Market Roundup
• US GDP Outlook stands at 2.0% vs 1.9% previous for 2017 Q2 - NY Fed.
• US GDP Outlook stands at 2.0% vs 1.8% previous for 2017 Q3 - NY Fed.
• Special counsel asks White House to save Trump Jr., Russian meeting documents.
• ECB rate setters see decision on stimulus in October – sources.
• ECB survey: Risks for inflation tilted to the downside in longer term, balanced for GDP growth.
• UK public finances suffer inflation hit, adding to Hammond's headache.
• Oil dives 2%; consultant sees OPEC crude output rise in July.
• Brazil's Temer: No more tax hikes, for now.
• Strong Canadian retail sales seen helping the case for rate hike.
• Mexico's June jobless rate dips to 3.3%, lowest since 2006.
Looking Ahead - Economic Data (GMT)
• 06:00 Japan Nikkei Mfg PMI Jul 52.4 previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0625 levels and currently trading at 1.1672 levels. The pair has made session high at 1.1682 and hit lows at 1.1631 levels. The euro strengthened against the U.S. dollar on Friday as greenback continued its downward march a day after the European Central Bank's chief abstained from talking down the euro, while obstacles to U.S. President Donald Trump's policy agenda also weighed. ECB President Mario Draghi said on Thursday that financing conditions remained broadly supportive, and noted that the euro's appreciation had "received some attention. However, he did not cite that strength as a problem nor did he directly try to talk the currency down. Draghi's apparent lack of concern about the strengthening euro convinced traders that the central bank remained on track to potentially begin tapering its bond-buying stimulus later this year. The dollar index touched 93.952, its lowest level since June of last year, and was last down 0.3 percent at 94.032. The euro touched $1.1677 its highest level against the dollar in nearly two years, and was last up 0.2 percent on the day at $1.1668.
GBP/USD is supported in the range of 1.2930 levels and currently trading at 1.2998 levels. It reached session high at 1.3010 and dropped to session low at 1.2952 levels. Sterling dipped against the dollar on Friday as recent downbeat economic numbers and political uncertainty poured cold water on expectations that the Bank of England could hike interest rates in the coming months. Prime Minister Theresa May moved to ease concerns over Brexit among British business on Thursday, saying she wanted a "smooth, orderly exit" from the European Union including "a period of implementation in order to avoid any cliff-edges. Investors are watching Brexit negotiations between Britain and the European Union closely, with any signs that Britain will lose its preferential access to the single market, or that it will not get a deal with the EU, likely to knock the currency. The pound rose above $1.31 to 10-month highs earlier this week as the dollar fell across the board, and as investors bet the 25-basis-point cut in British interest rates after last year's vote for Brexit could be reversed in the coming months. But BoE policymakers have made it clear that any monetary tightening will be data-dependent.
USD/CAD is supported at 1.2500 levels and is trading at 1.2534 levels. It has made session high at 1.2569 and lows at 1.2520 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as lonnie was boosted by stronger-than-expected retail sales data that supported prospects for another interest rate increase by the Bank of Canada. Retail sales rose by 0.6 percent in May from April to hit a record C$48.91 billion, Statistics Canada said, much greater than the 0.2 percent advance forecast by analysts in a poll. Sales volumes grew by 1.1 percent. A separate report showed Canada's annual inflation rate slowed to a 20-month low of 1.0 percent in June, well below the Bank of Canada's 2.0 percent target, although core measures showed signs of strength. The central bank raised interest rates last week for the first time since 2010. Chances of a second rate hike in October climbed above 70 percent from a roughly two-thirds chance before the economic reports, data from the overnight index swaps market shows. The Canadian dollar was trading at C$1.2556 to the greenback, or 79.64 U.S. cents, up 0.3 percent. The currency traded in a range of C$1.2546 to C$1.2607. On Thursday, it touched its strongest since early May 2016 at C$1.2541.
AUD/USD is supported around 0.7870 levels and currently trading at 0.7913 levels. It hit session high at 0.7939 and made session lows at 0.7902 levels. The Australian dollar fell from a two-year peak on Friday after a top central banker said there was no automatic reason for rates to rise after a recent outbreak of hawkishness by global policymakers. Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle, speaking at an event in Adelaide, quashed talk of domestic interest rate hikes which had gathered momentum on recent upbeat domestic data. The Australian dollar, which was perched near a two-year peak of $0.7992, sunk almost 1 percent to as low as $0.7875 as markets recalibrated their positions following Debelle's comments. Canada's central bank increased interest rates to 0.75 percent this month while the U.S. Federal Reserve has raised rates four times over the past two years. Policymakers in Europe have also shifted to a less dovish stance. That led some investors to build long positions in the Aussie in anticipation the RBA might echo its global peers. Trading volume was light in the absence of major U.S. economic data and some caution before next week's Federal Reserve policy meeting.
Equities Recap
European shares sank on Friday as the euro strengthened company earnings disappointed at the end of a turbulent week.
UK's benchmark FTSE 100 closed down 0.4 percent, FTSEurofirst 300 ended the day down by 1.08percent, Germany's Dax ended down by 1.7 percent, France’s CAC finished the day down by 1.5 percent.
U.S. stocks ticked lower on Friday as weak earnings from industrial giant General Electric weighed, while tech shares retreated from record highs and energy tracked the price of oil lower.
Dow Jones closed down by 0.15 percent, S&P 500 ended down 0.05 percent, Nasdaq finished the day down by 0.06 percent.
Treasuries Recap
U.S. Treasury yields fell on Friday, with benchmark yields hitting three-week lows, as the euro reached a near two-year high against the dollar, raising doubts whether the European Central Bank would scale back its bond purchases later in 2017.
The benchmark 10-year Treasury yield was down more than 3 basis points at 2.230 percent after hitting a three-week low of 2.225 percent.
Commodities Recap
Oil prices slid on Friday, settling about 2.5 percent lower after a consultancy forecast a rise in OPEC production for July despite the group's pledge to curb output, reigniting concerns the global market will stay awash with crude.
Benchmark Brent crude futures settled down $1.24 or 2.52 percent at $48.06 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled down $1.15 or 2.45 percent, at $45.77 a barrel.
Gold was set for its biggest weekly gain in two months on Friday as a surging euro dragged down the U.S. dollar to its weakest since June 2016, making bullion cheaper for holders of other currencies.
Spot gold was up 0.87 percent at $1,255.0601 an ounce by 2:21 p.m. EDT (1821 GMT). Prices hit $1,255, the highest since June 26, and were on track for their largest weekly gain since May.
U.S. gold futures for August delivery settled up $9.4, or 0.75 percent, at $1,254.90 per ounce and finished the week up 2.2 percent.
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