Market Roundup
• US Core CPI MM, SA Jun 0.1%, 0.2% forecast, 0.1% previous.
• US Core CPI YY, NSA Jun 1.7%, 1.7% forecast, 1.7 previous.
• US CPI Index, NSA Jun 244.96, 245.10 forecast, 244.73 previous.
• US Core CPI Index, SA Jun 251.63, 251.33.
• US CPI MM, SA Jun 0.0%, 0.1% forecast, -0.1% previous.
• US CPI YY, NSA Jun 1.6%, 1.7% forecast, 1.9% previous.
• US Retail Sales Jun MM -0.2%, 0.1% forecast, -0.3% previous.
• US Industrial Production MM Jun 0.4%, 0.3% forecast, 0.1% previous.
• US Capacity Utilization MM Jun 76.6%, 76.7% forecast, 76.4% previous.
• US Manufacturing Output MM Jun 0.2%, 0.2% forecast, -0.4% previous.
• US Business Inventories MM May 0.3%, 0.3% forecast, -0.2% previous.
• US U Mich Sentiment Prelim Jul 93.1, 95.0 forecast, 95.1 previous.
• US economy is seen growing 2.4% in Q2 vs 2.6% July 11 estimate - Atlanta Fed.
• US economy is seen growing 1.90% in Q2 vs 1.96% July 7 estimate - NY Fed.
• US economy is seen growing 1.84% in Q3 vs 1.78% July 7 estimate - NY Fed.
• Fed's Kaplan wants to trim balance sheet, wait on rate hikes.
• Kaplan: The US should look at tax reform to boost growth, but tax cuts would pressure deficit.
• Fed's Evans: Need slow removal of policy accommodation to achieve2% inflation goal in timely fashion.
• Russian-American lobbyist met with Trump Jr., Russian lawyer -NBC News.
• ECB wary of putting end-date on QE- sources.
Looking Ahead - Economic Data (GMT)
• 04:15 New Zealand CPI QQ Q2 0.2% forecast, 1.0% previous
• 04:15 New Zealand CPI YY Q2, 1.9% forecast, 2.2% previous
• 04:15 New Zealand CPI Index Q2, 1226.0 previous
• 07:30 China Urban investment (YTD) YY Jun 8.5% forecast, 8.6% previous
• 07:30 China Industrial Output YY Jun 6.5% forecast, 6.5% previous
• 07:30 China Retail Sales YY Jun 10.6% forecast,10.7% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant data
Currency Summaries
EUR/USD is likely to find support at 1.1388 levels and currently trading at 1.1465 levels. The pair has made session high at 1.1469 and hit lows at 1.1431 levels. Euro strengthened against the dollar on Friday as the greenback weakened after a benign reading of U.S. inflation in June and soft retail demand raised doubts the Federal Reserve would increase interest rates later this year. The U.S. consumer price index increased 1.6 percent, the smallest gain since October 2016, after rising 1.9 percent in May, the Labor Department said. Year-on-year CPI has been softening steadily since February, when it hit 2.7 percent. The CPI's drop of 0.1 percent in May and the lack of a rebound last month could trouble Fed officials who have largely viewed a recent moderation in price pressures as temporary. U.S. retail sales unexpectedly fell in June for a second straight month, which could temper expectations of strong acceleration in economic growth in the second quarter. The Commerce Department said on Friday retail sales fell 0.2 percent last month. The dollar index, which tracks the greenback against six major rivals, was down 0.5 to 95.248 after earlier falling to 95.186, its lowest since September 2016.The euro was up 0.62 percent against the greenback to $1.1470.
GBP/USD is supported in the range of 1.2952 levels and currently trading at 1.3101 levels. It reached session high at 1.3117 and dropped to session low at 1.2988 levels. The British pound rose sharply against the greenback on Friday, climbing more than 1 percent after data further undermined expectations for more hikes in U.S. interest rates. After a rough start to the week driven by poor British economic numbers, the pound is now up almost half a percent in trade-weighted terms, riding out a series of negative headlines on Brexit negotiations with the European Union. It rose as high as $1.3088 after a closely watched survey of U.S. consumer sentiment came in worse than forecast at 1400 GMT and was also half a percent higher at 87.63 pence per euro. The Bank of England's trade-weighted index stood at 77.1, almost 5 percent above seven-year lows hit last October, but 2.5 percent off highs hit in May when financial investors were banking on an electoral landslide for the ruling Conservatives. The pound has taken some support from a round of hawkish signals from Bank of England policymakers last week, and there are still some in the market looking out for a rise in interest rates next month.
USD/CAD is supported at 1.2614 levels and is trading at 1.2649 levels. It has made session high at 1.2754 and lows at 1.2646 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as oil extended its rally, while the gap between Canadian and U.S. bond yields narrowed after weaker-than-expected U.S. data. The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 1.2 basis points to a spread of -14.4 basis points, its narrowest since Aug. 18.The narrower spread comes after the Bank of Canada raised interest rates on Wednesday for the first time in seven years. Prices of oil, one of Canada's major exports, climbed and were on track for solid weekly gains following positive demand signals, production issues in Nigeria and a reported decline in inventory. The Canadian dollar was trading at C$1.2715 to the greenback, or 78.65 U.S. cents, up 0.1 percent. The currency traded in a range of C$1.2693 to C$1.2747. It touched on Wednesday its strongest in nearly 13 months at C$1.2681.
AUD/USD is supported around 0.7748 levels and currently trading at 0.7812 levels. It hit session high at 0.7828 and made session lows at 0.7711 levels. The Australian dollar hit 8-month high on Friday as risk appetite was robust with global stock markets hitting record highs and after dovish comments from global policymakers. The Australian dollar rose 1.22 percent to $0.7823, well on track to post its best weekly performance in four months. The U.S. dollar decline dafter data showed U.S. inflation in June was unchanged from the previous month and retail sales unexpectedly weakened, fueling doubts about an interest rate increase later this year. The U.S. data bolstered expectations that the U.S. Federal Reserve would likely to move slowly to continue raising interest rates in the absence of inflation signs. Some had been expecting another rate hike in 2017. For the week, the Australian dollar and the Canadian dollar are among the top gainers after European shares were poised to post their best week since late April.
Equities Recap
European shares had their strongest week in more than two months as investors piled back into equities on signs that the world's major central banks would likely not tighten monetary policy as quickly as some had feared.
UK's benchmark FTSE 100 closed down by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.01 percent, Germany's Dax ended down by 0.2 percent, France’s CAC finished the day down by 0.1 percent.
The Dow and S&P 500 hit record closing highs on Friday after weak economic data dulled prospects of more interest rate hikes this year.
Dow Jones closed up by 0.41 percent, S&P 500 ended up 0.47 percent, Nasdaq finished the day up by 0.59 percent.
Treasuries Recap
U.S. Treasury yields dropped to multi-week lows on Friday as benign U.S. inflation data in June and an unexpected fall in retail sales fueled doubts about an interest rate increase later this year.
U.S. 10-year yield fell to 2.303 percent, from 2.348 percent late on Thursday. It earlier fell to 2.279 percent, its lowest since June 30.
U.S. two-year yields slid as well, down to 1.339 percent, from Thursday's 1.367 percent, after sliding to a three-week trough of 1.323 percent.
The yield gap between shorter-dated and longer-dated Treasuries shrank on Friday after the data, with the spread between 2-year and 10-year yields at 95.7 basis points, its flattest level in more than a week.
Commodities Recap
Gold prices jumped 1.4 percent to the highest level in nearly two weeks on Friday after data pointed to weak U.S. inflation, reaffirming doubts that the U.S. central bank would again hike interest rates this year.
Spot gold gained 0.96 pct at $1,228.61 per ounce by 3:01 p.m. EDT (1901 GMT) after hitting $1,232.76. It was poised for a weekly gain of 1.3 percent, the biggest since mid-May.
The most-active U.S. gold futures for August delivery futures settled up $10.20, or 0.84 percent, at $1,227.50 per ounce. The contract finished the week up 1.5 percent, its first gain in six weeks.
Oil rose 1 percent on Friday, boosted by lower U.S. stockpiles, a slight slowdown in U.S. crude production and signs of increased Chinese demand, but trading was volatile as global supply remained strong.
Brent crude futures, the international benchmark for oil, settled up 49 cents, or 1.01 percent, at $48.91 per barrel.U.S. West Texas Intermediate (WTI) crude futures settled up 46 cents, or 1 percent, at $46.54 per barrel.
