Market Roundup
• US Jun Non-Farm Payrolls, 213k, 195k forecast, 223k previous.
• US Jun Private Payrolls, 202k, 190k forecast,, 218k previous.
• US Jun Manufacturing Payrolls, 36k, 15k forecast, 18k previous.
• US Jun Unemployment Rate, 4.0%, 3.8% forecast,, 3.8% previous,
• US Jun Average Earnings YY, 2.7%, 2.8% forecast,, 2.7% previous.
• US May International Trade USD, -$43.1 bln, -$43.1 bln forecast, -$46.2 bln previous.
• China blames U.S. for 'largest-scale trade war' as tariffs kick in.
• Trade fears persist despite brighter German data.
• CA Jun Employment Change, 31.8k, 24.0k forecast, -7.5k previous.
• CA Jun Unemployment Rate, 6.0%, 5.8% forecast, 5.8% previous.
• CA May Trade Balance C$, -2.77 bln, -2.05 bln forecast, -1.90 bln previous.
• In crisis talks, Britain's May feels more Brexit pressure from EU.
• UK's productivity problem rears its head in early 2018.
Looking Ahead - Economic Data (GMT)
• 8 Jul 23:50 Japan Jun Bank Lending YY, 2.0% previous
• 8 Jul 23:50 Japan May Current Account NSA JPY, 1,240.2 bln forecast, 1,845.1 bln previous
• 9 Jul 05:00 Japan Jun Economy Watchers Poll SA, 47.1 previous
Looking Ahead - Events, Other Releases (GMT)
• 8 Jul 08:30 Participation by ECB's Benoit Cœure in Session 31 "Which Leadership for Tomorrow?" at Rencontres Economiques organised by Le Cercle des Economistes in Aix-en-Provence, France
• 9 Jul 13:00 ECB's Mario Draghi speaks to the European Parliament's ECON committee in Brussels
• 9 Jul 13:10 Minneapolis Fed President Neel Kashkari makes welcoming remarks at "Homeownership in Indian Country: Creating the Opportunity for Choice," in Prior Lake, Minneapolis
• 9 Jul N/A Bank of England organizing a conference on Economics and Psychology: New ways of thinking about economic policy (to July 10) in London
• 9 Jul N/A Bank of Japan Governor Haruhiko Kuroda delivers speech at quarterly meeting of bank's regional branch managers in Tokyo
Currency Summaries
EUR/USD is likely to find support at 1.1669 levels and currently trading at 1.1743 levels. The pair has made session high at 1.1766 and hit lows at 1.1709 levels. The euro rose higher against US dollar on Friday as dollar weakened after data showed the U.S. economy created more jobs than expected in June, but a closely-watched inflation gauge wage growth rose less than forecast and the unemployment rate increased. The greenback had already weakened earlier on Friday as the United States and China imposed tariffs on each other's imports. U.S. nonfarm payrolls advanced by 213,000 jobs last month, the Labor Department said. Data for April and May was revised to show 37,000 more jobs created than previously reported. The unemployment rate, however, rose to 4.0 percent from an 18-year low of 3.8 percent in June, while the average hourly earnings rose five cents, or 0.2 percent in June after increasing 0.3 percent in May. The dollar index was down 0.5 percent at 94.008. Against the yen, the dollar slid 0.2 percent to 110.50, while the euro rose 0.6 percent to $1.1745. With U.S. payrolls out of the way, investors focus turned on the trade conflict between the world's biggest economic powers as U.S. tariffs on $34 billion worth of Chinese goods came into effect. Investors are anxious to know whether the latest tariffs were a continuation of tit-for-tat measures or an escalation between the two countries which could cause volatility in global financial markets.
GBP/USD is supported in the range of 1.3200 levels and currently trading at 1.3269 levels. It reached session high at 1.3281 and dropped to session low at 1.3243 levels. Sterling rose to eight-day high against the dollar on Friday as traders awaited the outcome of last-ditch efforts by Prime Minister Theresa May to unite her government over plans for Britain's future outside the European Union. The meeting at Chequers, May's country residence, which is set to run late into the evening, will see her appeal to ministers to put Brexit divisions behind them and move forward by backing her white paper policy document. The pound's rise on Friday was largely down to dollar weakness following the release of U.S. employment data. The perceived lack of progress in talks with Brussels over Britain's exit from the EU in March 2019 has weighed on the pound this year. Combined with signs of economic weakness, it has pushed the currency to near seven-month lows. The European Union told Britain on Friday there were still too many unanswered questions over Brexit. Traders expect volatility in the pound to jump once details of an agreementor a lack of one become clear late on Friday. The risk for May is that a number of ministers might quit if they consider her plan to be a "soft Brexit", or one that is too similar to Britain's current relationship with the EU. On the other hand, many analysts expect Brussels will reject her plan. The pound rose 0.4 percent to as high as $1.3284 against the dollar in late US trading. It slipped 0.2 percent against a broadly stronger euro to 88.64 pence
USD/CAD is supported at 1.3041 levels and is trading at 1.3100 levels. It has made session high at 1.3143 and lows at 1.3073 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as data showing a stronger-than-expected rise in domestic jobs supported expectations for a Bank of Canada interest rate hike next week. The Canadian economy added more jobs than expected in June, helping cement market expectations that the Bank of Canada will raise interest rates for the fourth time in a year next week. Statistics Canada said on Friday that 31,800 positions had been created in June, most of them part-time, while the unemployment rate rose to 6.0 percent from 5.8 percent as more people sought work. Analysts in a poll predicted a gain of 24,000 positions and said the jobless rate would remain unchanged. Chances of a Bank of Canada interest rate hike at the July 11 announcement were little changed after the data at about 85 percent, the overnight index swaps market indicated. The United States and China slapped tit-for-tat duties on $34 billion worth of each other's imports on Friday. Canada runs a current account deficit so its economy could be hurt if the flow of trade or capital slows. The country has its own trade feud with the United States and is also in slow-moving talks with the U.S. and Mexico to revamp the North American Free Trade Agreement. The Canadian dollar was trading slightly higher at C$1.3106 to the greenback. The currency touched its strongest since June 14 at C$1.3088.
USD/JPY is supported around 110.26 levels and currently trading at 110.41 levels. It peaked to hit session high at 110.55 and made session lows at 110.36 levels. The U.S. dollar weakened against the yen on Friday as dollar fell after data showed the U.S. unemployment rate increased and wages grew less than forecast in June even as the economy created more jobs than expected. Nonfarm payrolls increased by 213,000 jobs last month, the U.S. Labor Department said, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4 percent and average hourly earnings rose 0.2 percent. The moderate wage growth allayed fears of a strong build-up in inflation pressures. U.S. tariffs on $34 billion worth of Chinese goods took effect on Friday, while China's commerce ministry retaliated with 25 percent tariffs on $34 billion worth of U.S. imports. The United States and China slapped tit-for-tat duties on $34 billion worth of each other's imports on Friday, with Beijing accusing Washington of triggering the "largest-scale trade war" as the world's two biggest economies sharply escalated their conflict. U.S. President Donald Trump has warned that the United States may ultimately target over $500 billion worth of Chinese goods, an amount that roughly matches its total imports from China last year. Investors are anxious to know whether the latest tariffs were a continuation of tit-for-tat measures or an escalation between the two countries which could cause volatility in global financial markets.
Equities Recap
European shares climbed on Friday as traders said an escalating trade dispute between the United States and China with U.S. tariffs on $34 billion in Chinese imports taking effect and China immediately retaliating - was factored in to prices.
The UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day up by 0.12 percent, Germany's Dax ended up by 0.2 percent, and France’s CAC finished the up by 0.1 percent.
The S&P 500 and the Nasdaq rose to their highest levels in two weeks on Friday as strong U.S. jobs growth blunted the impact of an escalating U.S.-China trade dispute.
Dow Jones closed up by 0.40 percent, S&P 500 ended up 0.84 percent, Nasdaq finished the day up by 1.35 percent.
Treasuries Recap
U.S. 10-year Treasuries were little changed on Friday, with yields falling to their lowest level in five weeks on data that showed subdued U.S. wage pressure, but then returning to about where they were before the report as stock prices rose.
Benchmark 10-year note yields sat at 2.829 percent after touching 2.807 percent, the lowest since May 30.
The yield curve between 2-year and 10-year notes shrank to less than 27 basis points, the flattest since 2007, before rising to 28.40 basis points, which was above the previous day's close.
Commodities Recap
Gold fell on Friday, but bounced off session lows as the dollar weakened and equities rose, yet bullion was on track for a small weekly gain amid escalating U.S.-Sino trade tensions.
Spot gold was down 0.2 percent at $1,254.45 by 1:35 p.m. EDT (1735 GMT), off the session low of $1,252.15 and headed for its first weekly gain in four weeks.U.S. gold futures for August delivery settled down $3, or 0.2 percent, at $1,255.80 per ounce.
Oil was mixed on Friday, with short-covering pushing up U.S. crude futures while Brent slipped on global trade tensions and increased Saudi production.
West Texas Intermediate crude futures gained 80 cents to $73.74 by 1:48 p.m. (1748 GMT). Global benchmark Brent was down 29 cents at $77.10 a barrel.
