Market Roundup
•US Aug New Home Sales 740K, 714K, 708K previous
• US Aug New Home Sales (MoM) 1.5%, 1.0% previous
•Canada Jul Budget Balance -11.98B,-12.71B
•Canada Jul Budget Balance (YoY) -48.45B,-36.47B
•US Baker Hughes Total Rig Count 521,503 previous
Looking Ahead –Economic Data (GMT)
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Looking Ahead - Events, Other Releases (GMT)
•11:00 FOMC Member Williams Speaks
Currency Summaries
EUR/USD: The euro declined against dollar on Friday as uncertainty over beleaguered Chinese property developer Evergrande helped the greenback bounce back from a sharp decline in the prior session. China Evergrande Group owes $305 billion and has run short on cash, missing a Thursday deadline for paying $83.5 million and leaving investors questioning whether it will make the payment before a 30-day grace period expires. A collapse of the company could create systemic risks to China's financial system.Immediate resistance can be seen at 1.1751 (50%fib), an upside break can trigger rise towards 1.1784(61.8%fib).On the downside, immediate support is seen at 1.1700(Daily low), a break below could take the pair towards 1.1680 (23.6%fib).
GBP/USD: Sterling dipped against the dollar on Friday, losing some of its gains from a rally which followed the Bank of England taking a hawkish tone on interest rates and its pandemic-era government bond buying scheme. Markets brought forward their expectations of an interest rate rise after the central bank lifted on Thursday its forecast for inflation and two of its policymakers called for an immediate halt to its 895 billion pound ($1.23 trillion) bond purchase programme. Sterling, which had risen as high as $1.375 during the previous session, retreated 0.38% to about $1.3668 at 1800 GMT. Immediate resistance can be seen at 1.3753(23.6%fib),an upside break can trigger rise towards 1.3768 (21 DMA).On the downside, immediate support is seen at 1.3646(38.2%fib), a break below could take the pair towards 1.3605(50%fib).
USD/CAD: The Canadian dollar strengthened against the greenback on Friday as higher oil prices and weaker dollar supported Canadian dollar. Global equities also fell, hurt by uncertainty around the fate of China Evergrande, which missed an interest payment deadline on Thursday and has entered a 30-day grace period. Oil prices rose, with Brent up to a near three-year high, as global output disruptions have forced energy companies to pull large amounts of crude out of inventories. Strong resistance can be seen at 1.2696 (38.2%fib), an upside break can trigger rise towards 1.2979(23.6%fib).On the downside, immediate support is seen at 1.2625(50%fib), a break below could take the pair towards 1.2551(61.8%fib).
USD/JPY: The dollar rose higher against the Japanese yen on Friday as uncertainty over beleaguered Chinese property developer Evergrande helped the greenback rise against yen. Concern over whether distress at Evergrande could spill into the broader economy has hovered over markets this week. Evergrande’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash, the clearest sign yet that the property developer’s liquidity crisis is worsening in other parts of its business. The dollar was 0.02 percent higher versus the Japanese yen at 106.34. Strong resistance can be seen at 110.80(Daily high), an upside break can trigger rise towards 111.00 (Psychological level).On the downside, immediate support is seen at 110.30 (Sep 3rd low), a break below could take the pair towards 109.90 (50%fib).
Equities Recap
European stocks fell on Friday as worries about troubled property developer China Evergrande and weak German business confidence data prompted investors to book some profits after a mid-week rally.
The UK's benchmark FTSE 100 closed down by 0.38 percent, Germany's Dax ended down by 0.72 percent, and France’s CAC finished the down by 0.95 percent.
U.S. stock indexes fell on Friday following a two-day rally, weighed down by technology and healthcare shares, while a dour sales forecast from Nike further dampened sentiment..
Dow Jones closed up by 0.10 percent, S&P 500 ended up 0.15 percent, Nasdaq finished the day down by 0.03 percent.
Treasuries Recap
U.S. Treasury yields jumped again on Friday as a repricing of portfolios continues in the wake of the Federal Reserve's decision to soon begin tapering its massive bond purchases, a move that could lead to higher interest rates next year.
The yield on 10-year Treasury notes rose 4.9 basis points to 1.456%, up from the closing yield of 1.304% on Wednesday when the initial reaction to the Fed's plans announced that afternoon was muted.
Commodities Recap
Gold prices rose on Friday due to a subdued dollar and as investors avoided riskier assets because of China’s Evergrande saga, but looming interest rate hikes slowed bullion’s advance.
Spot gold was 0.4% higher at $1,750 per ounce by 1:50 pm EDT (1750 GMT) but still on course for a third consecutive week of falls. U.S. gold futures settled up 0.1% to $1,751.7.
Oil prices rose for a third week in a row to a near three-year high on Friday as global output disruptions have forced energy companies to pull large amounts of crude out of inventories.
Brent futures rose 84 cents, or 1.1%, to settle at $78.09 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 68 cents, or 0.9%, to settle at $73.98.
That was the highest close for Brent since October 2018 and for WTI since July 2021, both for a second day in a row.
