Market Roundup
•U.S. annual PCE inflation data posts largest gain since 1982
•U.S. labor cost index rises in Q2
•U.S. drillers add oil rigs for record 23rd month in a row - Baker Hughes.
•Brent at highest since July 5 above $110/bbl
•US Employment Wages (QoQ) (Q2) 1.40%,1.20% previous
•US Employment Cost Index (QoQ) (Q2) 1.20%, 1.2% forecast, 1.4% previous
•US Jun Personal Income (MoM) 0.6%,0.5% forecast, 0.5% previous
•US Jun Personal Spending (MoM) 1.1%, 0.9%forecast,0.2% previous
•US Jun PCE price index (MoM) 1.0%,0.6% previous
•US Jun Core PCE Price Index (MoM) 0.6%,0.5% forecast, 0.3% previous
•US Jun Core PCE Price Index (YoY) 4.8%, 4.7%forecast, 4.7% previous
•Canada May GDP (MoM) 0.0%,-0.2% forecast, 0.3% previous
•US Jul Chicago PMI 52.1, 55.0 forecast, 56.0 previous
•US Jul Michigan Consumer Sentiment 51.5,51.1 forecast, 51.1 previous
•US Jul Michigan Consumer Expectations 47.3, 47.3 previous
•US Jul Michigan Current Conditions 58.1, 57.1 previous
•US Jun Dallas Fed PCE 6.90%, 5.30% previous
•Canada Apr Budget Balance 2.66B, 2.66B previous
•US Baker Hughes Oil Rig Count 605 , 599 previous
• U.S. Baker Hughes Oil Rig Count 767 ,758 previous
Looking Ahead - Economic Data (GMT)
•No data ahead
Looking Ahead - Economic events and other releases (GMT)
•No significant events
Currency Summaries
EUR/USD: The euro strengthened against dollar on Friday as dollar dipped amid a mixed batch of economic data. The personal consumption expenditures (PCE) price index jumped 1.0% last month, the largest increase since September 2005 and followed a 0.6% gain in May. In the 12 months through June, the PCE price index advanced 6.8%, the biggest gain since January 1982. The dollar initially rose on the inflation numbers, but gains fizzled amid the final University of Michigan report showing consumers' inflation expectations slipped in July. The euro rose 0.2% versus the dollar to $1.0223.Immediate resistance can be seen at 1.0242(50%fib), an upside break can trigger rise towards 1.0349(61.8%fib).On the downside, immediate support is seen at 1.0194(5DMA), a break below could take the pair towards 1.0102(23.6%fib).
GBP/USD: The British pound ended July with another weak showing on Friday after U.S. inflation data boosted the dollar again. The pound fell almost 1% during afternoon trading as it moved mainly on a rallying dollar after key U.S. inflation data, but pared losses in the late afternoon to end the month about 0.1% down. During 2022, sterling has recorded just one month of gains versus the dollar - rising marginally in May - but has racked up a 10.1% loss since January against a backdrop of economic slowdown, rising interest rates and domestic political turmoil. Data from the Bank of England on Friday showed British consumer lending rose last month at its fastest since May 2019 while the number of mortgage approvals fell to the lowest since June 2020. Immediate resistance can be seen at 1.2198(Higher BB), an upside break can trigger rise towards 1.2259(50%fib).On the downside, immediate support is seen at 1.2065(38.2%fib),a break below could take the pair towards 1.2000(21DMA).
USD/CAD: The Canadian dollar edged lower against its U.S. counterpart on Friday but notched its second straight weekly gain, as equity markets rose and preliminary data showed the domestic economy growing at a pace exceeding the Bank of Canada's projection. The Canadian dollar was trading 0.1% lower at 1.2820 to the greenback, or 78.00 U.S. cents, after touching its strongest intraday level since June 13 at 1.2790. For the week, the currency was up 0.7%, while it has gained 0.4% since the start of the month, as the possibility that the Federal Reserve will raise interest rates more slowly than previously anticipated boosted global equity markets. Immediate resistance can be seen at 1.2872(38.2%fib), an upside break can trigger rise towards 1.2932 (21DMA).On the downside, immediate support is seen at 1.2797(50%fib), a break below could take the pair towards 1.2750 (Lower BB).
USD/JPY: The dollar dipped against the Japanese yen on Friday amid a mixed batch of economic data. U.S. consumers lowered their views of where inflation is headed in July, a closely watched survey showed on Friday, a downshift in expectations that will be welcome news at the Federal Reserve in its battle with the highest inflation rate in four decades. Consumers responding to this month's University of Michigan Consumer Sentiment Index survey indicated they see inflation in the next year easing to a rate of 5.2% from their previous expectation of 5.3% in June. That is the lowest one-year price increase expectation since February. Against the dollar, the yen climbed 0.8% on Friday to 133.17 yen to its highest levels since mid-June. Strong resistance can be seen at 134.24 (50DMA), an upside break can trigger rise towards 136.18(23.6%fib).On the downside, immediate support is seen at 132.70 (38.2%fib), a break below could take the pair towards 129.14 (50%fib).
Equities Recap
European stocks closed higher on Friday, extending recent gains, riding on data showing an acceleration in euro zone economic growth in the second quarter, and some encouraging earnings updates.
UK's benchmark FTSE 100 closed up by 1.06 percent, Germany's Dax ended up by 1.53 percent, France’s CAC finished the day up by 1.72 percent.
U.S. stocks extended their mid-summer rebound on Friday, with the dollar and some longer-term Treasury yields dipping, as Wall Street cheered positive corporate news in spite of increased labor costs and other indicators of continued inflation.
Dow Jones closed up by 0.97% percent, S&P 500 closed up by 1. 42% percent, Nasdaq settled up by 1.88% percent.
Treasuries Recap
Treasury yields at the long enddrifted lower on Friday after data on labor costs and wage growth suggested inflation remains sticky and raised fears of a recession as the Federal Reserve seeks to cool the economy without sparking a sharp slowdown.
The yield on benchmark 10-year Treasury notes slid 5.7 basis points to 2.624%, a drop from a high of 2.845% at the beginning of the week.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 1.1 basis points at 2.889%.
Commodities Recap
Gold bounced to a fresh multi-week peak on Friday with its safe-haven allure getting a fillip as the dollar gave up initial gains following another jump in U.S. inflation, with the current price range also seemingly attracting bids for bullion.
Spot gold rose 0.6% to $1,765.76 per ounce by 1:50 p.m. ET (1750 GMT). U.S. gold futures settled 0.7% higher at $1,781.80.
Oil prices settled up more than $2 a barrel on Friday as attention turned to next week's OPEC+ meeting and dimming expectations that the producer group will imminently boost supply.
Brent crude futures contract for September, which expire on Friday, jumped more than $3 a barrel during the session and then pared gains to settle at $110.01 a barrel, up $2.87, or 2.7%. The more active October contract was up $2.14, or 2.1%, at $103.97.
