ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
2030	USD	Change in Nonfarm Payrolls	180K	287K

(Source: FabTrader)

OVERNIGHT NEWS

• UK: 
• The BOE cut its benchmark for the first time in seven years to a record low 0.25% and increased the Asset purchase by GBP 60 Bn tp GBP 435 Bn
• The BoE also announced two new stimulus initiatives. One will buy £10bln of high-grade corporate debt and the second - potentially worth up to £100bln - is to ensure banks pass on the full 25bps rate cut to borrowers. The Term Funding Scheme is designed ensure lower interest rates set by the BoE are reflected in the costs commercial banks charge households and firms to borrow funds. For the next 18 months lenders will be able to borrow four-year central bank reserves at rates close to the Bank Rate. They will charge a penalty rate to banks that reduce net lending. 
• The BoE left its forecast for growth this year steady at 2.0% but downgraded 2017 growth to just 0.8% (Prev: +2.3%). The growth outlook for 2018 was cut to 1.8%. 
• BOE Carney said that:
• By acting early and comprehensively, the (Bank) can reduce uncertainty, bolster confidence, blunt the slowdown and support the necessary adjustments in the UK economy
• Had unveiled an "exceptional package of measures" as the economic outlook had changed markedly following the Brexit vote
• The BoE had scope for more stimulus in the form of rate cuts and quantitative easing, however he ruled out negative interest rates, and rejected "flights of fancy" such as handing out 'helicopter money' with no strings attached. “All of the elements in this package have scope to be increased,”
• US: 
• Initial claims for unemployment benefits crept up 3,000 to a seasonally adjusted 269,000 (Mkt est: 265k) in the week ended July 30. The four-week moving average edged higher by 3,750 to a seasonally adjusted 260,250. Continuing unemployment claims, reflecting workers drawing jobless benefits for more than one week, dipped 6,000 to 2,138,000 (Mkt est: 2,130k). 
• Factory orders dropped 1.5% MoM (Mkt est: -1.9%) falling a revised 1.2% in May (Prev: -1.0%). The drop was primarily due to another steep fall in durable goods orders, neg-3.9%, after diving 2.9% in May. Orders for transportation equipment slumped 10.5%. Excluding transportation orders, factory orders rose 0.4% (Mkt est: neg-0.2%). The increase in ex-transportation orders was partly due to continued growth in orders for non-durable goods, up 1%. Orders for non-defense capital goods excluding aircraft grew 0.4%. 

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	95.75	0.30%	95.472 – 95.904
EURUSD	1.1134	-0.22%	1.1114 – 1.1152
USDJPY	101.21	0.13%	101 - 101.67
AUDUSD	0.718	-0.10%	0.7147 – 0.7201
GBPUSD	1.3127	-1.70%	1.3103 - 1.3346

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1360.31	0.30%	1349.24 - 1365.13
Silver	20.34	0.32%	20.053 - 20.521
Oil (BRENT)	44.29	1.57%	42.51 - 49.22
Oil (WTI)	41.80	1.60%	40.43 - 42.08

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Precious metals were mainly unchanged for the night with Gold still settling close to the highs and 1375 the level to watch on the topside. Silver is also trading at the highs with the range on the wide from 19 and 21

Oil: Oil headed for the first weekly gain in three as declining U.S. output and easing gasoline stockpiles fuelled speculation that supplies at the highest seasonal level in at least two decades will ease. Six-month Brent contango now more than covers the freight costs for the same period, making it economical to store crude at sea, a Bloomberg survey showed. Cargoes for later delivery have averaged $2.83 a barrel higher than prompt shipments in August.

FOREX NEWS

• GBPUSD was the only mover of the night down 1.70% but only reached the bottom of the range of the past month and settled above 1.3000. The move came mainly from the additional QE. Carney saying that he is ruling out negative interest rates is now limiting the expectations of further rate cuts. From the previous IMM data, we could see the market was short GBP but not at extreme levels. There is definitely room to move lower but the main level to break is 1.3000. The major resistance is at 1.3500

Asia stocks gain, pound weakens on BoE easing, U.S. jobs data awaited

The British pound edged lower on Thursday as investors anticipated the Bank of England would cut interest rates to a record low later in the session, while a rebound in oil prices from four-month lows lifted Asian stocks.

The sterling slipped 0.1 percent to $1.3301 GBP=D4, but remained some distance from its three-decade low of $1.2798 hit almost a month ago.

Meanwhile, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, led by gains in resource shares, recovering some ground lost in Wednesday's 1.5 percent decline.

European shares were also set to open higher, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 .FTSE to rise 0.1 percent, and Germany's DAX GDAXI and France's CAC 40 .FCHI to start the day up 0.3 percent.

The Bank of England is expected to cut its policy rate by at least a quarter percentage point to 0.25 percent, making its first reduction since 2009 in a bid to ward off a recession that appeared increasingly likely after the United Kingdom voted to quit the European Union in June.

Currency dealers were uncertain how sterling would react to a rate cut, as it has been largely factored in and the scale of sterling's declines since the Brexit vote could limit the immediate downside.

"Given the market has a 25 basis-point cut priced at 100 percent, one would expect a huge spike in GBP/USD if they fail to ease," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

"But the real issue is whether they cut by 50 basis points and give a strong indication of quantitative easing in the September meeting."

Britain's economy is slowing at the fastest pace since the financial crisis, based on Markit's monthly all-sector Purchasing Managers' Index on Wednesday, which recorded the steepest month-on-month decline on record.

Many market players also believe the BoE may resume its multi-billion-pound quantitative easing program of government bond purchases.

The euro fell 0.1 percent to $1.1141 EUR=EBS, retreating from its 5-week high of $1.1234 touched on Monday.Oil, which jumped more than 3 percent on Wednesday, extended gains in Asian trade on Thursday, as larger-than-expected draw on gasoline stocks in the United States eased concerns about global supply glut.

Brent crude futures LCOc1 rose 0.7 percent on Thursday to $43.38 per barrel, extending its recovery from Monday's four-month low of $41.41. U.S. crude CLc1 gained 0.8 percent to $41.16 per barrel.

Energy shares also rose, contributing to gains on Wall Street, with the S&P 500 index .SPX closing up 0.3 percent on Wednesday.

Japan's Nikkei .N225, which earlier touched a near-four-week low on Thursday, rebounded to end the day up 1.1 percent as the yen weakened.

Against the yen, the dollar was 0.4 percent stronger at 101.650 yen JPY=D4, inching away from Monday's low of 100.68 yen.

Bank of Japan Deputy Governor Kikuo Iwata said on Thursday that a comprehensive review of the central bank's monetary policy next month would focus on the transmission mechanism and obstacles to its monetary policy. However, it is not meant to offer a specific direction for future monetary policy, he said.

Japanese government bonds, which suffered their worst sell-off in more than three years this week on worries the Bank of Japan may be running out of realistic easing options, remained under pressure.

The 10-year JGB yield rose 1 basis point to minus 0.080 percent JP10YTN=JBTC.

The broad increase in risk appetite helped Chinese shares recover some ground lost earlier. China's CSI 300 index .CSI300 gained 0.2 percent, and the Shanghai Composite .SSEC advanced 0.1 percent. Hong Kong's Hang Seng .HSI climbed 0.6 percent.

The dollar bounced back 0.7 percent from Monday's five-week low against a basket of six major currencies as investors looked to July payrolls data on Friday.

The dollar index added 0.1 percent to 95.647 .DXY =USD on Thursday, though it is still far below a 4 1/2-month peak of 97.569 hit last week.

A report from payrolls processor ADP showed on Wednesday U.S. private employers added 179,000 jobs in July, a tad above market expectations and bolstering hopes that Friday's data could show moderate growth in employment.

Soft second-quarter U.S. GDP data and some other mixed data have dented the dollar as they reduced expectations that the Federal Reserve will raise rates this year.

"A September rate hike could only be justified if July and August’s payrolls prove exceptionally strong," David Lafferty, chief market strategist at Natixis Global Asset Management, wrote in a note. "However, a post-election tightening in December is still in the cards provided the macro data doesn’t deteriorate."

Chicago Federal Reserve Bank President Charles Evans said on Wednesday that one rate increase might be appropriate this year, despite his worry that inflation is undershooting the Fed's 2 percent target, because "the real economy is doing quite well."
Read More at www.reuters.com