· In the currency market, the dollar index, which measures the greenback against a basket of its peer, traded at 97.421, climbing from levels near 96.900 earlier in the week. The Japanese yen traded at 111.97 to the dollar, weakening from levels near 111.20 in the previous week.
The euro EURUSD, +0.0356% traded at $1.1240 versus the dollar, compared with a level in late New York trading Wednesday of $1.1296. The euro extended its decline — and the dollar strengthened versus most major rivals — after U.S. March retail sales data came in stronger than expected.
· The U.S. dollar gained on Thursday on strong retail sales data, while the euro was dented by weak manufacturing data in the region.
U.S. retail sales increased by the most in 1-1/2 years in March as households boosted purchases of motor vehicles and a range of other goods, the latest indication that economic growth picked up in the first quarter after a false start.
Other data showed that the number of Americans filing applications for unemployment benefits fell to more than a 49-1/2-year low last week, pointing to sustained strength in the economy.
The picture was less bullish in the Eurozone as data showed that activity in Germany’s manufacturing sector shrank for a fourth straight month in April, while a similar survey from France also painted a bleak picture.
· U.S. retail sales surged in March at the fastest pace since late 2017, the Commerce Department said. Economists polled by Refinitiv expected a gain of 0.9%. The jump in sales was driven by more spending on autos, gasoline, furniture, and clothing.
· “A bounce in consumption is consistent with the pendulum of economic sentiment swinging back from the extreme negatives seen last month,” said Ian Lyngen, head of U.S. rates at BMO, in a note. “It also implies the Fed’s explicit bet on the return of the consumer in Q2 might yet pay off.”
· The number of Americans filing applications for unemployment benefits fell to more than a 49-1/2-year low last week, pointing to sustained strength in the economy.
Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 192,000 for the week ended April 13, the lowest level since September 1969, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.
Claims have now declined for five straight weeks. Economists polled by Reuters had forecast claims would rise to 205,000 in the latest week.
· The new North American free trade pact would modestly boost the U.S. economy, especially auto parts production, but may curb vehicle assembly and limit consumer choice in cars, a hotly anticipated analysis from the U.S. International Trade Commission showed on Thursday.
The ITC report is a crucial step in the push for Congress to consider ratification of the U.S.-Mexico-Canada Agreement, which was signed by President Donald Trump and the leaders of the other two countries last year to replace the 25-year-old North American Free Trade Agreement.
The report estimates that annual U.S. real gross domestic product would increase by 0.35 percent, or $68.5 billion, on an annual basis compared to a NAFTA baseline, and would add 176,000 U.S. jobs, while raising U.S. exports.
· Special Counsel Robert Mueller’s report on his inquiry into Russia’s role in the 2016 U.S. election described in extensive and sometimes unflattering detail how President Donald Trump tried to impede the probe, raising questions about whether he committed the crime of obstruction of justice.
Democrats said the report contained disturbing evidence of wrongdoing by Trump that could fuel congressional investigations, but there was no immediate indication they would try to remove him from office through impeachment.
But Mueller, a former FBI director, concluded there was not enough evidence to establish that Trump’s campaign engaged in a criminal conspiracy with Moscow.
· China’s better-than-expected first quarter economic growth has spurred some investment banks to raise their growth forecasts for this year.
Economists at Barclays, ING and Citi have raised their China growth outlook for 2019 on Wednesday, though others may be holding off for now.
Economists at Barclays raised their expectation for GDP expansion for this year to 6.5 percent from the previous 6.2 percent, citing the surprise first-quarter growth result.
Other analysts saw positives in the first-quarter numbers but were more cautious in their outlook.
J.P. Morgan economists said they expect “solid growth momentum” in the second and third quarters as stimulus continues to bolster the economy. But they added that the impact will eventually weaken by the end of the year. They kept their overall forecast for this year at 6.4 percent.
Standard Chartered also kept its full-year prediction at 6.4 percent, cautioning against “risks of being over-optimistic about China’s growth outlook.”
· Japan’s core inflation picked up slightly in March from a year earlier, but remained distant from the Bank of Japan’s ambitious 2 percent target in a sign of rising pressure on the central bank.
Over the past year, policymakers have had to contend with a slowdown in global demand as the Sino-U.S. tariff war put a dent in world trade and hit Japanese exporters. This has made the Bank of Japan’s task of generating inflation even more difficult.
Data on Friday showed a 0.8 percent increase in the nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food costs, compared with a median market forecast of 0.7 percent. In February, annual core consumer inflation hit 0.7 percent.
· Oil prices were slightly higher on Thursday, as a drop in crude shipments from top exporter Saudi Arabia and a draw in U.S. oil inventories supported prices.
Crude futures traded in a narrow range, with gains held in check by a strengthening dollar and tepid equities.
U.S. West Texas Intermediate crude futures settled 24 cents higher at $64 per barrel. Brent crude futures rose 35 cents, or half a percent, to $71.97 a barrel, near Wednesday’s five-month high of $72.27 a barrel.
· Saudi Arabia’s crude oil exports fell by 277,000 barrels per day just under 7 million bpd in February from the month before, according to data from the Joint Organizations Data Initiative.
· President Nicolas Maduro is funneling cash flow from Venezuelan oil sales through Russian state energy giant Rosneft as he seeks to evade U.S. sanctions designed to oust him from power, according to sources and documents reviewed by Reuters.
Since January, Maduro’s administration has been in talks with allies in Moscow about ways to circumvent a ban on clients paying PDVSA in dollars, the sources said. Russia has publicly said the U.S. sanctions are illegal and it would work with Venezuela to weather them.
Reference: CNBC, Reuters, Market Watch
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