Gold decreased to the lowest level in two weeks, after better-than-forecast U.S. economic report increased concerns the Federal Reserve may begin to scale back its bond purchases. Spot gold dropped 1.6% to $1,287.56 per ounce and U.S. gold retreated $24 to $1,287.10, adding to signs gold is heading towards the worst weekly decline in four weeks.
Growth in U.K. construction industry accelerated in July and was the fastest in 3 years. A gauge of activity in the sector rose from 51 in June to 57 in July, while experts predicted a rise to 51.5. Residential construction activity increased most since June 2010, while commercial construction activity rose the fastest since May 2012. The Pound rose 0.2%
U.K. government gilts jumped, sending 10-year note yields to the highest level in three weeks, on signals that U.K. economy is improving, damping demand for safer bonds. The U.K. 10-year note yield increased seven basis points to 2.47% and the price of the 1.75% security maturing in September 2022 declined 0.565 to 94.14.
The Pound inched up versus the U.S. Dollar as Britain's construction report was released, indicating the strongest construction production improvement since June 2010. The Sterling advanced 0.31% to $1.5165 versus the greenback and rose 0.213 to £0.8717 versus the common currency, and added 0.45% to 151.148 versus the Yen.
The British currency declined to the lowest level in two weeks versus the greenback on signs that U.K. economy's recovery will give an impact on U.S. The Sterling traded at $1.5131 by 8:33 a.m. in London, after depreciating to $1.5102, the lowest since July 17. The Pound was at 87.35 pence versus the Euro, falling 1.2% weekly.
The Canadian currency declined the most in more than a month on bets that the U.S. unemployment rate fall may lead to earlier than expected stimulus tapering. The Loonie weakened 0.7% to C$1.0346 per U.S. Dollar as of 5 p.m. Toronto time, making it the lowest level for the currency since June 21. One Canadian Dollar buys 96.66 U.S. cents.
The U.S. Dollar headed towards weekly adds versus all its major counterparts as recovery in the U.S. economy boosted the case for the Federal Reserve to scale back bond-buying programme. The greenback remained flat at $1.3210 versus the Euro and reached 99.70 against the Japanese Yen, the highest level since July 25.
German government bunds declined, with 10-year notes set for the second weekly fall, ahead of data that analysts forecast will indicate Euro block's producer costs rose in June. German 10-year bond yield advanced three basis points to 1.69% and the 1.5% note maturing in May 2023 decreased 0.225 to 98.28.
The U.S. Dollar was very bullish after manufacturing and jobs data from the United States turned out to be better-than-expected. The Swiss Franc declined 0.76% to 0.9331 at 5:20 p.m. CET after the promising U.S. data was revealed. Against the 17-nation currency, the Franc traded 0.27% lower to 1.2353 as the ECB decided not to change its monetary policy.
Developing market equities gained for the first time in almost a week as manufacturing data from China showed significant improvement and a increase in oil prices helped producers. The MSCI Emerging Markets gauge advanced 0.5% to 952.36 as of 10:50 a.m. New York time, after declining 2.2% in the last six days. Also Shanghai Composite added 1.8%.
Wall Street stocks touched record highs, with the S&P 500 and the Dow Jones reaching new highs for the second day, on positive U.S. ISM manufacturing and labor report. The Standard & Poor's 500 jumped 1.06% to 1,703.56, while the Nasdaq Composite increased 1.12% to 3,666.98, and the Dow Jones Industrial Average gained 0.86% to 15,632.33.
Canadian stocks advanced, heading for the largest increase in three consecutive weeks, as energy companies gained after China's manufacturing surprisingly improved and the Federal Reserve kept its asset-purchase programme. The S&P/TSX Composite Index added 1% to 12,612.81 as of 10:27 a.m. Toronto time.
The Australian currency reached the weakest level in 35 months versus the greenback during morning session on Wall Street. The U.S. Dollar is strengthening this week amid positive economic data releases. The Aussie declined to $0.8911, the lowest level in 35 months. The Australian Dollar also fell versus the common currency by 0.11% to A$1.4818.
Manufacturing in the United States not only grew more than analysts expected, but also did it at the fastest pace in at least two years. The Institute of Supply Management manufacturing gauge rose from 50.9 to 55.4 points in July, the highest level sine the summer of 2011. The advance exceeded any economists' forecast that participated in a Bloomberg poll.
The Standard & Poor' 500 gauge climbed above 1,700 after several central banks said to continue accommodative monetary policy and unemployment insurance claims dropped to a five-year low. The benchmark added 0.9% to 1,700.33 as of 9:33 a.m. in New York. Current news positively affects stock markets as they are driven by the Federal Reserves policy and good earnings.
Czech central bank decided to keep its key interest rate at 0.05, also called "technical zero", which is nearly half a point lower than The European Central bank's rate. Currently, authorities have not made any further comments before the news conference at 4:00 p.m. Prague time. The Koruna added 0.2% to 25.913 per Euro at 12:31 Prague time.
German government bunds advanced, with 10-year yields falling the most in about three weeks, as the European Central Bank President Mario Draghi announced interest rates will stay unchanged. German benchmark 10-year bond yield dropped five basis points to 1.62% and the 1.5% note expiring in May 2023 inched up to 98.9.
Treasuries dropped as less Americans applied for unemployment insurance last week. Reports showed that the number of claims is at the lowest level since 2008. Expectation of tomorrow's reports showing improving manufacturing sector is an additional factor for 10-year treasury yields gaining five basis points to 2.62% as of 8:35 a.m. in New York.
The common currency remained lower versus the greenback as the European Central Bank decided to maintain the key interest rate unchanged, while investors expect the ECB Governor Mario Draghi's press conference. The Euro declined 0.44% to $1.3242 against the Dollar, adding to signs the Euro fell from the strongest level in one and a half months.
Claims for unemployment benefits surprisingly decreased to a five-year low in the U.S. The number of Americans filling jobless claims declined by 19,000 to 320,000 in July 27 from 245,000 a week before. Surveyed economists expected 345,000 new claims. The data may indicate that employers are more optimistic about the nation's recovery.
The British Pound climbed slightly versus the U.S. Dollar after the Bank of England announced not changing monetary stimulus course. Additional factor for the gain was encouraging manufacturing data for July. The British Pound rose 0.17% to $1.5233 against the greenback at 11:02 a.m. GMT. The BoE made a decision of keeping key interest level at 0.5% and asset purchases
U.K. manufacturing expansion accelerated more than analysts predicted last month, adding to signs Britain's economy is recovering at a faster pace and boosting the case for the Bank of England to maintain stimulus paused. The factory measure increased from 52.9 in June to 54.6 in previous month, the highest level in 28 months.
Stocks in the U.K. appreciated, led by Lloyds Banking Group Plc and commodity producers. Country's mining companies gained after unexpected expansion in Chinese manufacturing, while Lloyds rose to the highest point since October 2010. The FTSE 100 jumped 0.3% to 6,643.55, while the FTSE All-Share Index gained 0.4% so far today. The ISEQ gauge rallied 0.8%.
German bunds rose most in almost 3 weeks as investors speculated that the ECB will keep rates at record lows. Yield on 10-year government securities decreased 6 basis points to 1.61%, the biggest drop since July 12. Similar-maturity France's bonds yield slid 0.06 percentage points to 2.18%, while Austria's yield slipped 0.05 percentage points to 2.03%.