aggressive rate rises moving forward,” Todd Elmer, the currency strategy at Citigroup Inc., said.
The euro weakened versus the dollar as a person said yesterday on condition of anonymity that Weber plans to step down this year.
The pound remained lower against the dollar as the Bank of England maintained emergency stimulus.
Sterling dropped as the BOE’s Monetary Policy Committee left its bond program at 200 billion pounds ($321 billion) and kept the benchmark interest rate at a record low 0.5%.
EUR/USD fell to $1.3610 low in Europe before set stable within the $1.3610/55 range.
GBP/USD fell to $1.6020 after the BOE rate decision, but then recovered to $1.6055/60.
USD/JPY rose to Y82.80 from Y82.50. Offers ahead of Y83.00.
US data starts at 1330GMT, when initial jobless claims are expected to fall 5,000 to 410,000 in the February 5 week after sharp movements in January.
US data continues at 1500GMT with Wholesale Inventories.
GBP/USD fell to $1.6020 on the reaction to unchanged rate decision from the BOE but quickly recovers to $1.6045. Later rate extended its rise up to $1.6067 before bacj to current $1.6050/53.
Financial markets see a one-in-five chance that the Bank of England will raise interest rates from their record low 0.5% later on Thursday. The BoE must choose whether to hold fire to support growth at a time when Britain's recovery still looks patchy, or act now to reduce the risk that an imminent spike in inflation will turn into something more permanent.
Data earlier on Thursday showed British factory output fell unexpectedly in December, chiming with recent shock data showing the economy contracted in the fourth quarter of last year.
On the other hand, figures next week are likely to show inflation hit 4% in January, and economists believe it will go higher still.
"The MPC is coming under intensive pressure to raise rates," Bank of America/Merrill Lynch interest rate strategist John Wraith wrote.
Last month the BoE surprised markets when new MPC member Martin Weale joined long-standing hawk Andrew Sentance to call for a rise in rates to 0.75% from a record low 0.5%, and other MPC members said their decision was "finely balanced".
Inflation has exceeded the BoE's 2% target by at least a percentage point for over a year. On Jan. 25, BoE Governor Mervyn King predicted it could near 5% in the coming months.
But King said inflation remained on track to return to target early next year.
The tension between high current inflation and the BoE's official forecast that it will be well below target in barely a year's time lies at the heart of the split between money market and economists' views of likely BoE policy.
Money markets see almost a 20% chance of a rate rise at 1200 GMT on Thursday and a near certainty of a move by May.
By contrast, fewer than a third of economists polled by Reuters last week expect rates to rise before the final three months of this year.
AUD/USD fell through $1.0040 and tested tech support at $1.0033 (50% $0.9866/1.0201 move). Further support $1.0015/20. Low print so far $1.0034 with
spot currently $1.0052.
GBP/USD rises after session lows of $1.6028. Rate back above $1.6060 again as renewed selling from model accounts in euro sterling gives cable a boost. Spot now $1.6062/65.
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