· The Swedish crown plummeted to a 17-year low on Thursday after the country’s central bank delayed its next interest rate hike.
The Riksbank began normalising policy in December due to a strong economy but it has since joined its counterparts in Europe and Canada in adopting a cautious outlook.
Still, its message of restraint and concern about weak inflationary pressure caught some investors off guard.
The crown sank 1.4 percent versus the dollar to 9.55, its lowest since August 2002 and was headed for its biggest daily loss versus the euro since November.
· The euro languished near a 22-month low, weighed down by ailing growth in Germany and the spectre of political uncertainty in Spain.
A surprise drop in German business morale has highlighted the divergence between economic data in the United States and the euro zone. The euro has recently traded in a fairly narrow range but expectations of price swings in next month’s elections for the European Parliament have risen according to implied volatility gauges.
The European Central Bank in March pushed out the timing of its first post-crisis rate hike until 2020 and that is impacting the euro. It suffered its worst day in over six weeks on Wednesday, falling 0.6 percent to a 22-month low of $1.1141. It traded flat on Thursday at $1.1154.
· The greenback rallied to a 23-month high of 98.189 against a basket of key rivals largely propelled by the euro’s weakness. The index last traded 0.15 percent lower at 98.027.
· Filings for U.S. unemployment benefits rose the most since late 2017, while still remaining in the range of what’s considered a tight labor market.
Jobless claims rose 37,000 to 230,000 in the week ended April 20, according to Labor Department figures Thursday that matched the highest estimate in Bloomberg’s survey. The four-week average, a less-volatile measure, increased to 206,000.
· Investors will watch the release on Friday of U.S. gross domestic product data for the first three months of 2019, for signs of whether the United States remains stronger than other leading economies.
· Turkey’s troubled lira fell to its lowest level since October on Thursday after its central bank scrapped a pledge to raise interest rates if needed.
The monetary tightening pause, now in its seventh month, is repelling investors already worried about double-digit inflation, unorthodox policy, political influence over the central bank’s independence, and dramatic yet unexplained moves in Turkey’s foreign currency reserves.
The lira was trading at 5.9502 to the dollar at 2:30 p.m. London time, and was down 1.5% at one point during the session. It is now down 7% on the greenback in the last month.
· Several economists, including one from U.S. banking giant J.P. Morgan, have downgraded their 2019 growth forecasts for South Korea, after an official estimate showed the north Asian economy unexpectedly shrank in the first quarter.
The country’s central bank, the Bank of Korea, surprised investors and analysts on Thursday by announcing that the economy contracted by 0.3% on a quarterly basis in the period from January to March this year. None of the economists polled by Reuters had foreseen a contraction.
Compared to a year ago, the South Korean economy grew by 1.8% in the first quarter, according to the central bank’s advance estimate. That’s below the 2.5% expansion that the Reuters poll had projected.
The disappointing economic performance in the first quarter led at least three economists to revise downward their annual growth forecasts for South Korea.
The economist now expects South Korea to grow by 2.4% for the full year, down from the previous projection of 2.6%. The north Asian economy had grown by 2.7% in 2018.
· Spain is holding a snap election on April 28 and the vote may throw up some surprising results that could have ramifications for the wider political landscape in Europe.
Prime Minister Pedro Sanchez, the leader of the Spanish Socialist Workers’ Party (PSOE), called the election in February. This came after Catalan pro-independence parties, on whose support Sanchez’s minority government relies, joined forces with the center-right opposition and rejected the government’s 2019 budget proposals.
Opinion polls in recent weeks have consistently signaled that Sanchez’s socialists could win the largest share of the vote — but not enough for the party to govern alone.
· Japanese Finance Minister Taro Aso said on Thursday he told U.S. Treasury Secretary Steven Mnuchin that Tokyo cannot accept discussions that link monetary policy to trade issues.
Aso, who met Mnuchin on the eve of a summit between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe in Washington, said the two countries also agreed that exchange-rate matters would be discussed between financial authorities.
· Japan’s factory output fell in March for the first time in two months and inventories rose at the fastest pace in a year as the U.S.-Sino trade war dents the country’s manufacturing sector.
Factory output fell 0.9 percent in March, data by the Ministry of Economy, Trade and Industry (METI) showed, more than a median estimate for a 0.1 percent decline in a Reuters poll of economists. That followed a 0.7 percent increase in February.
The mounting pressure on Japan’s economy from weak external demand has hurt exports and threatens corporate profits, which could weigh on capital expenditure and make it more difficult to keep growth on track, analysts say.
· Russian President Vladimir Putin said that North Korean leader Kim Jong Un wants to denuclearize but needs “security guarantees” to do so.
Speaking after a high-profile summit with Kim, Putin said Russia favored denuclearization on the Korean Peninsula and Kim agreed, but said bilateral security guarantees were not enough.
Putin said Thursday that a resumption of such talks “will help provide international security guarantees,” Reuters reported.
· Oil prices turned sharply lower heading into Thursday’s settlement after trading in a tight range much of the day.
Brent crude earlier topped $75 per barrel for the first time in nearly six months as quality concerns halted some Russian crude exports to Europe and the United States prepared to tighten sanctions on Iran.
Wednesday’s report of a bigger-than-expected build in U.S. crude inventories last week to their highest since October 2017 was weighing on the U.S. benchmark, analysts said.
U.S. West Texas Intermediate crude settled 68 cents lower at $65.21 per barrel, down 1% and slipping further from this week’s 2019 high at $66.60.
Brent crude futures fell 22 cents at $74.35, breaking a four-day winning streak. Brent earlier hit a session high of $75.60, the strongest since Oct. 31.
Reference: CNBC, Reuters, Bloomberg
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