Market Roundup
• Trump signs budget deal after raising government shutdown threat.
• China urges U.S. away from "brink" as Trump picks trade weapons.
• Fed policymakers say they are watching trade risks closely.
• U.S. Feb Durable Goods, 3.1%, 1.5% forecast, -3.6% previous, -3.5% revised.
• U.S. Feb Durables Ex-Transport, 1.2%, 0.5% forecast, -0.3% previous, -0.2% revised.
• U.S. Feb New Home Sales-Units, 0.618 mln, 0.623 mln forecast, 0.593 mln previous, 0.622 mln revised.
• U.S. Feb New Home Sales Chg MM, -0.6%, 4.4% forecast, -7.8% prev, -4.7% revised.
• U.S. Feb Build Permits R Numb, 1.321 mln, 1.298 mln previous.
• After transition deal, Bank of England to update its Brexit approach next week.
• CA Feb CPI Inflation MM, 0.6%, 0.5% forecast, 0.7% previous.
• CA Feb CPI Inflation YY, 2.2%, 2.0% forecast, 1.7% previous
• CA Feb CPI BoC Core YY, 1.5%, 1.2% previous
• CA Feb CPI BoC Core MM, 0.7%, 0.5% previous
• CA Feb CPI MM SA, 0.2%, 0.5% previous
• CA Feb Core CPI MM SA, 0.2%, 0.2% previous, 0.3% revised
• CA Jan Retail Sales MM, 0.3%, 1.1% forecast, -0.8% previous, -0.7% revised
• CA Jan Retail Sales Ex-Autos MM, 0.9%, 0.9% forecast, -1.8% previous, -1.7% revised
• Euro zone leaders give new push to reforms of single currency area
• U.S. warship sails near disputed South China Sea island, officials say
Looking Ahead - Economic Data (GMT)
• 25 Mar 21:45 New Zealand Feb Trade - Imports NZD, 4.87 bln previous
• 25 Mar 21:45 New Zealand Feb Trade Balance NZD, -3.22 bln previous
• 25 Mar 21:45 New Zealand Feb Trade - Exports NZD, 4.31 bln previous
Looking Ahead - Events, Other Releases (GMT)
• 26 Mar 09:30 German central bank chief Jens Weidmann holds a speech about "New Impetus for Europe" – Vienna
• 26 Mar 10:00 Swedish Central Bank's Cecilia Skingsley visits Handelsbanken in Sodertalje to talk about the current monetary policy
• 26 Mar 10:30 Austrian Central bank chief Ewald Nowotny and Bundesbank President Jens Weidmann speak in Vienna
• 26 Mar 16:30 Fed's William Dudley speaks on regulatory reform at the U.S. Chamber of Commerce - Washington
Currency Summaries
EUR/USD is likely to find support at 1.2300 levels and currently trading at 1.2356 levels. The pair has made session high at 1.2372 and hit lows at 1.2320 levels. The euro strengthened against the U.S. dollar on Friday as investors worried that escalating trade tensions could hurt global growth. China urged the United States on Friday to "pull back from the brink" as President Donald Trump's plans for tariffs on up to $60 billion in Chinese goods moved the world's two largest economies closer to a trade war. U.S. President Donald Trump signed a memorandum on Thursday that will target up to $60 billion of Chinese products with tariffs, but only after a 30-day consultation period that starts once a list of goods is published. Trump on Friday signed into law Congress' massive $1.3 trillion spending bill, which is expected to worsen the deficit and increase the government’s need to issue more debt. Data on Friday showed that new orders for key U.S.-made capital goods rebounded more than expected in February after two straight monthly declines and shipments surged, pointing to strong growth in business spending on equipment in the first quarter. But sales of new U.S. single-family homes unexpectedly fell for a third straight month in February, weighed down by steep declines in the Midwest and West. The dollar index, which measures the greenback against a basket of six other major currencies, was down 0.48 percent at 89.427. For the week, the index was down 0.9 percent.
GBP/USD is supported in the range of 1.4055 levels and currently trading at 1.4135 levels. It reached session high at 1.4172 and dropped to session low at 1.4083 levels. Sterling made further gains against the dollar on Friday and was set for its best week in eight after Britain agreed a Brexit transition deal and investors got some clarity over a possible interest rate hike in May. The British currency added 0.3 percent to trade at $1.4134, bringing week to date gains to 1.49 percent. The pound climbed on Friday as the dollar sold off on fears of a global trade war, which investors say could also hurt sterling in the medium-term given the UK's trade deficit. The pound will be caught in the crossfire of any global trade war, since Britain has a large deficit for which it needs capital inflows. Britain on Monday agreed with the European Union on a 21-month transition period following its exit from the bloc next year, reducing the likelihood of a "cliff-edge" Brexit that many investors have feared. Better-than-expected wages data also boosted the pound this week. The Bank of England kept interest rates steady on Thursday but two policymakers voted to raise them, reinforcing the view among economists that borrowing costs will rise in May for only the second time since the 2008 financial crisis. But some investors turned cautious after the BoE repeated that rate rises would remain gradual and sterling pulled back from the month's highs hit earlier on Thursday of $1.4220.
USD/CAD is supported at 1.2800 levels and is trading at 1.2869 levels. It has made session high at 1.2934 and lows at 1.2822 levels. The Canadian dollar strengthened to an 11-day high against the greenback on Friday as oil prices rose and hotter-than-expected domestic inflation data raised the chances of a further Bank of Canada interest rate hike over the coming months. The annual inflation rate rose to 2.2 percent, a three-year high, from 1.7 percent in January, Statistics Canada said. Economists had forecast a rate of 2.0 percent. The Bank of Canada's three measures of core inflation also all strengthened. The central bank has hiked rates three times since July even as it worried about a more uncertain outlook for trade. Chances of a hike in May rose to 82 percent from 74 percent before the data, the overnight index swaps market indicated. Still, separate data showing a weaker-than-expected 0.3 percent rise in January retail sales added to the picture of a domestic economy that has lost some momentum in recent months. The price of oil, one of Canada's major exports, rose after the Saudi energy minister said the Organization of the Petroleum Exporting Countries would need to keep coordinating supply cuts with non-member countries including Russia into 2019. The Canadian dollar was last trading 0.7 percent higher at C$1.2846 to the greenback, or 77.85 U.S. cents. The currency touched its strongest since March 12 at C$1.2825.
USD/JPY is supported around 104.00 levels and currently trading at 104.68 levels. It peaked to hit session high at 105.20 and made session lows at 104.58 levels. The Japanese yen strengthened against the dollar on Friday as investors shied away from risky bets going into the weekend while they braced for a potential U.S. trade war with China. President Donald Trump's plans for tariffs on up to $60 billion in Chinese goods moved the world's two largest economies closer to a trade war as China declared plans to levy duties on up to $3 billion of U.S. imports including fruit and wine even as it urged the United States to "pull back from the brink. In response to Trump's measures, European Union leaders continued to talk tough, with French President Emmanuel Macron accusing the U.S. president of putting a "gun" to the European Union's head. U.S. tariff measures also met a barrage of criticism from politicians in Japan, Australia and several other countries at a World Trade Organization meeting on Friday. Many investors turned to the Japanese yen, a currency likely to benefit from a full-fledged trade war.The currency gained as much as 0.6 percent against the dollar to 104.635 yen, the first time it has been below 105 since November 2016. Investors later booked profits to leave the yen up 0.2 percent at 104.77 yen per dollar.
Equities Recap
European shares fell on Friday, with autos and basic resources stocks bearing the brunt of a wide sell-off triggered by mounting worries that U.S. tariffs on up to $60 billion of imports from China could escalate.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day down by 0.87 percent, Germany's Dax ended down by 1.6 percent, France’s CAC finished the day down by 1.2 percent.
Wall Street tumbled on Friday as investors, increasingly nervous about a potential U.S. trade war with China, shied away from risky bets going into the weekend as they looked for shelter from further declines.
Dow Jones closed down by 1.77 percent, S&P 500 ended down by 2.08 percent, Nasdaq finished the day down by 2.40 percent.
Treasuries Recap
U.S. Treasury yields rose from to six-week lows on Friday as stocks appeared stronger, after tumbling on Thursday on concerns about global trade wars.
Benchmark 10-year notes were last down 5/32 in price on the day to yield 2.850 percent, after falling to a six-week low of 2.792 percent overnight.
Commodities Recap
Gold prices surged to a one-month high on Friday as the threat of a global trade war sent investors scrambling for safe assets.
Spot gold gained 1.6 percent at $1,349.56 per ounce by 1:33 p.m. ET (1733 GMT), having hit its highest since Feb. 19 at $1,350.20.U.S. gold futures for April delivery settled up $22.50, or 1.7 percent, at $1,349.90 per ounce.
Crude prices on Friday hit their highest level since late January after the Saudi energy minister said OPEC and allied producers would need to keep coordinating supply cuts into 2019, and as concerns grew over the future of Iranian crude exports.
Brent crude futures hit a session high of $70.22 a barrel before retreating to $69.90 by 1:25 p.m. EDT (1725 GMT), up 99 cents, or 1.4 percent. For the week, Brent was up about 5.9 percent, its strongest weekly rise since July.
U.S. West Texas Intermediate (WTI) crude futures were at $65.36 a barrel, up $1.06, or 1.7 percent. On the week, WTI was up about 4.9 percent, its biggest weekly gain since September.
