Market Roundup
• China exempts some U.S. goods from additional tariffs
• U.S. curve steepens, gap widest in four weeks
• US Aug retail sales rise 0.4% vs forecast of 0.2%
• US Aug Core Retail Sales (MoM) 0.0%,0.1% forecast, 1.0% previous
• US Aug Export Price Index (MoM) -0.6%,-0.2% forecast, 0.2% previous
• US Aug Import Price Index (MoM) -0.5%,-0.4% forecast, 0.1% previous
• US Aug Retail Control (MoM) 0.3%,0.3% forecast,0.9% previous
• US Aug Retail Sales (MoM) 0.4%,0.2% forecast, 0.8% previous
• US Aug Retail Sales Ex Gas/Autos (MoM) 0.1% , 0.9% previous
• Brazil Jul IBC-Br Economic Activity -0.16%, 0.30% previous
• US Jul Business Inventories (MoM) 0.4%,0.3% forecast, 0.0% previous
• US Sep Michigan 5-Year Inflation Expectations 2.30%,2.60% previous
• US Sep Michigan Consumer Expectations 82.4 , 82.0 forecast, 79.9 previous
• US Jul Retail Inventories Ex Auto 0.3% , 0.3% previous
Looking Ahead - Economic Data (GMT)
• No economic data ahead
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD: 0.3% The euro gained against the dollar on Friday for a second day after the European Central Bank on Thursday exempted euro zone banks from a penalty charge, which analysts say will reduce the currency impact of new stimulus. The ECB on Thursday cut its deposit rate to a record low -0.5% from -0.4% and said it will restart bond purchases of 20 billion euros a month from November. The purchases will run for as long as necessary and end shortly before it starts raising the key ECB interest rates. The euro was up 0.08 percent at $1.1072. An index that tracks the dollar versus a basket of six major currencies was down 0.30 at 98.30. Immediate resistance can be seen at 1.1109 (Daily high), an upside break can trigger rise towards 1.1127 (50 DMA).On the downside, immediate support is seen at 1.1032 (9 DMA), a break below could take the pair towards 1.0964 (lower BB).
GBP/USD: Sterling rose against dollar on Friday, as investors pounced on a media report that Northern Ireland’s largest political party had agreed to accept some European Union rules after Brexit. Talk of an alternative to the Irish backstop, which Prime Minister Boris Johnson wants scrapped, comes as investors slash their short positions on the pound because of the receding risks of a no-deal Brexit. Having hit a three-year low below $1.20 last week, sterling has soared since the British parliament voted to stop Johnson’s government from taking Britain out of the European Union on Oct. 31. The pound strengthened more than 1% to as high as $1.2504, its strongest since July 25, before settling at $1.2495 towards the end of the US trading session. Immediate resistance can be seen at 1.2500 (Higher BB), an upside break can trigger rise towards 1.2516 (100 DMA).On the downside, immediate support is seen at 1.2382 (5 DMA), a break below could take the pair towards 1.2270 (11 DMA).
USD/CAD: The Canadian dollar weakened to its lowest in more than one week against its U.S. counterpart on Friday, as investors guarded against the risk that the Federal Reserve would shift next week to a less dovish stance. Money markets expect the Fed to cut interest rates next Wednesday, but they have been scaling back the amount of additional easing they see over the coming year. U.S. retail sales increased more than expected in August, pointing to solid consumer spending that should continue to support a moderate pace of economic growth.The Canadian dollar was trading 0.5% lower at 1.3277 to the greenback, or 75.32 U.S. cents. The currency, which touched its weakest intraday level since Sept. 4 at 1.32285, was down 0.8% for the week.Immediate resistance can be seen at 1.3287 (100 DMA), an upside break can trigger rise towards 1.3307 (200 DMA).On the downside, immediate support is seen at 1.3264 (21 DMA), a break below could take the pair towards 1.3200 (Psychological level).
USD/JPY: The U.S. dollar was little changed against the yen on Friday, as signs the United States and China were narrowing their differences over trade ahead of key talks decreased demand for safe haven assets. U.S. President Donald Trump said on Thursday he would not rule out an interim trade pact with China.The two sides are preparing for new rounds of talks aimed at curbing their trade war, which has dragged on for more than a year, roiling financial markets and threatening to push other economies into recession.The yen, widely considered a safe-haven currency, tends to rise during times of heightened economic or market stress and vice versa. Strong resistance can be seen at 108.28 (Higher BB), an upside break can trigger rise towards 109.00 (Psychological level).On the downside, immediate support is seen at 107.76 (5 DMA), a break below could take the pair towards 106 .98 (11 DMA).
Equities Recap
A surge in banks, miners and automakers galvanized European stocks on Friday, as continued rotation into the cyclical sectors amid signs of progress in U.S.-China trade talks drove the STOXX 600 to its fourth straight week of gains.
The UK's benchmark FTSE 100 closed up by 0.31 percent, Germany's Dax ended up by 0.47 percent, and France’s CAC finished the day up by 0.22 percent.
Wall Street was mixed on Friday, with the S&P 500 and the Dow hovering just below all-time highs as cautious optimism regarding easing U.S.-China trade tensions was held in check by a drop in Apple stock.
Dow Jones closed up by 0.14 percent, S&P 500 ended down 0.07 percent, Nasdaq finished the day down by 0.22 percent.
Treasuries Recap
U.S. Treasury yields climbed to multi-week peaks on Friday, as trade tensions between the United States and China eased further after more conciliatory measures, with U.S. recession risks continuing to diminish after stronger-than-expected retail sales data.
In afternoon trading, U.S. benchmark 10-year note yields rose to 1.901% from 1.791% late on Thursday, hitting a six-week high of 1.903%. Yields on 30-year bonds were also higher at 2.373% from 2.264% on Thursday, touching a five-week high of 2.378%.
Commodities Recap
Gold prices eased on Friday, heading for a third straight weekly fall, as positive U.S. retail sales data and hopes for a thaw in China-U.S. trade tensions lifted equities and yields to multi-week highs.
Spot gold fell 0.5% to $1,491.41 per ounce by 1:35 p.m. EDT (1735 GMT), and has fallen about 1% for the week so far.U.S. gold futures settled down nearly $8, or 0.5%, to $1,499.50 per ounce.
Oil prices edged lower on Friday and posted weekly losses, as concerns about slower global economic growth outweighed hints of progress in the U.S.-China trade dispute.
Brent crude futures fell 16 cents to settle at $60.22 a barrel. U.S. West Texas Intermediate (WTI) crude futures delivery fell 24 cents to end at $54.85 a barrel.
