ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
07.00pm	GBP	Bank of England Bank Rate	1.25%	1.25%
07.00pm	GBP	Bank of England Inflation Report	N/A	N/A

(Source: FabTrader)

OVERNIGHT NEWS

• US: 
• US Import prices rose less than expected in June to 0.2% (Exp. 0.5%) despite the fact that Petroleum import prices rose 6.4% and natural gas 5.2%. However, ex-energy prices for all other goods fell 0.3% in their largest decline since December. Prices for food, machinery and consumer-related products all fell. U.S. export prices rose 0.8% MoM to post their third straight monthly increase. 
• The U.S. federal government delivered a budget surplus of $6.3bln (Mkt est: +$19bln) during June, well down from the $50.5bln surplus enjoyed a year ago. Nonetheless the overall budget deficit widened to its highest level in two years, as revenue growth continued to slow. Over the past year, the deficit increased 20.6% to $523bln. In the 12 months through June, the deficit represented 2.9% of gross domestic product, up from 2.6% through May, and the highest level since March 2015. 
• According to the Beige Book, the US economy continued to expand at a modest pace from mid-May through the end of June. Employment continued to grow modestly, with strong demand for skilled labor. Consumer spending showed signs of softening. Inflation pressures outside of wages “remain slight. Factory activity was “mixed but generally improved across districts. Residential real estate activity strengthened from earlier in the spring, with home sales increasing despite limited inventory. Commercial real estate activity was stable or improved in almost all districts. Wage pressures were "modest to moderate" in most of the central bank's districts and price pressures remained slight
• FED Speech: 
• Dallas Federal Reserve President Robert Kaplan said a "slow, gradual, careful" approach to raising interest rates is appropriate as the U.S. central bank deals with global headwinds. Kaplan said the Fed needs to calibrate monetary policy more cautiously now than it did five or six years ago in the face of China's economic slowdown, the possible impact of Brexit on global and U.S. economic growth, and other global threats. "Accommodation should be removed only in a slow and patient manner," 
• CANADA
• Bank of Canada kept the rates on hold at 0.5% as expected and said that climate of heightened uncertainty" exists, primarily due to the U.K. referendum, which is likely to weigh on the decision-making processes of businesses and households. However, a projected increase in rising global demand -- particularly in the U.S. -- will help bolster the Canadian economy
• BOC sees real GDP contracting by about 1.0% in 2Q, which followed a 2.4% increase in 1Q in large part due to even weaker expectations for business investment and exports. The BOC sees economic growth advancing by 3.5% in 3Q amid the resumption of oil production and restorative efforts commencing in the wake of the Fort McMurray wildfires.
• BOC sees CPI to be 1.6% in 2016, and price gains are expected to average close to 2.0% in 2017 amid a narrowing output gap.
• UK
• Theresa May fired George Osborne, the chief strategist of Cameron’s administration and the architect of his flagship austerity policies, as finance minister. She replaced him with Philip Hammond, the former foreign secretary.
• Boris Johnson, who was named foreign secretary.  David Davis was assigned the task of overseeing Brexit negotiations, and Liam Fox will have to negotiate new trade deals.

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	96.31	-0.06%	96.093 – 96.598
EURUSD	1.1096	0.23%	1.1042 – 1.112
USDJPY	104.23	0.03%	103.91 - 104.86
AUDUSD	0.7597	0.08%	0.7578 – 0.7638
GBPUSD	1.3119	-1.37%	1.3132 - 1.3319

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1345.50	0.63%	1327.61 - 1345.41
Silver	20.43	0.87%	19.8975 - 20.484
Oil (BRENT)	46.26	3.77%	46.14 - 49.22
Oil (WTI)	45.13	2.82%	44.56 - 46.71

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Gold prices rose Wednesday, buoyed by a softer dollar. The price rise is also supported by Holdings in SPDR Gold Shares dropped 16 metric tons to 965.22 metric tons on Tuesday as U.S. equity markets reached record highs. Silver and platinum rose together. 

Oil: Front month WTI crude sank 3.6% to US$45.13 a barrel following bearish U.S. inventory data and a warning from the International Energy Agency about a global oil supply glut. The Energy Information Administration reported that crude stockpiles fell less than expected last week, distillate inventories rose the most since January and gasoline posted a surprise build.

FOREX NEWS

USDCAD came off as the market after the BOC meeting which kept the rates unchanged. The market had concerned about financial stability and property prices but despite a downgrade in growth forecasts, BOC didn’t mention anything about property prices and prefers to keep its ammunition. is very long the pair and was expecting a more bearish BOC. USDCAD is now testing again the 100d MA at 1.2982 and expect more stops on the downside if we manage to close the day below that level

UK Rates and GBP fell overnight as we saw fresh selling interest from funds to go short ahead of the BOE meeting today where a cut is expected.  Most market players still believe that the upside is very limited for GBPUSD and the market is again targeting 1.3000 and below. We are already pricing 80% chance of cut though so the first reaction after the rate cut could be painful

After the unexpected rate cut by BNM in Malaysia yesterday, the market started to get paid first pushing USDMYR at 4.0100 and then we saw a big collapse to 4.9400 at the lows on the expectation that this rate cut would open the door for more bond inflows and at least that BNM will keep rates low for much longer 

Asian shares hover near eight-month peak on BoE rate cut hope

Asian shares remained near an eight-month high on Thursday as investors bet the Bank of England will cut rates to ward off recession following Britain's vote to leave the European Union.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent, hovering near the highest level since November it reached on Wednesday. Japan's Nikkei .N225 added 0.8 percent.

Chinese stocks, however, were lower, with the CSI 300 index .CSI300 slipping 0.3 percent and the Shanghai Composite .SSEC down 0.4 percent. Hong Kong's Hang Seng .HSI was little changed.

U.S. stocks ticked up on Wednesday, just enough for the S&P 500 and Dow industrials to set record highs, with investors expecting upbeat earnings to keep the rally going.

Wall Street shares have quickly recovered the losses triggered by Britain's vote on June 23 to leave the European Union, driven by solid U.S. economic data.

"Brexit doesn't mean a breakdown of the global financial system after all, nor a major slowdown in the economies outside the UK," said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank in Tokyo. "Investor activity is slowing down after June 24 but uncertainty is gradually easing."

In addition, concerns that Brexit could disrupt European economies effectively took a Federal Reserve rate hike off the agenda in the near future, and boosted expectations of more monetary stimulus from central banks in Europe and Japan.

Financial markets expect the Bank of England to announce a rate cut later on Thursday. Governor Mark Carney has hinted he may ease policy to cushion the economy from the Brexit shock.

The British pound GBP=D4 advanced 0.3 percent to $1.3194 on Thursday. Sterling climbed to this week's high of $1.3340 on Wednesday as political uncertainty eased following the appointment of Theresa May as prime minister.

But it ended the day down 1.4 percent from that peak after May named leading Brexit supporters to key positions in her new government, including former London mayor Boris Johnson as foreign secretary, and attention shifted toward a possible rate cut by the Bank of England.

"The Brexit vote appears to be having a psychological effect as informal measures of consumer confidence have already fallen precipitously," David Lafferty, chief market strategist at Natixis Global Asset Management, wrote in a note.

"Having argued that Brexit may lead to recession, it may be difficult for (Carney) to justify postponing a rate cut."

The euro EUR= was stuck in its familiar range and last stood up 0.2 percent at $1.1108.

While the European Central Bank is expected to keep policy on hold at its meeting next week, the euro's overnight index swaps were pricing in further rate cuts over coming months. EUROIS.

The yen, which slid 3.9 percent over the first three days of this week, extended losses by 0.2 percent to 104.75 to the dollar JPY=.

Japanese Prime Minister Shinzo Abe called for fiscal stimulus, expected to reach about two percent of GDP, following his election victory on Sunday. 

Oil prices bounced back after losses of over 4 percent on Wednesday that erased most of the previous session's gains, as a run of bearish U.S. inventory data heightened concerns about a global glut.

Global benchmark Brent crude futures LCOc1 gained 1.2 percent to $46.79 per barrel.

U.S. crude CLc1 added 1 percent to $45.18.

The revival in risk appetite weighed on gold. Spot gold XAU= retreated 0.3 percent to $1,338.40 an ounce.(Source: reuters.com)