Market Roundup
• US Non-Farm Payrolls Jun +222k vs 179k forecast, 152k previous.
• US Private Payrolls Jun +187k vs 172k forecast, 159k previous.
• US Unemployment Rate Jun 4.4% vs 4.3% forecast, 4.3% previous.
• US Average Earnings MM Jun +0.2% vs 0.3% forecast, 0.1% previous.
• US economy is seen growing 1.96% in Q2 vs 1.91% estimate June 30 – NY Fed.
• US economy is seen growing 1.78% in Q3 vs 1.61% estimate June 30 – NY Fed.
• Fed report: only 'moderate' vulnerabilities in US financial system.
• Fed: Weak wage growth, despite tight labor market, may reflect weak productivity.
• Not many good North Korea options if pressure fails - Tillerson.
• UK's Hammond: wants business friendly Brexit deal, with as much reciprocal access
to markets as possible.
• UK economy likely expanded 0.3 percent in Q2 - NIESR.
• Trump hails NAFTA progress, Mexico eyes general deal by end-2017.
• Mexican consumer prices rose 6.31% in June, at the fastest pace in 8-1/2 years.
• Brazil IPCA Inflation Index fell 0.23% in June, the first deflation rate since June 2006
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Machinery Orders MM May 1.7% forecast, -3.1% previous
• 23.50 Japan Current Account NSA (JPY) May 1796.3b forecast, 1951.9b previous
• 01:30 China PPI YY Jun 5.5% forecast, 5.5% previous
• 01:30 China CPI YY Jun 1.5% forecast, 1.5% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1357 levels and currently trading at 1.1404 levels. The pair has made session high at 1.1440 and hit lows at 1.1378 levels. The euro declined against the dollar on Friday as euro was weighed down after a report showed the U.S. economy created far more jobs than expected in June and the previous months, keeping the Federal Reserve on track to raise interest rates at least once this year. Friday's data showed U.S. non-farm payrolls jumped by 222,000 jobs last month, beating economists' expectations for a 179,000 gain. Data for April and May was revised to show 47,000 more jobs created than previously reported. That was the second biggest payrolls increase this year and beat economists' expectations for a 179,000 rise. The economy also created 47,000 more jobs in April and May than previously reported. While the unemployment rate rose to 4.4 percent from a 16-year low of 4.3 percent in May, that was because more people were looking for work, a sign of confidence in the labor market. U.S. financial markets shrugged off the anemic wage growth and investors focused on the jump in payrolls, which reinforced views that the economy regained speed in the second quarter after a lackluster performance at the start of the year. The euro, rose to around $1.1430, from $1.1411 ahead of the jobs report, and was last at $1.1395, down 0.2 percent. That pushed the dollar index up 0.3 percent at 96.042.
GBP/USD is supported in the range of 1.2820 levels and currently trading at 1.2881 levels. It reached session high at 1.2891 and dropped to session low at 1.2861 levels. Sterling declined against the dollar on Friday as sterling came under selling pressure after below-forecast output and trade data capped a run of downbeat readings of Britain's economy, adding to questions over the Bank of England's shifting interest rate stance. Data showing an unexpected contraction in British industrial output in May put sterling on the defensive from the start of European trade and the currency extended its losses against the dollar after a strong U.S. labour market report. The pound was down over half a percent at $1.2879, having fallen as low as $1.2867. It was 0.4 percent lower at 88.41 pence per euro. The numbers also flagged shrinkage in the UK manufacturing and construction sectors and echoed surveys of purchasing managers earlier in the week that were tepid across the board. Added to a widening trade deficit, the readings raised doubts about whether the BoE will follow through on recent hawkish rhetoric and soon raise interest rates that have stayed at record lows for 10 years. Investors will look to next week's hearing on the central bank's latest inflation report for further clues on its willingness to look through a rise in prices that has shot past its 2 percent target.
USD/CAD is supported at 1.2850 levels and is trading at 1.2870 levels. It has made session high at 1.2992 and lows at 1.2851 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday to a nearly 10-month high against its U.S. counterpart after stronger-than-expected domestic jobs data boosted chances of an interest rate increase by the Bank of Canada as soon as next week. Canada's economy added 45,300 jobs last month, topping the 10,000 gain forecast by economists. The unemployment rate dipped to 6.5 percent, even as more people were looking for work. The loonie strengthened even as prices of oil, one of Canada's major exports, fell. Oil prices erased the previous day's gains after a report showed U.S. production rose last week just as OPEC exports hit a 2017 high, casting doubt on efforts to curb persistent oversupply. Chances of an increase at next week's rate meeting rose to 91 percent from 86 percent before the jobs report, data from the overnight index swaps market showed. Expectations of a rate increase have been rising since top Bank of Canada officials said in June that a pair of 2015 interest rate cuts had done their job in cushioning the economy from collapsing oil prices.
USD/JPY is supported around 113.33 levels and currently trading at 113.98 levels. It peaked to hit session high at 114.17 and made session lows at 113.49 levels. The Japanese weakened against the dollar on Friday as U.S. dollar rose after data showed stronger-than-expected U.S. jobs growth but wage increases missed forecasts. Nonfarm payrolls increased by 222,000 jobs last month, data from the Labor Department showed, beating economists' expectations for a 179,000 gain. Average hourly earnings rose 0.2 percent in June after gaining 0.1 percent in May, but fell below the estimated 0.3 percent. While the unemployment rate rose to 4.4 percent from a 16-year low of 4.3 percent, that was because more people were looking for work, a sign of confidence in the labor market. U.S. financial markets shrugged off the anemic wage growth and investors focused on the jump in payrolls, which reinforced views that the economy regained speed in the second quarter after a lackluster performance at the start of the year. The U.S. dollar was up 0.2 percent against a basket of currencies and on pace to post its largest weekly percentage gain since early June. The dollar initially weakened to 113.54 yen following the jobs report from 113.74 minutes before the data's release, as investors focused mostly on the inflation implications of the average earnings growth. It was last at 113.88, up 0.6 percent.
Equities Recap
European shares slipped on Friday but eked out slight gains for the week as the market sought a floor following a sell-off sparked by expectations of tightening monetary conditions.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.21 percent, Germany's Dax ended flat, France’s CAC finished the day down by 0.3 percent.
Wall Street stocks closed on a high note Friday, with the S&P 500 index posting its best gain in six sessions on the heels of a U.S. payrolls report that gave investors more confidence in the strength of the economy.
Dow Jones closed up by 0.43 percent, S&P 500 ended up by 0.63 percent, Nasdaq finished the day up by 1.02 percent.
Treasuries Recap
Most U.S. Treasury yields rose on Friday, with longer-dated yields briefly hitting multi-week highs, after mixed details of a U.S. June employment report did not derail expectations of tighter global central bank monetary policy.
Benchmark 10-year Treasury yields hit a more than eight-week high of 2.396 percent and 30-year yields hit a more than six-week high of 2.943 percent after the U.S. jobs data.
U.S. two-year yields were last at 1.403 percent, from 1.406 percent late Thursday.
Commodities Recap
Oil prices fell more than 2.5 percent on Friday after data showed U.S. production and rig counts rose last week just as OPEC exports hit a 2017 high, casting doubt over efforts by producers to curb global oversupply.
Benchmark Brent futures were down $1.36, or 2.8 percent, to $46.75 a barrel at 1:35 p.m. EDT (1735 GMT), after falling to $46.28, the lowest in more than a week.
U.S. West Texas Intermediate (WTI) crude futures traded down $1.28, or 2.8 percent, at $44.24 a barrel, after falling to $43.78.
Gold fell to the lowest in nearly four months on Friday after stronger than expected United States jobs data increased the likelihood of another U.S. interest rate increase and the dollar rose.
Spot gold was down 1.2 percent at $1,209.90 an ounce by 2:21 p.m. EDT (1821 GMT), after touching $1,207.15, the weakest since March 15. It has dropped about 2.5 percent this week and is set for its biggest weekly fall since the week of May 5. U.S. gold futures for August delivery settled down 1.1 percent at $1,209.70.
