Market Roundup
• US Markit Mfg PMI Flash 52.9 v 51.6 forecast, 51.3 previous, Employment index 53.4 v 52.3 in June highest since July 15.
• Canada June inflation tame (1.5% v 1.4% forecast, 1.5% previous), central bank seen on sidelines.
• Euro ends NY near session low after news of the attack in Munich shopping center.
• Bavarian broadcaster BR: 6 dead many injured in Munich shooting in shopping center.
• Stocks dip on soft earnings, GBP tumbles as poor U.K. PMI data stokes recession worries.
• CAD dips as oil prices on track for weekly decline on supply concerns.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Exports YY Jun forecast -11.6%, -11.30%-previous
• 23:50 Japan Imports YY Jun forecast -19.7%, -13.80%- previous
• 23:50 Japan Trade Balance Total Yen Jun forecast -494.8b, -40.7b- previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- China Finance and central bank deputies meeting (to July 23) Chengdu, China.
Currency Summaries
EUR/USD is likely to find support at 1.0900 levels and currently trading at 1.0971 levels. The pair has made session high at 1.1026 and hit lows at 1.0954 levels. Euro declined against the dollar on Friday as recent solid readings on the U.S. economy revived bets that Federal Reserve may raise interest rates by year-end. That put pressure on the euro and safe heaven assets. The euro fell to its lowest level against the dollar since the day after the June 23 Brexit vote, taking another leg down after a shooting in Munich that left multiple people dead. It was last down 0.6 percent to $1.0962. On the data front, the U.S. flash Markit purchasing managers' index, a preliminary survey of executives who make spending decisions at major firms, rose to its highest level in a year, surpassing economists' expectations. The dollar index rose 0.5 percent, touching a high of 97.487, its highest since March 10. Federal Reserve monetary policy meeting is scheduled next week, with the committee expected to hold rates steady. The policy-setting Federal Open Market Committee (FOMC), though, could strike a hawkish tone in its post-decision comments.
GBP/USD is supported in the range of 1.3050 currently trading at 1.3112 levels. It reached session high at 1.3116 and hit low at 1.3079 levels. Sterling declined sharply lower against the U.S. dollar on Friday after surveys showed business activity had wilted in the wake of the Brexit vote, bolstering expectations the Bank of England will have to do more next month to stimulate growth. The PMI survey of services sector purchasing managers fell to 47.4 in July from 52.3 in June, its steepest drop since records began in 1996 and the lowest reading since March 2009. Economists had expected a much smaller fall to 49.2. The manufacturing PMI fell to 49.1 from 52.1 in June, the lowest since February 2013. The composite index, which combines services and manufacturing, slumped to 47.7 from 52.4, the weakest since April 2009. Sterling fell more than 1 percent to $1.3085 down from $1.3270 beforehand and on track for weekly losses. The euro rose 1 percent to 84.19 pence, up from around 83.12.
USD/CAD is supported at 1.3052 levels and is trading at 1.3145 levels. It has made session high at 1.3185 and lows at 1.3056 levels. The Canadian dollar initially rose against the U.S. dollar on Friday after data showed Canadian retail sales rose in May, but reversed course as the loonie was pressured by decline in crude oil and stronger-than -expected U.S. data. Canadian retail sales rose by 0.2 percent in May from April to hit a record C$44.28 billion, Statistics Canada said. Meanwhile, Canada's annual inflation rate held at 1.5 percent in June, slightly firmer than analysts had forecast. The core inflation rate, which strips out the prices of some volatile items and is closely watched by the Bank of Canada, remained at 2.1 percent. Crude futures were on track for weekly losses as investor’s reassessed U.S. data on oil stocks and excesses in oil products in Europe and Asia. U.S. crude prices were down 1.1 percent, at $45.69.
AUD/USD is supported around 0.7430 levels and currently trading at 0.7465 levels. It hit session high at 0.7484 and made session lows at 0.7440 levels. The Australian dollar slumped against US dollar on Friday as markets expect upcoming inflation data would trigger a rate cut at home while upbeat U.S. data boosted greenback. The Australian dollar 0.31 percent to $0.7468 on Friday, losing 1.4 percent in the week. This is the currency's biggest loss since May, though it does follow seven straight weekly gains. Investors have cut long positions in case consumer price data on July 27 proves weak enough to spur the Reserve Bank of Australia (RBA) into easing its policy rate to new lows. The market is pricing in a 60 percent probability of a 25 basis point rate cut to 1.50 percent at the next policy review on Aug.2. The Aussie has also flattened on the yen at 79.10 , after being as high as 80.77 earlier in the week.
Equities Recap
European stock markets slipped on Friday, weighed down by falls at Spain's Banco de Sabadell, though Vodafone gained after its update
UK's benchmark FTSE 100 closed up by 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 0.04 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day flat.
Wall Street rose on Friday, clinching the fourth straight positive week for the stock market, boosted by strength in telecom stalwarts AT&T and Verizon.
Dow Jones closed up by 0.27 percent, S&P 500 ended up by 0.50 percent, Nasdaq finished the day up by 0.44 percent.
Treasuries Recap
Yields on long-dated U.S. Treasury debt slipped on Friday in choppy trading although the outlook remained upbeat given generally solid U.S. economic data over the last few weeks that support expectations of at least one interest rate hike this year.
In late trading, benchmark U.S. 10-year Treasury notes were down 1/32 in price for a yield of 1.568 percent, up from 1.565 percent the previous session. Benchmark yields hit a high of 1.628 percent on Thursday, their strongest since June 24.
U.S. 30-year bond prices rose 12/32 in price to yield 2.283 percent, down from 2.301 percent late on Thursday.
U.S. two-year notes were down 1/32, yielding 0.706 percent, up from 0.69 percent late on Thursday.
Commodities Recap
Oil prices settled lower on Friday, losing 4 percent on the week, after the fourth weekly rise in the U.S. oil rig count added to worries about a global crude glut.
Brent settled down 51 cents, or 1.1 percent, at $45.69 a barrel, after falling to $45.17, the lowest since May 11. For the week, Brent lost 4 percent.
U.S. West Texas Intermediate (WTI) crude closed down 56 cents, or 1.3 percent, at $44.19. It fell 3.8 percent on the week.
Gold prices fell on Friday, reflecting tension between a global backdrop of easier interest rates and the chance of U.S. monetary policy being tightened before the end of the year.
Spot gold was down 0.6 percent at $1,323.16 an ounce by 3:16 p.m. EDT (1916 GMT), on course for a weekly decline of about 1 percent. U.S. gold futures settled down 0.6 percent at $1,323.4.
