1. ECB to react to EUR strength
The European Central Bank meets for the first time since the Federal Reserve changed its monetary policy doctrine to essentially increase its inflation tolerance. The dollar has weakened since then, pushing the EUR/USD up to its highest in over two years, with many analysts forecasting a further run up to $1.25 in the coming months.
The Financial Times reported on Thursday that President Christine Lagarde will include a sentence on the exchange rate in the introductory statement at her press conference at 8:30 AM ET (1230 GMT), prompting speculation that she will try to talk the euro down.
Whether she succeeds in that may depend on how her words fit the ECB’s new forecasts for growth and inflation. The ECB already expects to undershoot its CPI target through 2022, and any downward revision to that forecast will be tantamount to admitting that more stimulus is necessary, even though the final Q2 GDP reading suggested the Eurozone economy shrank by less than first thought.
2. Jobless claims to show further drop
In the U.S., the weekly jobless claims data will be released at 8:30 AM ET. These have had a diminishing impact on financial markets in recent weeks, with little change evident in the narrative of a slowly recovering labor market.
Wednesday’s job openings survey from the Bureau of Labor Statistics pointed to a much bigger rise in vacancies than expected, which suggests there is room for a positive surprise. Consensus forecasts expect initial claims to have fallen to 848,000 from 881,000 last week, while continuing claims – which come with a one-week lag – are expected to have fallen to 12.925 million from 13.354 million.
As always, it will be important to look beyond those headlines to the total number of people claiming unemployment-related benefits, which stuck above 29 million in last week’s report.
3. Stocks set to open lower; Senate stimulus bill eyed
U.S. stocks are set to open lower, as the pace of selling picks up again in the wake of Wednesday’s bounce.
By 6:35 AM ET (1035 GMT), the Dow 30 futures contract was down 160 points or 0.6% and S&P 500 Futures were down by slightly less.
NASDAQ Futures, where volatility has been highest in recent sessions, were down 0.5%.
In addition to the jobless claims numbers, there will be producer price inflation data for August, along with earnings reports after the closing bell from Oracle (NYSE:ORCL), exercise bike maker Peloton (NASDAQ:PTON) and pet food group Chewy (NYSE:CHWY).
Participants will also keep one eye on the Senate’s vote on a slimmed-down stimulus package.
4. China’s regulator steps in to stop retail speculation
China’s tech stocks, which have also enjoyed a retail-investor-driven rally during the summer, continued to slide after the Securities Regulatory Commission moved to limit ‘speculative’ trading.
The Chinext index, where many of the country’s hottest startups are listed, fell another 1.6% and is now down 10% from the start of the month.
More than 300 start-ups dropped more than 10% on Thursday, including 50 companies hitting their downside trading limits, Reuters reported.
Korea’s KOSDAQ index, by contrast, surged another 1.7% to a fresh all-time high on perceptions that its companies will be among the biggest beneficiaries of U.S. moves to exclude Huawei from global telecoms infrastructure.
5. Oil slumps again after inventory data
Oil prices gave up Wednesday’s gains on nagging worries about global oversupply or, more accurately, a shortfall of demand as the world economy struggles to get back to pre-pandemic levels of activity.
The mood was soured by the American Petroleum Institute’s weekly report that showed U.S. crude inventories rose by nearly 3 million barrels last week, instead of falling as expected. The government’s data are due at 10:30 AM ET.
By 6:30 AM ET, U.S. crude futures were down 1.5% at $37.47 a barrel, while Brent futures were down 1.2% at $40.30 a barrel.