Market Roundup
• US Existing Home Sales Sept, 5.39M, 5.30M forecast, 5.35M previous.
• US Existing Home Sales % Chg Sept, 0.7%, -1.0% forecast, -1.7% previous.
• CA Retail Sales MM Aug,-0.3%, 0.5% forecast, 0.4% previous.
• CA CPI Inflation MM Sept, 0.2%, forecast 0.3%, 0.1% previous.
• CA CPI Inflation YY Sept, 1.6%, forecast 1.6%, 1.4% previous .
• CA CPI BoC Core YY Sept, 0.8%, 0.9% previous.
• CA CPI BoC Core MM Sept, 0.2% previous 0.0%.
• US economy is seen growing at 1.46 pct in Q3 VS 1.70 pct estimate - Oct 13 - NY Fed.
• US economy is seen growing at 2.61 pct in Q3 VS 2.91 pct estimate - Oct 13 - NY Fed.
• Barclays raises US Q3 GDP growth view to 2.5pct from 1.5 pct on expected faster economic rebound from storms.
• US Fiscal 2017 budget deficit of 3.5pct of GDP compared with 3.2 pct in fiscal 2016.
• Trump tax cuts gain momentum as Rand Paul goes 'all in'.
• Spain plans new elections in Catalonia to end independence bid- opposition.
• ECB's Nowotny: We are watching the effect of Euro on inflation.
• Nowotny: Euro has become a thing of safe haven like Swiss Franc.
• Britain's May wins Brexit reprieve, faces tough weeks ahead.
Looking Ahead - Economic Data (GMT)
• 02:30 China House Prices Sept 8.3% previous
Looking Ahead - Events, Other Releases (GMT)
• EU Employment, Social Policy, Health and Consumer Affairs Council meeting - Luxembourg
Currency Summaries
EUR/USD is likely to find support at 1.1728 levels and currently trading at 1.1776 levels. The pair has made session high at 1.1804 and hit lows at 1.1170 levels. The euro dipped against the dollar on Friday as weeks as progress on U.S. tax reforms raised prospects of a fiscal lift to the economy, bolstering investor appetite for risk. Senate approval of a budget blueprint on Thursday for the 2018 fiscal year cleared a critical hurdle for Republicans to pursue a tax-cut package without Democratic support. Investors also have viewed as bullish for the dollar remarks this week from Chair Janet Yellen and other officials of the Federal Reserve that suggest the central bank is moving forward with another rate hike this year. The dollar briefly fell on news that Trump was considering nominating John Taylor and Jerome Powell to the top two posts at the Fed, one as chair and one as vice-chair, and on news Yellen had lunched at the White House with Trump adviser Gary Cohn. It quickly retraced those losses. The dollar's strength dragged the euro down 0.6 percent to $1.1763 ahead of a European Central Bank meeting next week in which policymakers are seen cutting bond purchases but voting for an extension in stimulus. The dollar index, tracking the greenback against a basket of major currencies, rose 0.49 percent, its biggest daily gain in a month.
GBP/USD is supported in the range of 1.3085 levels and currently trading at 1.3187 levels. It reached session high at 1.3200 and dropped to session low at 1.3158 levels. Sterling bounced back from day low against the dollar on Friday, with investors hopeful of a breakthrough in Brexit negotiations after British Prime Minister Theresa May won a modest reprieve in stalled talks with the European Union.EU leaders said at a summit in Brussels that they would begin preparations to move into the second phase of Brexit talks in December, a step forward that would allow London to discuss its future trade relationship with the bloc. May said EU leaders need not be concerned about the current budget plans, that Britain would honour the commitments it had already made as a member of the bloc and that she was optimistic about winning a good Brexit deal. Against a stronger dollar, the pound recovered from a two-week low, trading up 0.3 percent on the day at $1.3188.For the week, though, it was down around 0.6 percent, having been pushed lower by a combination of weak data and comments from BoE policymakers that markets have interpreted as dovish. Although investors are still largely expecting a 25 basis-point interest rate hike will come at the Bank of England's next policy meeting on Nov. 2, doubts are growing about future rate rises. The next major data point for the pound will be UK GDP numbers due on Wednesday.
USD/CAD is supported at 1.2560 levels and is trading at 1.2624 levels. It has made session high at 1.2629 and lows at 1.2566 levels. The Canadian dollar weakened against its U.S. counterpart on Friday, pressured by data showing a surprise drop in domestic retail sales and as the greenback broadly gained. Retail sales fell by 0.3 percent in August from July, with lower sales at food, building supplies and home furnishing retailers. Analysts had forecast an increase of 0.5 percent. Chances of another interest rate increase this year fell to less than 50 percent from 57 percent before the data, while the probability of a hike as soon as next week slipped to less than 20 percent, the overnight index swaps market indicated. The central bank will make an rate decision on Wednesday. It hiked in July and September, the first rate increases since 2010, after rapid expansion in the domestic economy in the first half of the year. But economists expect growth to slow in the second half of the year, and separate data on Friday showed that inflation remains well below the central bank's 2 percent target. The annual inflation rate increased to 1.6 percent in September from 1.4 percent in August, matching forecasts. The U.S. dollar rose as progress on a U.S. tax overhaul raised prospects of a fiscal boost to the economy. The Canadian dollar was trading at C$1.2627 to the greenback, U.S. cents, down 0.7 percent.
USD/JPY is supported around 113.24 levels and currently trading at 113.48 levels. It peaked to hit session high at 113.56 and made session lows at 113.23 levels. The U.S. dollar declined against the Japanese yen on Friday as the dollar strengthened on increased hopes President Donald Trump could make progress on his fiscal plans after the U.S. Senate approved a budget blueprint that paves the way for tax cuts. U.S. Republican Senator Rand Paul appeared to back the administration's sweeping tax cut plan, saying he was "all in" for massive tax cuts, even as the Senate passed a key budget measure without his support one day earlier. The dollar hit a three-month high against the Japanese yen, to 113.56 yen, and a five-month high against the Swiss franc, touching 0.9858 franc. Traders seek the yen and Swiss franc in times of uncertainty and fear, and sell the currencies when they favor riskier assets. The currency market has experienced some volatility in the past 24 hours due to reports about Trump's possible preference to head the Federal Reserve. Traders have been speculating on Trump's possible picks for Fed chief Fed Governor Jerome Powell, current Fed Chair Janet Yellen, his chief economic adviser, Gary Cohn, former Fed Governor Kevin Warsh and Stanford University economist John Taylor. Trump is expected to announce his nominee in the coming days.
Equities Recap
Ericsson and Volvo led European shares higher on Friday with well-received earnings reports during a session where financials and tech stocks also outperformed.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day up by 0.26 percent, Germany's Dax ended up by 0.02 percent, France’s CAC finished the day down by 0.21 percent.
U.S. stocks hit record closing highs on Friday and the S&P 500 posted a sixth week of gains after the U.S. Senate passed a budget resolution, lifting hopes that President Donald Trump's tax-cut plan may move forward.
Dow Jones closed up by 0.70percent, S&P 500 ended up by 0.50 percent, Nasdaq finished the day up by 0.35 percent.
Treasuries Recap
U.S. Treasury yields rose on Friday, with two-year yields reaching a near nine-year high, as investors reduced bond holdings on worries about more inflation and federal borrowing after the U.S. Senate passed a budget resolution.
The yield on 10-year Treasury notes reached a two-week peak of 2.392 percent. It was 2.383 percent, up 6 basis points for its biggest weekly rise in five weeks.
The two-year yield touched a near nine-year peak at 1.580 percent on bets for faster economic growth due to the tax-cut plan, allowing the Fed to raise interest rates further.
Commodities Recap
Gold prices fell on Friday after the U.S. Senate approved a budget blueprint that paves the way for tax cuts, causing stocks, the dollar and bond yields to rise.
Spot gold was down 0.77 percent at $1,279.44 an ounce by 2:41 p.m. EDT (1841 GMT), down about 1.9 percent on the week.
U.S. gold futures for December delivery settled down $9.50, or 0.7 percent, at $1,280.50 per ounce, 1.8 percent lower on the week.
Oil prices were up slightly on Friday in see-saw trade, ending the week upon support from a sharp decline in Iraqi crude exports due to tensions in the Kurdistan region after contending with weak demand data.
U.S. crude futures settled up 18 cents, or 0.4 percent, at $51.47 a barrel. Brent crude rose 52 cents, or 0.9 percent, at $57.75 a barrel. Both contracts were up slightly for the week.
