Market Roundup
• Rising rents, healthcare costs lift US cons prices; CPI +0.2% v 0.1% forecast, Core +0.3% v 0.2% forecast.
• University of Michigan prelim Sentiment 89.8 v 90.8 forecast, Prelim conditions 103.5 v 107.5 forecast; 1-yr inflation 2.3% v 2.5% previous.
• EU’s Tusk: Quite a likely UK will be ready to trigger article 50 in January or February; adds to GBP weakness.
• Germany’s Merkel: Europe situation critical, can't be fixed at one summit; Europe in critical situation since Brexit vote.
• USD gains after inflation data suggest more hawkish Fed; Uncertainty pre- BOJ meet limits USD gains v yen.
• Deutsche Bank: Slumps after US DoJ asks it to pay USD14bn; DB 5-yr Sr. CDS +16bp, subordinated +33bp.
• MXN hits a record low, USD/MXN inching toward 20; weak oil, uncertain US election weighs on MXN.
• Sterling skids to 10-wk low by 1.3000, near minor Fib support.
• Oil hits multi-week lows on glut worry, Iran oil exports near pre-sanctions level-source.
Looking Ahead - Economic Data (GMT)
• 22:00 New Zealand Westpac Consumer Survey Q3 106-previous
• 01:30 China-China House Prices YY* Aug 7.9%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1120 levels and currently trading at 1.1156 levels. The pair has made session high at 1.1230 and hit lows at 1.1149 levels. The dollar rose sharply against euro on Friday after a surprise rise in U.S. inflation last month increased expectations that the Federal Reserve would raise interest rates this year. U.S. consumer prices rose more than expected in August as healthcare costs recorded their biggest gain in 32-1/2 years. The inflation data suggested a greater probability of a December move from the U.S. central bank and a quicker pace of rate increases next year. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.8 percent to 96.063. The euro hit a 10-day low against the dollar of $1.1149, while the dollar hit a two-week high against the Swiss franc of 0.9817 franc. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.81 percent to 96.059.The U.S. and Japanese central banks hold monetary policy meetings on Sept. 20-21. The Fed is scheduled to release a statement at 2 p.m. EDT (1800 GMT) on Wednesday.
GBP/USD is supported in the range of 1.2970 and currently trading at 1.2999 levels. It reached session high at 1.3178 and hit low at 1.2996 levels. Sterling declined to hit a one-month low against the dollar on Friday, as the dollar rallied broadly after data showed U.S. inflation data rose last month and investors were worried about Britain's vote to leave the European Union and bet on another cut in UK interest rates this year. The Bank of England kept rates at their record lows on Thursday but signaled that it would cut them again before the end of the year. It cut rates to 0.25 percent in early August and relaunched an asset-purchase program to cushion the economic blow from Brexit. Sterling’s downside further increased after Bloomberg reported that Chancellor of the Exchequer Philip Hammond was "ready to accept" that Britain may have to give up a membership of the European Union's single market, citing unnamed officials. The currency was last down 1.7 percent at $1.2999.
USD/CAD is supported at 1.3149 levels and is trading at 1.3215 levels. It has made session high at 1.3248 and lows at 1.3198 levels. The Canadian dollar weakened against its U.S. counterpart on Friday, as crude oil prices further fell and domestic manufacturing sales rose by less than expected. Canadian manufacturing sales edged up by 0.1 percent in July from June, Statistics Canada data indicated, held back by weakness in the machinery and aerospace sectors. The gain was well below the 1 percent gain forecast. Oil prices fell to multi-week lows as rising Iranian exports and returning supplies from Libya and Nigeria fueled concerns that a global glut would persist. U.S. crude prices were down 2.53 percent at $42.8 a barrel. The Canadian dollar was last trading at C$1.3215 to the greenback, or 75.53 U.S. cents, weaker than Thursday's close of C$1.3160, or 75.99 U.S. cents.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7492 levels. It hit session high at 0.7512 and made session lows at 0.7475 levels. The Australian dollar declined against US dollar on Friday as the oil prices continued to fall and the dollar strengthened against all major commodity exporting currencies after upbeat US Economic data. U.S. consumer prices rose faster than expected in August as higher housing and healthcare costs more than offset a decline in gasoline prices. U.S. inflation data offered additional support to expectations of a Federal Reserve rate hike this year. The Aussie, still near seven-week lows, is on track for its second weekly loss. The currency had been under pressure from investors unwinding carry trades in high-yielding, riskier assets on concerns global central banks were reaching the limits of policy stimulus.
Equities Recap
European shares ended at six-week lows on Friday, with Deutsche Bank dragging banking stocks lower after it said that the U.S. government is demanding billions of dollars to settle a mortgages case.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 0.88 percent, Germany's Dax ended down by 1.6 percent, France’s CAC finished the day down by 1 percent.
U.S. stocks fell on Friday as the possibility of a $14 billion fine against Deutsche Bank weighed on big banks and investors wrestled with lingering uncertainty about when the U.S. Federal Reserve will hike interest rates.
Dow Jones closed down by 0.49 percent, S&P 500 ended down by 0.38 percent, Nasdaq finished the day up by 0.10 percent.
Treasuries Recap
U.S. Treasuries yields rose on Friday after data showed that U.S. consumer prices increased more than expected in August, raising the odds that the Federal Reserve will raise rates later this year.
Benchmark 10-year notes ended up 1/32 in price to yield 1.70 percent, after trading at 1.67 percent before the data.
The yield curve between five-year note yields and 30-year bond yields flattened to 123.70 basis points, after reaching its steepest levels in two-and-a-half months on Thursday at 130 basis points.
Commodities Recap
Gold fell to a two-week low on Friday after data showing faster-than-expected growth in U.S. consumer prices last month helped support the case for the Federal Reserve to raise interest rates later this year and the dollar jumped.
Spot gold slid to its lowest since Sept. 1 in after the data at $1,306.26 an ounce, and was down 0.4 percent at $1,308.33 by 2:31 p.m EDT (1831 GMT). U.S. gold futures for December delivery settled down 0.6 percent at $1,310.20.
Crude oil prices fell 2 percent on Friday to multi-week lows as swelling Iranian exports reinforced fears of a global glut, while gasoline rallied on refinery and pipeline outages.
Brent crude futures settled down 82 cents, or 1.8 percent, at $45.77 a barrel, hitting a two-week bottom of $45.48.
U.S. West Texas Intermediate crude futures fell 88 cents, or 2 percent, to settle at $43.03 a barrel. WTI hit a five-week low of $42.74.
