Market Roundup
• US Aug Personal Income m/m, 0.3%, 0.3% previous
• US Aug Consumption, Adjusted m/m, 0.3%, 0.4% previous
• US Aug Core PCE Price Index m/m, 0.0%, 0.2% previous
• US Aug PCE Price Index y/y, 2.2%, 2.3% previous
• US Sep U Mich Sentiment Final, 100.1, 100.8 previous
• Italy's populists challenge EU with plans to boost deficit
• CA Jul GDP m/m, 0.2%, 0.0% previous
• CA Aug Producer Prices m/m, -0.5%, -0.2% previous
• U.S.-Mexico trade deal text to be released as focus remains on Canada
• EXCLUSIVE-Outsider tapped for Mexico central bank says has 'balanced' stance
• Argentina central bank mulling rise in reserve requirements-media
Looking Ahead - Economic Data (GMT)
• 30 Sep 22:30 Australia Sep AIG Manufacturing Index, 56.70 previous
• 30 Sep 23:50 Japan Q3 Tankan Big Mf Index, 21 previous, 22 forecast
• 30 Sep 23:50 Japan Q3 Tankan Big Non-Mf Index, 24 previous, 22 previous
• 30 Sep 23:50 Japan Q3 Tankan All Big Capex Est, 13.6% previous, 14.2% previous
• 30 Sep 23:50 Japan Q3 Tankan Small Mf Index, 14 previous, 13 forecast
• 30 Sep 23:50 Japan Q3 Tankan Small Non-Mf Index, 8 previous, 6 previous
• 30 Sep 23:50 Japan Q3 Tankan All previous, -11.8% previous, -5.1% previous
• 30 Sep 01:00 China Sep NBS Manufacturing PMI, 51.3 previous, 51.2 forecast
• 30 Sep 01:00 China Sep Composite PMI, 53.8 previous
• 30 Sep 01:45 China Sep Caixin Mfg PMI final, 50.6 previous, 50.5 forecast
• 1 Oct 00:30 ap Sep Nikkei Mfg PMI, 52.9 previous
Looking Ahead - Events, Other Releases (GMT)
• Oct 1 Mary Daly begins tenure as president of the Federal Reserve Bank of San Francisco.
• Oct 1 07:00 Riksbank executive board meeting in Stockholm.
• Oct 1 13:02 Federal Reserve Bank of Atlanta President Raphael Bostic participates in panel before the Inclusive Economic Development Council Conference in Atlanta.
• Oct 1 15:00 Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a town hall meeting in Minnesota.
• Oct 1 14:50 Bank of England Monetary Policy Committee Member Silvana Tenreyro: Chairing session at Rebuilding Macroeconomics Annual Conference on “Bringing Psychology and Social Sciences into Macroeconomics” in London.
• Oct 1 16:15 Federal Reserve Bank of Boston President Eric Rosengren speaks on "U.S. Outlook/Monetary Policy" before the National Association for Business Economics 60th Annual Meeting in Boston
Currency Summaries
EUR/USD is likely to find support at 1.1526 levels and currently trading at 1.1604 levels. The pair has made session high at 1.1628 and hit lows at 1.1570 levels. The euro declined against the dollar on Friday for the first time in two weeks after Italy's government agreed a budget seen by some investors as defying Brussels. Political wrangling over the budget in heavily indebted Italy has put a lid on a recent revival in the euro's fortunes against the dollar. The single currency recorded its biggest one-day decline for nearly two months on Thursday as the battle over fiscal policy intensified in the euro zone's third largest economy. Financial markets are nervous that the Italian government's spending plans will boost Italy's debt, which is already the second highest in the euro zone as a share of economic output after Greece, near 131 percent of gross domestic product (GDP). The government is targeting a budget deficit at 2.4 percent of GDP, inside the 3 percent ceiling prescribed by EU rules. Some traders were caught off guard by the euro's move. The euro on Friday fell half a percent to $1.1582 after slumping almost 0.9 percent overnight. Versus the Swiss franc it fell 0.8 percent to trade at 1.1281. The dollar remained buoyant. It advanced against the British pound and the Swiss franc, and rose to a nine-month high versus the Japanese yen after data on Thursday reinforced upbeat views about the U.S. economy and a recent Federal Reserve hike.
GBP/USD is supported in the range of 1.2981 levels and currently trading at 1.3053 levels. It reached session high at 1.3081 and dropped to session low at 1.3002 levels. Sterling declined against the dollar on Friday after data showed that British companies had cut their investment in the second quarter of 2018 and the economy grew slightly slower than previously thought. The pound had already been under pressure as investors' optimism for a Brexit trade deal has declined ahead of the ruling Conservative party's annual conference next week, while a late rally in the dollar further hurt the British currency. Beginning the day at $1.3089, sterling dropped to as low as $1.3000, its weakest since Sept. 12, before recovering slightly. The pound held up better against a broadly weaker euro and was down just 0.1 percent at 89.115 pence. British companies cut their investment in the second quarter of 2018, with Britain's exit from the EU less than a year away, and the country's balance of payments shortfall grew more than expected, data showed. The Office for National Statistics confirmed a previous estimate that Britain's overall economy grew by a quarterly 0.4 percent in the April-June period but lowered the annual growth rate in the second quarter to 1.2 percent from a previous estimate of 1.3 percent.
USD/CAD is supported at 1.2885 levels and is trading at 1.2927 levels. It has made session high at 1.2982 and lows at 1.2912 levels. The Canadian dollar strengthened against the greenback on Friday after a speech by Bank of Canada Governor Stephen Poloz and faster-than-expected growth of the domestic economy reinforced expectations of an interest rate hike in October. Canada’s economy grew 0.2 percent in July, stronger than the 0.1 percent increase that analysts had forecast, Statistics Canada data indicated. Chances of an interest rate increase next month by the Bank of Canada held at nearly 80 percent after the data, the overnight index swaps market indicated. The central bank will continue to raise interest rates gradually, Governor Stephen Poloz said on Thursday, stressing that despite economic uncertainties, the bank did not want to let inflation momentum build. Canada on Thursday shrugged off U.S. President Donald Trump's criticism that talks to modernize NAFTA were moving too slowly and made clear it had to keep negotiating as long as there was a chance of success. Trump has already concluded an agreement with Mexico, the third country in NAFTA, and is threatening to leave out Canada unless it signs up by Sunday. The Canadian dollar last was trading 0.5 percent higher at 1.2920 to the greenback, or 77.07 U.S. cents, outperforming all other G10 currencies.
USD/JPY is supported around 112.95 levels and currently trading at 113.63 levels. It peaked to hit session high at 113.65 and made session lows at 113.32 levels. The dollar strengthened against the Japanese yen on Friday as concerns about the Italian budget weighed on the euro while the greenback drew support from an outlook for multiple U.S. interest rate hikes until 2020.The U.S. Federal Reserve raised interest rates on Wednesday and said it planned four more increases by the end of 2019 and another in 2020. Spot gold prices later closed down 0.6 percent to $1,194.06 per ounce, their lowest since Sept. 11. The dollar index rose 0.3 percent to 95.144, rising for three straight sessions. The dollar rose to a nine-month peak versus the yen of 113.66 yen, and was last up 0.2 percent at 113.59 yen. U.S. data on Friday all supported the view of an economy that is on a stable growth path. U.S. consumer spending rose 0.3 percent last month after an unrevised 0.4 percent gain in July, while a measure of underlying inflation remained at the Fed's 2 percent target for a fourth straight month. The Chicago Purchasing Management index for September was 60.4, slightly lower than the consensus forecast. The U.S. consumer sentiment index for September, on the other hand, was slightly lower than forecast at 100.1, but still the highest since March..
Equities Recap|
European shares slid on Friday after the Italian government agreed to set a higher than expected budget deficit target that could put Rome on a collision course with Brussels.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.75 percent, Germany's Dax ended down by 1.4 percent, France’s CAC finished the day down by 0.8 percent.
Wall Street ended flat on Friday as gains by Intel, real estate companies and utilities offset a drop in Facebook after the social media network disclosed a security breach.
Dow Jones closed up by 0.07 percent, S&P 500 ended up by 0.00 percent, Nasdaq finished the day up by 0.06 percent.
Treasuries Recap
U.S. Treasury yields slipped on Friday as the $15.3 trillion bond sector recorded its worst month since January due to rising government debt supply and sturdy economic data that have enabled the Federal Reserve to keep raising interest rates.
Benchmark 10-year Treasury yields were marginally lower at 3.056 percent. On Tuesday, they reached 3.113 percent, the highest since May, Reuters data showed.
Their German counterpart fell to 0.474 percent, down over 5 basis points, which was its biggest one-day fall in almost a month.
Commodities Recap
Gold inched higher but was on track for its longest monthly losing streak since January 1997 as the U.S. dollar firmed against the euro after Italy's budget jitters threatened the European currency.
Spot gold increased 0.9 percent to $1,193.32 per ounce by 1:43 p.m. EDT (1743 GMT), but touched its lowest since Aug. 17 at $1,180.34 earlier in the session.
December U.S. gold futures settled up $8.80, or 0.7 percent, at $1,196.20 per ounce.
Oil prices rose more than 1 percent on Friday, with Brent climbing to a four-year high, as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.
Brent crude futures rose $1 to settle at $82.72 a barrel. The session high of $82.87 was the contract's highest since Nov. 10, 2014. In the third quarter, Brent has gained about 4 percent.
U.S. West Texas Intermediate (WTI) crude futures rose $1.13 to settle at $73.25 a barrel. The session high of $73.73 was the highest since July 11. The contract is up about 5 percent this month but down around 1 percent for the quarter.
