Market Roundup
• Trump hails growth as one-offs and consumers boost economy.
• US Q2 GDP Advance, 4.1%, 4.1% forecast, 2.0% prev, 2.2% revised.
• US Q2 GDP Sales Advance, 5.1%, 3.7% forecast, 2.0% previous, 1.9% revised.
• US Q2 Core PCE Prices Advance, 2.0%, 2.2% forecast, 2.3% prev, 2.2% revised.
• US Jul U Mich Sentiment Final, 97.9, 97.1 forecast, 97.1 previous.
• US Jul U Mich Conditions Final, 114.4, 114.0 forecast, 113.9 previous.
• US Jul U Mich Expectations Final, 87.3, 86.5, 86.4 previous.
• N.Y. Fed lifts U.S. third-quarter GDP forecast to 2.83 pct.
• U.S. says has addressed residual seasonality in GDP data.
• Putin says Trump can 'be my guest' in Moscow, White House welcomes idea.
• CA Apr Budget Balance, C$, 0.64 bln, -10.63 bln previous.
• CA Apr Budget YTD, C$, 3.18 bln, -16.19 bln previous.
• Canada to host meeting on WTO reform, U.S. and China left out for now.
• NAFTA teams ready to 'start solving' stalled issues – Mexico.
Looking Ahead - Economic Data (GMT)
• Jul 29 23:50 Japan Jun Retail Sales YY, 1.6% forecast, 0.6% previous
Looking Ahead - Events, Other Releases (GMT)
• July 30 N/A BoJ holds monetary policy meeting – Tokyo
Currency Summaries
EUR/USD is likely to find support at 1.1618 levels and currently trading at 1.1654 levels. The pair has made session high at 1.1662 and hit lows at 1.1634 levels. The euro edged higher against US dollar on Friday as data showing the U.S. economy rang up its strongest quarter in nearly four years failed to erase worries that trade frictions would be a drag in the second half of 2018. Gross domestic product increased at a 4.1 percent annualized rate also as government spending picked up, the Commerce Department said in its snapshot of second-quarter GDP.January-March quarter GDP growth was revised up to a 2.2 percent pace from the previously reported 2.0 percent rate to account for updated information and methodology improvements. Compared to the second quarter of 2017, the economy grew 2.8 percent. Output expanded 3.1 percent in the first half of 2018, putting the economy on track to hit the Trump administration's target of 3 percent annual growth. A measure of domestic demand surged at a 4.3 percent rate in the second quarter.While the latest reading may be less stellar than it first appeared, it provided solid fundamentals to own dollars. The latest GDP figure also reinforced the notion that the Federal Reserve would further raise interest rates, which is also a positive for the dollar. An index that tracks the dollar versus the euro, yen, sterling and three other currencies was down 0.09 percent at 94.662, paring its weekly gain to 0.2 percent. The euro was up 0.14 percent at $1.1659.
GBP/USD is supported in the range of 1.3000 levels and currently trading at 1.3093 levels. It reached session high at 1.3139 and dropped to session low at 1.3097 levels. Sterling nursed losses on Friday and is poised to register its third consecutive weekly loss as concerns about the progress of Brexit negotiations trumped any optimism ahead of a likely interest rate hike next week. EU Brexit negotiator Michel Barnier rejected key elements of Britain's new trade proposals on Thursday even as he and his new British counterpart Dominic Raab voiced a shared determination to reach a deal by October.At a joint news conference with the Brexit secretary after three days of talks among officials in Brussels, Barnier made clear British offers to collect customs duties for the EU as part of efforts to avoid friction on Northern Ireland's new EU border had failed to convince already sceptical Europeans. Barnier added that Prime Minister Theresa May might instead offer to join a customs union with the EU, although that would prevent London cutting its own trade deals with other countries. May has ruled out a customs union and Raab said Britain still believed it could reach a deal to avoid a "hard border".On Friday, the pound held steady at a three-day low of $1.3111.Market bets for a Bank of England rate hike next week have settled at a firm 81 percent. In contrast, the European Central Bank backed investor expectations for a 10 basis point hike only in October 2019, its first since 2011.
USD/CAD is supported at 1.3024levels and is trading at 1.3059 levels. It has made session high at 1.3073 and lows at 1.3047 levels. The Canadian dollar was little changed against its U.S. counterpart on Friday as the loonie held on to this week's gains even after data showed the U.S. economy expanded at its fastest clip in nearly four years. The Canadian dollar was trading 0.1 percent higher at C$1.3059 to the greenback, or 76.58 U.S. cents. The currency, which on Wednesday touched its highest level in nearly six weeks at C$1.3025, traded in a narrow range of C$1.3041 to C$1.3080.For the week, the loonie is on track to rise 0.7 percent. It has been boosted by stronger-than-expected domestic data and easing of trans-Atlantic trade tensions. Canada runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows. The country is in talks with Mexico and the United States to revamp the North American Free Trade Agreement (NAFTA). Mexico and the United States agreed on Thursday to step up talks in hopes of reaching an agreement on major issues by August, Mexican Economy Secretary Ildefonso Guajardo said. The price of oil, one of Canada's major exports, dipped but was set for a weekly gain thanks to Saudi Arabia halting crude transport through a key shipping lane. U.S. crude prices were down 0.1 percent at $69.51 a barrel.
AUD/USD is supported around 0.7368 levels and currently trading at 0.76401 levels. It hit session high at 0.7413 and made session lows at 0.7383 levels. The Australian dollar nursed hefty losses on Friday, as Sino-U.S. trade concerns refused to fade away. The Aussie dollar had peeled back to $0.7386, having shed 1 percent overnight against a broadly firmer U.S. currency. Some of the retreat was technical as the Aussie again failed to break the $0.7484 barrier which has held since mid-June. If it ends the day at current levels it will be the seventh week in a row the Aussie has finished within a quarter cent of $0.7400.Investors were also unnerved by speculation the White House would use its truce on trade with the European Union to focus on its tariff battle with China. Sources said one key aspect of the deal was that both sides had agreed to work together to tackle China's market abuses. China is Australia's largest export market and the world's biggest buyer of commodities, and anything that threatens free trade with Beijing is taken as negative for Australia. Domestically, data showed Australian producer prices were remarkably tame in the second quarter, rising only 0.3 percent despite a surge in petrol costs. Annual growth in producer prices was a modest 1.5 percent, suggesting firms were choosing to absorb higher costs rather than jack up prices - another reason why consumer inflation remains uncomfortably low.
Equities Recap
European stocks rose to fresh six-week highs on Friday, helped by an easing of fears over U.S tariffs and some solid company results.
UK's benchmark FTSE 100 closed up 0.8 percent, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany's Dax ended down by 0.5 percent, France’s CAC finished the day down by 0.6 percent.
Wall Street's major indexes fell on Friday as weak earnings reports from major technology companies led to a big drop for the sector.
Dow Jones closed down by 0.29 percent, S&P 500 ended up by 0.65 percent, Nasdaq finished the day down by 1.47 percent.
Treasuries Recap
U.S. Treasury yields retreated from six-week highs on Friday after data showed the U.S. economy grew at its fastest pace in nearly four years, but came in below high expectations for the number.
Benchmark 10-year notes gained 4/32 in price to yield 2.962 percent, down from a high of 2.988 percent reached in overnight trading, which was the highest since June 13.
Commodities Recap
Gold inched higher on Friday as the U.S. dollar slid lower after strong U.S. economic growth data while concern remains about trade tensions between the United States and Europe.
Spot gold edged up 0.1 percent to $1,223.46 an ounce 1:31 p.m. EDT (1731 GMT), having hit a one-week low of $1,216.93, and was on track for its third consecutive weekly decline, of about 0.5 percent.
U.S. gold futures for August delivery settled down $2.70, or 0.2 percent, at $1,223 per ounce.
Oil prices fell on Friday, weighed down by a drop in the U.S. equities market, but Brent still marked a weekly increase, supported by easing trade tensions and a temporary shutdown by Saudi Arabia of a key crude oil shipping lane.
Brent crude futures fell 25 cents to settle at $74.29 a barrel, but notched a 1.8 percent weekly increase, its first increase in four weeks.
U.S. West Texas Intermediate (WTI) crude futures fell 92 cents to settle at $68.69 a barrel, and marked a fourth week of declines, falling about 2.4 percent.
