Market Roundup
• U.S. retail sales rise (1.3% v -0.3% in Mar), boost economy outlook, retail control +0.9% v 0.2% previous.
• U.S. April PPI rise 0.2 pct m/m, business inventories (+0.4%) post largest gain in 9 months.
• University of Michigan May preliminary sentiment 95.8 v 90 forecast, expectations 87.5 v 78.1 forecast.
• Fed's Brainard: wants to see persistence on inflation, positive developments in domestic economy.
• NY Fed’s Nowcast Q2 GDP tracker 1.2% vs 0.8% previous.
• Atlanta Fed’s GDPNow sees Q2 GDP 2.8% from 2.2% previous.
• USD strengthens after retail sales & University of Michigan beats, oil dips, US yield curve flattens, equities drop.
• NIKKEI Exclusive: Japan's Abe to put off sales tax hike again, 2019 seen as window for hike.
• Brazil’s Interim-President Temer: Main challenge is to stop free-fall in economy.
• Brazil’s FinMin Meirelles: Brazilian society is mature enough for tough measures, need to limit public spending.
Looking Ahead - Economic Data (GMT)
• Sat 05:30 China Urban investment (ytd)yy April forecast 10.9%, 10.7%-previous
• Sat 05:30 CN Industrial Output YY* April forecast 6.5%, 6.8%- previous
• Sat 05:30 CN Retail Sales YY* April forecast 10.5%, 10.5%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1265 levels and currently trading at 1.1315 levels. The pair has made session high at 1.1333 and hit lows at 1.1282 levels. The dollar rose to a two-week high against euro on Friday, as better than expected U.S. retail sales boosted expectations that the Federal Reserve may raise interest rates more than once this year. The move was the best two week-gain for the dollar since late February. The greenback also rose for a second straight session versus the yen. Data on Friday showed U.S. retail sales gained 1.3 percent in April, the largest rise in more than a year, suggesting the economy was regaining momentum after growth almost stalled in the first quarter. Meanwhile, the dollar index rose 0.7 percent to 94.768. It also got a boost after the University of Michigan's consumer sentiment index rose to 95.8 this month, the highest level since June 2015, from April's reading of 89.Following the consumer sentiment data, the euro fell further to $1.1284, down 0.8 percent.
GBP/USD is supported in the range of 1.4300 levels and currently trading at 1.4360 levels. It reached session high at 1.4387 and dropped to session low at 1.4340 levels. British pound declined sharply to hit three-week low against the dollar on Friday, after the International Monetary Fund joined the Bank of England in warning of risks if Britain leaves the European Union. Losses accelerated in the early US session after the dollar was boosted by a strong U.S. retail sales report and an upbeat consumer sentiment survey. Retail sales rose to 1.3 percent last month, the largest gain since March 2015, while the University of Michigan said its consumer sentiment index surged 6.8 points to 95.8 early this month, the highest reading since June. Pound weakened to $1.4340 after the U.S. data was released, its lowest since May 22. The euro was flat against the pound at 78.745 pence.
USD/CAD is supported at 1.2844 levels and is trading at 1.2933 levels. It has made session high at 1.2956 and lows at 1.2879 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as oil prices fell and stronger than expected U.S. retail sales data boosted the greenback. U.S. retail sales jumped 1.3 percent last month, the largest gain since March 2015 and a bigger rise than economist’s expected.U.S. crude prices fell 1 percent to $46.22 a barrel as the U.S. dollar strengthened. The currency has fallen more than 3 percent from a recent 10-month high of C$1.2461 as a wildfire in Alberta's oil sands region weakened the outlook for Canada's economy. The U.S currency had already received a boost overnight when two Fed officials said the central bank should raise rates if data points to an improving economy.
AUD/USD is supported around 0.7200 levels and currently trading at 0.7270 levels. It hit session high at 0.7281and made session lows at 0.7253 levels. The Australian dollar declined to hit 11-week trough on Friday after another slide in commodities and rebound in dollar hammered Australian dollar towards lower side. The Australian dollar dropped to as low as $0.7253, its weakest reading since early March, after stops were tripped on the break of key support at 73 cents. It was last at $0.7268 with the next big support level seen around $0.7200. Meanwhile Australian dollar it dropped a leg lower after another fall in prices of iron ore, Australia's top export earner. The mineral touched its lowest in two-months on Thursday to be down nearly 6 percent this week.
Equities Recap
European shares rebounded from losses earlier in Friday's session as strong U.S. retail sales data buoyed markets, although satellite company Eutelsat plunged nearly 30 percent after slashing its outlook.
UK's benchmark FTSE 100 closed up 0.5 percent, the pan-European FTSEurofirst 300 ended the day up 0.57 percent, Germany's Dax ended up by 0.9 percent, France’s CAC finished the day up by 0.6 percent.
U.S. stocks ended lower on Friday as a decline in oil prices added to pressure from consumer companies after gloomy quarterly reports from retailers Nordstrom and J.C. Penney overshadowed upbeat April retail sales data.
Dow Jones closed down by 1.05 percent, S&P 500 ended down by 0.85 percent, Nasdaq finished the day down by 0.42 percent.
Treasuries Recap
The U.S. yield curve flattened to the lowest levels in two months on Friday after data showed U.S. retail sales rose the most in a year in April, suggesting the economy was regaining momentum after growth almost stalled in the first quarter.
Benchmark 10-year notes rose 16/32 in price on Friday to yield 1.71 percent, down from 1.76 percent on Thursday. The yields have fallen from 1.94 percent on April 26.
Commodities Recap
Gold prices rose on Friday, buoyed by weak U.S. equity markets and chart-based strength, as it shrugged off a higher dollar and strong U.S. economic data suggesting a brightening outlook for the economy.
Spot gold was up 0.8 percent at $1,273.53 an ounce at 2:46 p.m. EDT (1846 GMT). That left gold down 1.1 percent this week, the biggest weekly decline since the week ended March 25
.U.S. gold for June delivery settled up 0.1 percent at $1,272.70 an ounce.
Oil slipped on Friday on a stronger dollar and as investors cashed in on a three-day rally, but prices still ended the week higher after production in Nigeria fell to its lowest in two decades and wildfires slashed output from Canada's oil sands.
Brent crude futures settled down 25 cents at $47.83 a barrel while U.S. crude ended 49 cents lower at $46.21.
