Market Roundup
• Trump brings tough trade message in vision for Asia.
• N.Y. Fed sees U.S economy growth near 3.2 pct in fourth quarter.
• TPP countries salvage agreement to keep trade deal alive.
• China widens foreign access to its giant financial sector.
• EU wants Brexit money this month, Davis seeks "political" fix.
• Bitcoin slides by over $1000 in less than 48 hours.
• Industry shines in otherwise hazy vista for UK economy.
• U Mich Nov Sentiment prelim, 97.8, 100.7 forecast, 100.7 previous.
• U Mich Nov 1 yr inflation prelim, 2.6%, 2.4% previous.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Oct Corp goods price m/m, 0.1% forecast, 0.2% previous (Nov 12)
• 23:50 Japan Oct Corp goods price y/y, 3.1% forecast, 3.0% previous (Nov 12)
Looking Ahead - Events, Other Releases (GMT)
• 10:00 ECB President Mario Draghi speaks in Milan, Italy (Nov 11)
• 00:10 Philadelphia Fed President Patrick Harker speaks in Tokyo (Nov 13)
Currency Summaries
EUR/USD is likely to find support at 1.1605 levels and currently trading at 1.1666 levels. The pair has made session high at 1.1667 and hit lows at 1.1648 levels. The euro rose against the dollar on Friday as the disappointment that a landmark U.S. tax overhaul may be delayed until 2019 put a brake on the dollar’s recent rally. U.S. Senate Republicans unveiled a tax plan on Thursday that differed from the House of Representatives' version on several key fronts, including how they treat the corporate tax rate, the tax deduction for state and local taxes, and the estate tax. Complicating a Republican push for the biggest overhaul of U.S. tax law since the 1980s, senators said that, like the House, they wanted to slash the corporate tax rate to 20 percent from 35 percent, but in 2019, not right away. The House was set to vote on its measure next week after its tax-writing Ways and Means Committee approved the legislation on Thursday along party lines, with Democrats united in opposition. The Senate's timetable was less clear, with a formal bill yet to be drafted in that chamber, where Republicans have a much smaller majority and a narrower path to winning approval for any legislation, let alone one as contentious as a tax package. The dollar index, which tracks the greenback against six major currencies, was down 0.08 percent at 94.37. For the week, the index was down 0.6 percent, on pace for its worst performance since the week ending Oct. 13.
GBP/USD is supported in the range of 1.3085 levels and currently trading at 1.3198 levels. It reached session high at 1.3229 and dropped to session low at 1.3143 levels. Sterling gained around half a percent against the dollar on Friday as better-than-expected data on British industry and rising confidence in the progress of Brexit talks supported the currency. Negotiations aimed at unraveling over four decades of union between Britain and the other European member states restarted this week, promising more clarity about the shape of a future divorce deal and easing some of the political uncertainty that has pressured the pound. The European Union's chief negotiator Michel Barnier said the bloc was willing to reach an accord on an orderly Brexit, but expected clarification on three key issues including the contested divorce bill within the next two weeks. Sterling was up 0.5 percent against the dollar, trading at $1.3200 at 20:00 GMT and posting its first week of gains in four. It was also up against the euro, trading 0.4 percent higher at 88.23 pence. Strong data on trade and industrial output on Friday also provided a welcome if modest - boost for the pound. British industrial output increased in September at the fastest pace this year and well above all forecasts in a poll of economists, the numbers showed. The goods trade deficit also improved.
USD/CAD is supported at 1.2619 levels and is trading at 1.2676 levels. It has made session high at 1.2694 and lows at 1.2667 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as Canadian benefited from a recent rise in oil prices and a weakening of the greenback this week. The U.S. dollar stabilized against a basket of major currencies but was set for its biggest weekly drop in a month on disappointment that a landmark U.S. tax bill may be delayed until 2019. The price of oil, one of Canada's major exports, gained support from continuing supply cuts and expectations that an output deal would be extended at the end of the month. A planned meeting of leaders of the 11 countries in the Trans-Pacific Partnership to decide on the fate of the trade pact did not take place on Friday, amid disagreements over how to take it forward without the United States. Canada, whose economy is the second-largest among the TPP-11 after Japan, has said it would not be rushed into a revived deal. Like Mexico, its position is further complicated by renegotiation of the North American Free Trade Agreement with the United States. The Canadian dollar was last trading at C$1.2676 to the greenback. The currency's weakest level of the session was C$1.2694, while it touched its strongest since Oct. 25 at C$1.2666.
AUD/USD is supported around 0.7636 levels and currently trading at 0.7660 levels. It hit session high at 0.7680 and made session lows at 0.7651 levels. The Australian dollar declined on Friday after the country's central bank downgraded forecasts for inflation and growth, signalling that interest rates will remain steady. The Australian dollar was a tad weaker at $0.7661. It went as low as $0.7650 after the Reserve Bank of Australia's (RBA) quarterly statement on monetary policy. Recently, the Aussie has been trapped in a band of $0.7622-$0.7729 but it has managed to eke out a 0.4 percent gain for the week. Technical analysts say the Aussie needs to break above $0.7700 to gain upside momentum. Australia's central bank has sliced its forecasts for core inflation which is seen lurking under its long-term target band for another two years, a strong signal that interest rates won't rise for a long time to come. In its 72-page statement on monetary policy on Friday, the Reserve Bank of Australia (RBA) also projected little improvement in the unemployment rate despite a surge in jobs since the start of the year. Just last August, the central bank had predicted core inflation would reach 2 percent in the second half of this year. But data out last month showing another quarter of lukewarm consumer prices has poured cold water over those projections.
Equities Recap
European shares suffered their worst week in three months on Friday, as a slowdown in earnings growth and jitters in bond markets spurred profit-taking in a market that remains close to two-year highs.
The UK's benchmark FTSE 100 closed down by 0.7 percent, FTSEurofirst 300 ended the day down by 0.39 percent, Germany's Dax ended down by 0.5 percent, and France’s CAC finished down by 0.5 percent.
Wall Street ended nearly unchanged on Friday, with losses in Intel and Apple as investors worried about the future of promised corporate tax cuts following dueling plans unveiled by Republican U.S. lawmakers.
Dow Jones closed down by 0.17 percent, S&P 500 ended down 0.09 percent, Nasdaq finished the day up by 0.01 percent.
Treasuries Recap
U.S. Treasury yields rose on Friday, with two-year yields at a nine-year high as traders closed out some curve-flattener positions and dealers reduced their holdings of longer-dated debt following this week's auctions.
The two-year yield hovered at a nine-yield high of 1.650 percent, which was up over 2 basis points on the day.
The yield spread between two-year and 10-year Treasuries widened to 72.1 basis points from a decade-tight level of 65.9 basis points set on Thursday.
Commodities Recap
Gold prices turned lower on Friday as U.S. Treasury bond yields rose, but losses were limited by weaker stock markets and the dollar, which fell due to uncertainty over U.S. tax reform.
Spot gold was down 0.7 percent at $1,275.60 an ounce by 1:55 p.m. EST (1855 GMT). It touched $1,288.34 on Thursday, its highest since Oct. 20 and was on track for a 0.5 percent weekly rise.
U.S. gold futures for December delivery settled down $13.30, or 1 percent, at $1,274.20 per ounce, a 0.4 percent weekly rise.
Crude was down slightly on Friday as expectations OPEC and other producers will extend their production cut agreement were offset by U.S. drillers adding the most oil rigs in a week since June, indicating output will continue to grow.
Brent futures fell 38 cents, or 0.6 percent, at $63.55 a barrel by 1:12 p.m. EST (1813 GMT), while U.S. West Texas Intermediate crude was down 45 cents at $56.72 per barrel.
