Market Roundup
•Market consolidation likely next week -BMO
•U.S. inflation data better than expected, lifts yields
•U.S. yield curve steepens after flattening for most of the week
• US Employment Cost Index (QoQ) (Q4) 0.7%,0.5% forecast, 0.5% previous
• Canada Dec IPPI (MoM) 1.5%,-0.6% previous
• Canada Dec RMPI (MoM) 3.5%,0.6% previous
• Canada Dec RMPI (YoY) -0.7%, -1.7% previous
• Canada Dec IPPI (YoY) 1.8%,0.7% previous
• US Employment Wages (QoQ) (Q4) 0.90%, 0.40% previous
• US Employment Benefits (QoQ) (Q4) 0.60%,0.60% previous
• US Dec Personal Income (MoM) 0.6%,0.1% forecast, -1.1% previous
• US Dec Real Personal Consumption (MoM) -0.6%, -0.4% previous
• US Dec PCE Price index (YoY) 1.3 ,1.1 previous
• US Dec Personal Spending (MoM) -0.2%,-0.4% forecast, -0.4% previous
• US Dec Core PCE Price Index (YoY) 1.5%, 1.3% forecast, 1.4% previous
• Canada Nov GDP (MoM) 0.7%,0.4%forecast,0.4% previous
• US Dec Core PCE Price Index (MoM) 0.3%, 0.1% forecast
• US Jan Chicago PMI 63.8,58.5 forecast, 58.7 previous
• US Dec Pending Home Sales Index 125.5, 125.7 previous
• US Jan Michigan Consumer Sentiment 79.0,79.2 forecast, 79.2 previous
• US Jan Michigan Inflation Expectations 3.0%, 3.0% previous
• US Jan Michigan Current Conditions 86.7 , 87.7 previous
• US Jan Michigan Consumer Expectations 74.0, 73.8 previous
• US Jan Michigan 5-Year Inflation Expectations 2.70%,2.70% previous
• US Dec Pending Home Sales (MoM) -0.3%, -0.1% forecast,-2.6% previous
• Canada Nov Budget Balance (YoY) -232.02B, -216.62B previous
• Canada Nov Budget Balance-15.40B,-18.51B previous
• US Dec Dallas Fed PCE 1.90%,0.50% previous
Looking Ahead – Economic (GMT)
•No data ahead
Looking Ahead - Economic events and other releases (GMT)
• No significant events
Currency Summaries
EUR/USD: The euro strengthened against greenback on Friday after sources said European Central Bank is unlikely to cut its already-record low policy rate as this would do little to revive the pandemic-hit euro zone economy, playing down concerns about a strong euro. Traders were left scratching their head this week when Dutch central bank governor Klaas Knot said the ECB had room to push its Deposit Facility Rate, currently at minus 0.5%, further below zero if needed to stem a rally in the euro. The sources noted that the ECB’s focus now was on keeping financing conditions, i.e. bond yields and bank lending rates, stable, and said that the exchange rate was a secondary issue. Immediate resistance can be seen at 1.2150 (Daily high), an upside break can trigger rise towards 1.2209 (23.6%fib).On the downside, immediate support is seen at 1.2057 (38.2% fib), a break below could take the pair towards 1.2000 (Psychological level).
GBP/USD: The pound declined against dollar on Friday as market unease boosted demand for safe-haven greenback. Sterling fell nearly half a percent below $1.37 against a broadly stronger dollar, last at $1.3660.The pound has held up better against the dollar than most of its G10 peers this week, with analysts citing the UK’s comparative progress in rolling out COVID-19 vaccinations . Currency traders will be watching to see if the Bank of England, takes further monetary policy action next week. It is due to announce a rates decision on Feb 4. Immediate resistance can be seen at 1.3749 (23.6%fib), an upside break can trigger rise towards 1.3800(Psychological level).On the downside, immediate support is seen at 1.3639 (38.2%fib), a break below could take the pair towards 1.3612(25 EMA).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and data showed the domestic economy growing faster than expected in November, with the loonie clawing back some of this week's decline. The Canadian economy grew by 0.7% in November, surpassing estimates for a 0.4% gain, data from Statistics Canada showed. A preliminary estimate pointed to a 0.3% advance for December GDP, while fourth-quarter annualized growth was seen at 7.8%. The Canadian dollar was trading 0.5% higher at 1.2759 to the greenback . The currency traded in a range of 1.2754 to 1.2874. Immediate resistance can be seen at 1.2808 (50%fib), an upside break can trigger rise towards 1.2872 (61.8%fib).On the downside, immediate support is seen at 1.2747 (38.2%fib), a break below could take the pair towards 1.2664 (23.6%fib).
USD/JPY: The dollar rose higher against the Japanese yen on Friday as investors rebalanced portfolios for month-end. The yen underperformed on Friday even as risk appetite worsened, hitting a two-month low versus the dollar and a nearly three-year low against the Swiss franc.Bank of Japan policymakers discussed the merits of allowing long-term yields to move more flexibly around the bank’s target, a summary of opinions at their January meeting showed on Friday.The dollar was last up 0.50% at 104.73 yen. It earlier rose to 104.94. Strong resistance can be seen at 104.92 (Daily high), an upside break can trigger rise towards 105.34 (23.6%fib).On the downside, immediate support is seen at 104.36 (38.2%fib), a break below could take the pair towards 103.93(61.8% fib).
Equities Recap
European stocks slid on Friday, recording their worst weekly performance since October as concerns around the slow rollout of COVID-19 vaccines mount, while a retail trading frenzy led to volatility on Wall Street.
UK's benchmark FTSE 100 closed down by 1.82 percent, Germany's Dax ended down by 1.71 percent, France’s CAC finished the day down by 2.02percent.
U.S. stock indexes fell on Friday after COVID-19 vaccine data from Johnson & Johnson hurt sentiment, while a standoff between Wall Street hedge funds and small, retail investors weighed.
Dow Jones closed down by 2.03% percent, S&P 500 closed down by 1.93% percent, Nasdaq settled up by 2.00% percent.
Treasuries Recap
U.S. Treasury yields extended gains on Friday after data showed inflation perked up last month, while employment costs rose suggesting the world’s largest economy is on the mend from the devastating effects of the pandemic.
The U.S. yield curve steepened as long yields rose following the inflation number, with the spread between 2-year and 10-year notes hitting 98.30 basis points, the widest in about a week.
Commodities Recap
Gold prices traded in a tight range on Friday, but prices were on track to post a weekly and monthly decline as a stronger dollar took some shine off the precious metal.
Spot gold was up 0.2% at $1,844.86 per ounce by 0732 GMT. Prices were down 0.5% for the week and 2.7% for the month. U.S. gold futures rose 0.4% to $1,847.90.
Oil prices edged up slightly on Friday but traded in a tight range, and briefly dipped on demand worries due to coronavirus variants and slow vaccine rollouts, which offset a bullish sentiment due to a cut in Saudi Arabian oil supply and falling U.S. oil inventories.
Global benchmark Brent crude futures for March rose 44 cents, or 0.8%, to $55.97 a barrel by 12:13 EST (16:13 GMT).
The Brent March contract expires on Friday. The more active April contract was up 25 cents, or 0.4%, at $55.35.
