Market Roundup
• Oil plunges 6% to the lowest in a year despite potential OPEC cut.
• Spain digs in on Gibraltar before EU Brexit summit.
• N.Irish DUP leader: We cannot support Brexit deal as it stands.
• Mexico 3rd-quarter growth slightly below first estimate.
• Brazil mid-Nov inflation slows more than expected, below target.
• CA Sep Retail Sales MM, 0.2%, 0.1% forecast, -0.1% previous, 0.0% revised.
• CA Sep Retail Sales Ex-Autos MM, 0.1%, 0.3% forecast, -0.4% previous.
• US Nov Markit Comp Flash PMI, 54.4, 54.9 previous.
• US Nov Markit Mfg PMI Flash, 55.4, 55.7 forecast, 55.7 previous.
• US Nov Markit Svcs PMI Flash, 54.4, 54.9 forecast, 54.8 previous.
Looking Ahead - Economic Data (GMT)
• 25 Nov 21:45 New Zealand Q3 Retail Sales Volumes QQ, 1.10% previous
• 25 Nov 21:45 New Zealand Q3 Retail Qrtly Vs Yr Ago, 3.1% previous
• 26 Nov 00:30 Japan Nov Nikkei Mfg PMI Flash, 52.9 previous
Looking Ahead - Events, Other Releases (GMT)
• 26 Nov 09:00 ECB Chief Economist Peter Praet speaks at a conference in Frankfurt
• 26 Nov 12:30 ECB board member Benoit Coeure speaks at a conference in Vienna
• 26 Nov 14:00 The President of the ECB, Mario Draghi, addresses the European Parliament in Brussels
• 26 Nov 18:00 BoE Executive Director for UK Deposit Takers Supervision James Proudman speaks at Cass Business School, London
• 26 Nov 18:30 BoE Governor Mark Carney and former Fed Chairman Alan Greenspan discuss the new book by Greenspan in London
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1330 levels. The pair has made session high at 1.1378 and hit lows at 1.1324 levels. The euro slumped half a percent against the dollar in on Friday on signs that economic growth could be slowing across the euro zone with worries about Brexit and Italy's budget negotiations also weighing on the single currency. Business growth in the euro zone slowed much faster than expected this month, a Purchasing Managers Index survey showed.The disappointing readings, hastened by a U.S.-led trade war, will be of concern to the European Central Bank which is expected to end its 2.6 billion euro asset purchase programme next month before raising interest rates next year. After German private-sector growth slowed to its lowest level in nearly four years, the euro dropped into negative territory, hitting a five-day low of $1.1330. Weakness in the euro supported the dollar, which rose 0.2 percent against a basket of currencies to trade at 96.706.
GBP/USD is supported in the range of 1.2717 levels and currently trading at 1.2806 levels. It reached session high at 1.2838 and dropped to session low at 1.2794 levels. Britain's pound declined against the dollar on Friday as investors moved to the sidelines before a Sunday summit where European Union and British policymakers are expected to endorse a Brexit deal.Four months before Britain leaves the EU, the legal divorce treaty and an accompanying political declaration on future ties are due to be rubber-stamped by British Prime Minister Theresa May and the leaders of the other 27 EU countries. Although Spain's eleventh-hour objections over Gibraltar have prevented EU officials from clearing the last hurdle before the summit on Friday, investors say the bigger concern is whether opposition from British MPs would scuttle the deal at a parliamentary vote in December. Though the British currency is trading at the lower end of recent ranges and remains one of the most undervalued currencies on a trade-weighted basis, investors are wary of buying the pound at these levels on political concerns. Against a broadly resurgent dollar, the British currency fell 0.5 percent to $1.2806 while it was a tad firmer against the euro at 88.50 pence.
USD/CAD is supported at 1.3179 levels and is trading at 1.3228 levels. It has made session high at 1.3259 and lows at 1.3185 levels. The Canadian dollar weakened against its U.S. counterpart on Friday, as a further slide in the price of oil offset domestic data showing above-target inflation and increased retail sales. Canada’s annual inflation rate remained above the central bank's target of 2 percent for the ninth straight month in October and retail trade volumes climbed 0.5 percent in September, data showed. The price of oil, one of Canada's major exports, slumped to the lowest point in more than a year amid fears of a supply glut even as major producers consider cutting output. U.S. crude oil futures settled 7.7 percent lower at $50.42 a barrel. The Canadian dollar was trading 0.2 percent lower at 1.3235 to the greenback. The currency, which on Tuesday touched its weakest level in nearly five months at 1.3318, traded in a range of 1.3185 to 1.3259. For the week, the loonie fell 0.6 percent.
USD/JPY is supported around 112.25 levels and currently trading at 112.88 levels. It peaked to hit session high at 112.89 and made session lows at 112.65 levels. The U.S. dollar strengthened against the yen on Friday as demand for greenback increased following a steep drop in oil prices that suggested global growth is slowing. The greenback also benefited from a retreat in the euro, which slumped half a percent following a Purchasing Managers Index (PMI) survey that showed business growth in the euro zone had slowed much faster than expected this month. The dollar index was up 0.1 percent on the day at 96.836 . It has gained in five of the last six sessions. The dollar's near-term outlook, however, has dimmed a little bit as some of the recent U.S. economic numbers have come in weaker than expected and several Federal Reserve officials have struck a cautious tone on the economy. All told, investors are increasingly of the mindset that the Fed may be nearing the end of its tightening cycle.
Equities Recap
European shares closed the day higher in choppy trade on Friday but notched up their second straight week of losses as concerns about slowing global growth, weak earnings, and a U.S.-China trade war drove investors away from the region's equities.
UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.33 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.2 percent.
U.S. stocks closed lower in a shortened post-holiday trading session on Friday as the energy sector tumbled on continued weakness in oil prices, and the benchmark S&P 500 confirmed its second correction of 2018.
Dow Jones closed down by 0.74 percent, S&P 500 ended down by 0.66 percent, Nasdaq finished the day down by 0.52 percent.
Treasuries Recap
Benchmark U.S. Treasury yields fell to eight-week lows on Friday and the yield curve flattened as falling stock and oil prices increased safe-haven buying of long-dated U.S. government bonds.
Benchmark 10-year notes gained 5/32 in price to yield 3.043 percent, after earlier dropping to 3.032 percent, the lowest level since Sept. 28 and down from 3.061 percent on Wednesday.
Two-year note yields were at 2.812 percent, down from 2.977 percent on Nov. 8 as falling stocks and weakening global growth raised doubts whether the U.S. central bank will be able to continue its rate-hike cycle much further without damaging the economy.
Commodities Recap
Gold prices slipped on Friday as investors banked on the safety of the dollar over worries about a slowdown in the global economy, exacerbated by a sharp decline in oil prices.
Spot gold fell 0.4 percent to $1,222.31 per ounce by 1:24 p.m. EST (1824 GMT), while U.S. gold futures for December delivery settled down $4.80, or 0.4 percent, at $1,223.20.
Oil prices slumped up to nearly 8 percent to the lowest in more than a year on Friday, posting the seventh consecutive weekly loss, amid intensifying fears of a supply glut even as major producers consider cutting output.
Brent crude futures settled down $3.80 a barrel, or 6.1 percent at $58.80. During the session, the benchmark dropped to $58.41, the lowest since October 2017.
U.S. West Texas Intermediate crude (WTI) lost $4.21, or 7.7 percent, to trade at $50.42, also the weakest since October 2017. In post-settlement trade, the contract continued to fall.
