Market Roundup
• US Core CPI YY NSA 1.9% v 2.0% forecast, 2.0% -previous.
• US CPI YY NSA 2.2% v 2.3% forecast, 2.4% - previous.
• US Retail sales MM 0.4% v 0.6% forecast, 0.1% - previous.
• US Business inventories MM 0.2% v 0.1% forecast, 0.2% - previous.
• US Mich sentiment prelim 97.7 v 97.0 Rtrs f/c, 97.0 – previous.
• Atlanta Fed's GDPNow: Keeps US Q2 GDP growth view at 3.6% .
• NY Fed's Nowcast: Sees US economy growing 1.9% in Q2 '17 vs 1.8% on May 5.
• Fed's Evans: Fed is discussing right size and pace of reductions to balance sheet: Bloomberg.
• Fed's Evans: could be okay with one more rate hike if there are more uncertainties about the inflation outlook.
• Fed's Harker: acceleration in inflation could mean more than two more rate hikes this year.
• Fed’s Harker: hard to see fiscal policies passed that boost US economy in 2017 or 2018.
• G7 officials worried about U.S. policies' impact on global growth, FX rates & capital outflows.
• Japan's Aso: told G7 that cannot be complacent with global economy.
• ECB'S Lane: discussion around bond-buying limits should not deflect from the ability to meet the inflation target.
• Mexico Economy Minister Guajardo: expects negotiations on NAFTA to start towards the end of August.
• White House says not aware of any recordings of Trump and Comey dinner conversation
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Corp goods price YY* 1.8% forecast, 1.4% - previous
• 02:00 China Industrial output YY* 7.1% forecast, 7.6% - previous
• 02:00 China Retail sales YY* 10.6% forecast, 10.9% - previous
• 22:45 New Zealand Retail sales volumes QQ* 0.90% forecast, 0.6% - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0852 levels and currently trading at 1.0927 levels. The pair has made session high at 1.0934 and hit lows at 1.0926 levels. The euro inched against the dollar on Friday as the dollar retreated after weaker-than-expected U.S. economic data raised doubts about whether the Federal Reserve would assume a hawkish bent through the end of the year. The U.S. core consumer price index (CPI) increased 1.9 percent year-on-year in April, the smallest gain since October 2015. Economists polled by Reuters expected the inflation measure to remain at 2 percent. In addition, the Commerce Department said retail sales rose 0.4 percent last month. While March saw an upwardly revised 0.1 percent gain, the April figure disappointed expectations of economists for an increase of 0.6 percent. The euro rose as much as 0.7 percent against the dollar to a session high of $1.0934. The euro had fallen to a more than two-week low on Thursday of $1.0838.The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.4 percent at 99.274. It was still on track to gain about 0.6 percent for the week to notch its first gain in five weeks.
GBP/USD is supported in the range of 1.2820 levels and currently trading at 1.2883 levels. It reached session high at 1.2893 and dropped to session low at 1.2860 levels. The British pound declined against the dollar on Friday and it was set for its first weekly loss in four after the Bank of England showed no sign of leaning more towards raising interest rates before the start of Brexit negotiations. Thursday's BoE rates decision quashed some bets in the market that more policymakers would join outgoing Kristin Forbes in voting for a rate hike. Together with the Bank's trimmed UK growth forecast and weak industrial output data, that helped pull the pound below $1.29. After hitting daily lows at 1.2842 sterling was recovered some ground to trade at $1.2887 by 2030 GMT. That added up to an almost 1 percent loss for the week, its first since the week ended April 4. It is still up more than 2 percent since British Prime Minister Theresa May's surprise mid-month decision to call a June 8 election.
USD/CAD is supported at 1.3640 levels and is trading at 1.3707 levels. It has made session high at 1.3729 and lows at 1.3664 levels. The Canadian dollar edged lower against its broadly weaker U.S. counterpart on Friday but kept some distance from a recent 14-month low as prices of oil held on to this week's gains. The U.S. dollar fell against a basket of major currencies after data showed U.S. retail sales increased less-than-expected in April. Oil prices edged higher to score their biggest weekly gain in more than a month as traders expected OPEC-led production cuts to extend beyond the middle of this year and as U.S. crude inventories fell to their lowest levels since February. The Canadian dollar was last trading at C$1.3710 to the greenback, or 72.94 U.S. cents, down 0.1 percent. The currency traded in a range of C$1.3665 to C$1.3742. One week ago, it had hit its weakest in 14 months at C$1.3793.
AUD/USD is supported around 0.7356 levels and currently trading at 0.7393 levels. It hit session high at 0.7419 and made session lows at 0.7375 levels. Australian dollar regained some ground against the dollar on Friday as weak economic data weighe the on the dollar. The dollar weakened across the board as weaker-than-expected retail sales and inflation data that diminished the view the Federal Reserve would raise interest rates more than once for the rest of the year. Concern over risky assets like equities has dominated trading this week and sent investors to assets like gold and the Japanese yen after President Donald Trump unexpectedly fired his FBI chief, the potential fallout of which could delay any positive reaction to Trump's pro-growth policy. The Australian dollar edged up to $0.7380, but was still within reach of a four-month trough of $0.7329 touched on Tuesday. It was on track for its seventh weekly loss in eight with a drop of 0.5 percent. The dollar index, which tracks the currency against a basket of six major rivals, fell 0.45 percent to 99.177.
Equities Recap
European shares enjoyed a third straight week of gains on Friday, lifted by deal-making among telecoms and strong company trading updates, as flows into European equities reached record levels.
The UK's benchmark FTSE 100 closed up by 0.6 percent, FTSEurofirst 300 ended the day up by 0.24 percent, Germany's Dax ended up 0.4, and France’s CAC finished the day up by 0.3 percent.
Wall Street slipped on Friday, ending the week lower as tepid economic data weighed on banks and worries deepened over Nordstrom JWN.N and other department stores.
Dow Jones closed down by 0.12 percent, S&P 500 ended down 0.16 percent, Nasdaq finished the day up by 0.09 percent.
Treasuries Recap
The U.S. Treasuries market rallied on Friday with the benchmark yield posting its biggest one-day drop in more than three weeks, as weaker-than-expected consumer inflation data in April diminished the view on whether Federal Reserve would raise interest rates more than once for the rest of the year.
The benchmark 10-year Treasury yield fell 7 basis points to 2.329 percent. On Thursday, it reached 2.423 percent, a near six-week peak, in reaction to data showing a surprisingly strong jump in U.S. producer prices in April.
Commodities Recap
Oil prices settled slightly higher on Friday as lower U.S. crude inventories and increasing support for continued OPEC-led production cuts inspired hope that the global supply glut can be reduced.
Benchmark Brent crude settled up 7 cents at $50.84. U.S. light crude was up 1 cent at $47.84.
Gold rose on Friday and was set to end the week little changed as the sudden sacking of the head of the FBI in the United States stoked investor concerns and boosted demand for bullion, and the U.S. dollar and Treasury yields fell.
Spot gold was up 0.3 percent at $1,228.01 an ounce by 2:52 p.m. EDT (1852 GMT), hovering around the 100-day moving average. Gold rose 0.5 percent in the previous session, its biggest one-day gain in a month. U.S. gold futures settled up 0.3 percent at $1,227.70.
