Market Roundup
• US Apr Durable Goods, -1.7%, -1.4% forecast, 2.6% previous.
• US Apr Durables Ex-Transport, 0.9%, 0.5% forecast, 0.1% previous.
• US Apr Durables Ex-Defense MM, -1.9%, -1.0% forecast, 2.8% previous.
• US Apr Nondefe Cap Ex-Air, 1.0%, 0.7% forecast, -0.4% previous.
• US May U Mich Sentiment Final, 98.0, 98.8 forecast, 98.8 previous.
• US May U Mich Conditions Final, 111.8, 113.3 previous.
• US May U Mich Expectations Final, 89.1, 89.5 previous.
• US May U Mich 1 Yr inf Final, 2.8%, 2.8% previous.
• US May U Mich 5-yr Inf Final, 2.5%, 2.5% previous.
• US w/e ECRI Weekly Index, 148.5, 148.7 previous.
• US w/e ECRI Weekly Annualised, 3.5%, 4.3% previous.
• CA Mar Budget Balance, C$, -10.63 bln, 2.83 bln previous.
• CA Mar Budget, Year-To-Date, C$, -16.19 bln, -5.56 bln previous.
• On again? Trump says still chance of June 12 North Korea summit.
• U.S. reaches deal to keep Chinese telecom ZTE in business -congressional aide.
• Fed's Kaplan 'hopeful' rate-setting tweak will address issue.
• 'Agonizing' debate ahead for Fed as rates near neutral level – Kaplan.
• Iran pressures Europe to speed up plans to save nuclear deal.
• Mexico minister: 40 pct chance of NAFTA deal before July election.
• ECB resolve to end bond buys this year remains firm –sources.
Looking Ahead - Economic Data (GMT)
• No major economic data is scheduled
Looking Ahead - Events, Other Releases (GMT)
• No major economic events are scheduled
Currency Summaries
EUR/USD is likely to find support at 1.1626 levels and currently trading at 1.1664 levels. The pair has made session high at 1.1687 and hit lows at 1.1644 levels. Euro declined against the dollar on Friday as rising bond yields in Italy triggered nervousness among investors, while brewing political instability in Spain also weighed on sentiment. Italian prime minister-designate Giuseppe Conte met the governor of the Bank of Italy on Friday as markets fell on fears the incoming eurosceptic government will embark on a spending spree that will undermine fragile state finances. The closely-watched Italy-Germany 10-year bond yield spread, seen by many investors as a proxy for investors' sentiment on the euro zone, widened to 200 basis points (bps) for the first time since June. Widening spreads have pulled the euro lower against the dollar in recent days. Data this week showed the German PMI fell to a 20-month low in May indicating that momentum in Europe's biggest economy was faltering. Minutes of the European Central Bank's April meeting showed policymakers were worried about a more pronounced slowdown in the euro zone and political uncertainty in Italy. The single currency was down a fifth of a percent against the dollar at around $1.1660. For the week it is down 0.6 percent and on track for six consecutive weeks of losses.
GBP/USD is supported in the range of 1.3262 levels and currently trading at 1.3295 levels. It reached session high at 1.3351 and dropped to session low at 1.3289 levels. Sterling declined to trade near a five-month low against dollar on Friday as sterling was weighed down by worries over Brexit and signs of sustained weakness in Britain's economy. Sterling had been one of the best-performing currencies in 2018, but weak economic data and a recent surge in the dollar have erased all of its gains for this year. Markets have radically scaled back expectations for when and how much the Bank of England will raise interest rates as economic growth slows. Data on Friday showed GDP grew just 0.1 percent in the first quarter, keeping the pound under pressure. Weak construction and retail data mean investors are now only pricing in a one-in-three chance of the BoE raising borrowing costs in August, the next time it updates its economic forecasts. Meanwhile, concerns are growing about the sort of relationship Britain can agree with the EU before it exits the bloc in March 2019 and that is also impacting sterling. BoE Governor Mark Carney said on Thursday the central bank could pump more stimulus into Britain's economy if this year's Brexit negotiations resulted in a bad deal. He said two days earlier that the Brexit vote has cost each UK household 900 pounds. Sterling was last trading 0.5 percent at $1.3318 as the dollar gained broadly.
USD/CAD is supported at 1.2885 levels and is trading at 1.2980 levels. It has made session high at 1.2987 and lows at 1.2915 levels. The Canadian dollar weakened to a more than two-week low against its U.S. counterpart on Friday as oil prices fell and the greenback broadly climbed. The price of oil, one of Canada's major exports, tumbled after Saudi Arabia and Russia discussed easing supply curbs that have helped push crude prices to their highest since 2014. The U.S. dollar gained against a basket of major currencies as rising bond yields in Italy and brewing political instability in Spain weighed on the euro. On Thursday, the loonie had been pressured by the potential imposition of U.S. auto tariffs, after the Trump administration launched a national security investigation into car and truck imports. Canada is a major exporter of autos to the United States so its economy could be hurt by U.S. auto tariffs. The Canadian dollar was last trading 0.7 percent lower at C$1.2972 to the greenback, or 77.07 U.S. cents, its biggest decline since April 20. The currency touched its weakest level since May 8 at C$1.2987.
AUD/USD is supported around 0.7520 levels and currently trading at 0.7543 levels. It hit session high at 0.7588 and made session lows at 0.7541 levels. The Australian dollar eased against greenback on Friday as risk appetite soured after U.S. President Donald Trump scrapped a key summit with North Korea, although Pyongyang's measured response to the cancellation helped calm nerves. The Australian dollar, widely seen as a liquid proxy for risk trades, was last down 0.2 percent at $0.7543 as it drifted away from a recent one-month top of $0.7606. The antipodean currency has been under pressure from diverging monetary policy with the central bank in Australia taking a consistent stance that rates will remain at record lows even while the U.S. Federal Reserve has been on a tightening path. On Friday, the dollar was supported by data showing new orders for key U.S.-made capital goods increased more than expected in April and shipments rebounded, suggesting that business spending on equipment was picking up after slowing down at the end of the first quarter. The dollar index, which measures the greenback against a basket of six currencies, was up 0.44 percent at 94.166, after hitting a high of 94.249, its strongest since mid-November. The index was up 0.6 percent for the week. Next week, Australia releases building approvals data for April and business investment data for the first quarter.
Equities Recap
Euro zone shares hit a roadbump on Friday as heightened risk of a snap election in Spain piled new political anxiety on investors already shaken by the new Italian government's plans to ramp up fiscal spending.
UK's benchmark FTSE 100 closed up by 0.3 percent, the pan-European FTSEurofirst 300 ended the day up by 0.07 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day down by 0.1 percent.
The S&P 500 index and the Dow eased on Friday after a steep drop in oil prices pressured energy stocks, but losses were limited by gains in chipmakers and retail stocks.
Dow Jones closed down by 0.25 percent, S&P 500 ended down by 0.25 percent, Nasdaq finished the day up by 0.10 percent.
Treasuries Recap
U.S. Treasury yields fell to their lowest level in three weeks on Friday as concerns about Italy’s new government and a leadership challenge in Spain boosted demand for low-risk debt.
The 10-year notes gained 13/32 in price to yield 2.93 percent, down from 2.98 percent on Thursday.
Commodities Recap
Gold prices dropped slightly on Friday, but still remained above $1,300 per ounce as investors digested news of U.S. President Donald Trump saying a meeting with North Korea's leader could still go ahead.
Spot gold lost 0.1 percent at $1,303.34 per ounce by 1:38 p.m. EDT (1738 GMT), yet was on track for a weekly gain of 0.9 percent, its biggest since March. Spot gold earlier hit a 10-day high at $1,307.80.
U.S. gold futures for June delivery settled down 70 cents, or 0.1 percent, at $1,303.70 per ounce.
Oil prices fell more than $2 per barrel on Friday as Saudi Arabia and Russia discussed easing production cuts that have helped push crude prices to their highest since 2014.
Brent crude futures fell $2.35, or 3 percent, to settle at $76.44 a barrel. The global benchmark lost about 2.7 percent this week, its largest weekly drop since early April.
U.S. West Texas Intermediate (WTI) crude slumped $2.83, or 4 percent, to finish at $67.88 a barrel. For the week, WTI tumbled about 4.9 percent, its biggest loss since early February, a sharp course reversal after six weeks of gains.
