Market Roundup
• US Nov Housing starts -18.7% vs. prior 27.4%; 1.090m unit rate, forecast 1.230m prior revised up to 1.340m from 1.323m.
• US Nov Building Permits 1.201m, forecast 1.240m prior 1.260m.
• China’s Navy has seized and unmanned, underwater U.S. Navy vehicle collecting scientific data in international waters of South China Sea- U.S. Official.
• ECB’s Praet: Impact of ECB asset buys on inflation has been disappointing up to now – Telegraaf newspaper.
• Russia C. Bank’s nabiullina: Thinks that cutting key rate more likely in Q2; Important that inflation expectations anchored about 4%; Doesn’t expect rouble strengthening to extent would threaten financial stability.
• Brazil poll shows 46% rate President Temer’s government as ‘bad’ or ‘terrible’ compared to 39% in Oct – IBOPE.
• Brazil’s pres. Temer: Without fiscal reforms Brazilian state will become insolvent.
• Dutch PM Rutte: Increasingly assertive Russia is a threat to stability and our national security.
Looking Ahead - Economic Data (GMT)
• 21:00 New Zealand Q4 Westpac consumer survey, no forecast prior 108.0
• 21:45 New Zealand Oct Building consents, no forecast prior 0.2%
• 00:00 New Zealand Dec NBNZ Business outlook, no forecast prior 20.5%
• 00:00 New Zealand Dec NBNZ Own Activity, no forecast prior 37.6%
• 23:50 Japan Nov Trade Balance total (JPY), forecast 227.4b, prior 496.2b
• 23:50 Japan Nov Exports y/y, forecast -2.0% prior -10.3%
• 23:50 Japan Nov Imports y/y, forecast -12.6% prior -16.5%
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0364 levels and currently trading at 1.0440 levels. The pair has made session high at 1.0472 and hit lows at 1.0395 levels. The dollar dipped slightly against euro on Friday as greenback took a breather after this week's big moves after the Federal Reserve signaled a faster pace of U.S. interest rate increases next year. The dollar index, which measures the greenback against a basket of six major rivals, was last at 103.140, not far from Thursday's 14-year high of 103.560 but up only 0.12 percent on the day in the wake of Wednesday's Fed decision. The index gained 1.2 percent on Thursday to mark its biggest daily percentage gain in nearly six months a day after the U.S. central bank raised interest rates for the first time in a year. The Fed also signaled it was likely to increase rates three more times in 2017, up from the two increases forecast at the central bank's September meeting. The euro was last flat against the dollar at $1.0410 after hitting a nearly 14-year low of $1.0364 Thursday, while the dollar was flat against the yen at 118.19 yen after hitting a roughly 10-1/2 month high of 118.66 yen Thursday.
GBP/USD is supported in the range of 1.2377 levels and currently trading at 1.2484 levels. It reached session high at 1.2511 and dropped to session low at 1.2403 levels. Sterling traded close to a three-week low against the dollar on Friday, recording a second week of losses against a greenback that has risen sharply on expectations for a faster-than-anticipated increase in U.S. interest rates. The U.S. currency soared to 14-year highs against a basket of currencies this week after the Federal Reserve on Wednesday hinted that rates could rise three times over the course of next year - up from a forecast of two hikes at the Fed's September meeting. Sterling already weak because of Brexit concerns - skidded along with other currencies, hitting a low of $1.2378 on Thursday, its weakest since Nov. 23, and closing the day more than 1 percent down its weakest performance in two months. On Friday it edged up to $1.2439 in thin trading volumes. The pound had tumbled more than 16 percent on a trade-weighted basis in the wake the Brexit vote in June but has since recovered almost half of that. It is now around 9 percent weaker than before the EU referendum against the Bank of England's trade-weighted index.
USD/CAD is supported at 1.3277 levels and is trading at 1.3346 levels. It has made session high at 1.3391 and lows at 1.3323 levels. The Canadian dollar declined against its U.S. counterpart on Friday as loonie was pressured by the recent fall in Canada's bond yields below U.S. yields as investors braced for divergence in monetary policy between the Federal Reserve and the Bank of Canada. Losses for the loonie came despite higher prices for oil, one of Canada's major exports, as producers showed signs of adhering to a global deal to reduce output. Oil prices jumped as producers showed signs of adhering to a global deal to reduce output. Brent crude futures were trading at $55.20 per barrel, up 2.2 percent, while U.S. crude was up 1.8 percent at $51.83.The U.S. dollar held onto gains since the Fed on Wednesday increased interest rates and signaled increases would follow at a faster pace next year. The Canadian dollar was trading at C$1.3385 to the greenback, or 74.71 U.S. cents, weaker than Thursday's close of C$1.3347, or 74.92 U.S. cents.
AUD/USD is supported around 0.7262 levels and currently trading at 0.7297 levels. It hit session high at 0.7333 and made session lows at 0.7264 levels. The Australian dollar declined against US dollar on Friday as the Australian dollar was weighted down by slightly firmer dollar. The Aussie was down at $0.7299 and set for a weekly loss of 1.4 percent following the Fed's rate rise and signal of more to come. The Federal Reserve, which raised interest rates for the second time in nearly a decade on Wednesday, sees a faster pace of rate hikes in 2017, partly due to the potential economic benefits from President-elect Donald Trump's policies. Support was seen around the November trough at $0.7265, and a break would revisit ground last trod in May when it got as low as $0.7145. On the data front, U.S. new housing projects dropped 18.7 percent to a seasonally adjusted annual rate of 1.09 million units. October's starts, however, were revised up to a 1.34 million-unit rate, the highest since July 2007.
Equities Recap
European shares marked a second week of gains on Friday with merger and acquisition speculation around drug maker Actelion and a rally among oil stocks helping the region's benchmark index stay near 11-month highs.
UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 provisionally closes up by 0.07 percent, Germany's Dax ended up by 0.2 percent, France’s CAC finished the day up by 0.1 percent.
The S&P 500 and the Dow were little changed in early afternoon trading on Friday, but the Nasdaq was dragged down by a fall in technology shares.
Dow Jones closed down by 0.05 percent, S&P 500 ended down by 0.18 percent, Nasdaq finished the day down by 0.38 percent.
Treasuries Recap
U.S. Treasury debt yields inched higher on Friday, continuing a trend that has been in place for several weeks, with investors consolidating some positions ahead of what is expected to be a quiet holiday period for economic data.
In late trading, 10-year Treasury note prices were down 6/32, yielding 2.600 percent, up from Thursday's 2.578 percent. On the week, 10-year yields have gained 13 basis points.
U.S. 30-year bond prices were down 24/32, yielding 3.185 percent, up from 3.145 percent late on Thursday.
Yields on U.S. two-year notes, the maturity most sensitive to interest rate expectations, were at 1.256 percent, down slightly from 1.264 percent the previous session. The note has gained 12 basis points in yield this week.
Commodities Recap
Gold rose on Friday, climbing above the prior session's 10-1/2 month low, as the dollar and U.S. stocks dipped at the end of a volatile week highlighted by the Federal Reserve's signal that there could be more rate hikes than previously expected in 2017.
Spot gold was up 0.6 percent at $1,135.16 an ounce by 2:30 p.m. EST (1930 GMT). The metal hit $1,122.35 on Thursday, its weakest since Feb. 2 and is down 2 percent so far this week, leaving it on track for its sixth consecutive weekly loss. U.S. gold futures settled up 0.7 percent at $1,137.40.
Oil rose on Friday, edging closer to new 17-month highs after Goldman Sachs boosted its price forecast for 2017 and producers showed signs of adhering to a global deal to reduce output.
Brent futures rose $1.19, or 2.2 percent, to settle at $55.21 a barrel, while U.S. West Texas Intermediate crude rose $1, or 2 percent, to settle at $51.90 per barrel.
