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America’s Roundup: Dollar recovers after walk-back of dovish Fed comments,Wall Street dips, Gold slips from 6-year top, Oil climbs as Middle East tensions offset demand worries-July 20th,2019

Market Roundup

• Canada May Retail Sales (MoM), 0.1 %, 0.3% forecast, 0.1% previous

• Canada May Core Retail Sales (MoM), -0.3%, 0.3% forecast, 0.2% previous

• US July Michigan  5-Year Inflation Expectations , 2.60, 2.30% previous 

• US  July Michigan Consumer Expectations, 90.1 , 89.8  forecast, 89.3  previous  

• US  July Michigan Consumer Sentiment , -98.1 , 98.6 forecast, 98.2 previous  
• US  July Michigan Current Conditions ,111.1,112.0 forecast,111.9  previous  
Looking Ahead - Economic Data (GMT)

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Looking Ahead - Events, Other Releases (GMT)

• No major economic events are scheduled

Currencies Summary 

EUR/USD: The euro declined against U.S. dollar on Friday, as investors ramped up bets for a European Central Bank interest rate cut as early as next week. Money markets are now pricing in a roughly 60% chance of a10 basis point rate cut next week, versus a 40% chance earlier in the week. The euro's drop reversed some of its yesterday’s gains when dovish comments from a key Federal Reserve policy maker bolstered expectations of an aggressive interest rate cut this month, hurting the dollar.The euro was down 0.53 percent at $1.1217. An index that tracks the dollar versus a basket of six major currencies was down 0.45 at 96.867 after hitting a 16-month high of 97.693 on Monday. Immediate resistance can be seen at 1.1246 (50 DMA), an upside break can trigger rise towards 1.1317 (200 DMA).On the downside, immediate support is seen at 1.1204 (Daily Low), a break below could take the pair towards 1.1160 (Lower Bollinger Band).

GBP/USD:The pound declined against dollar on Friday, as traders focused on the growing risks of Britain crashing out of the European Union without a deal in place by end-October. Though a vote by lawmakers on Thursday makes it harder for Britain’s next prime minister to try to force a no-deal Brexit, market watchers have steadily increased the probability of such an outcome this week. On Friday, those concerns dominated sentiment with the pound weakening 0.2% to $1.2496 against the dollar and 0.1% versus the euro to 89.89 pence.Economists at Berenberg who now assign a 40% probability of a hard Brexit say the choice of Boris Johnson, the favourite to succeed Prime Minister Theresa May, to surround himself with hardline eurosceptics is an indicator of such growing risks. A stronger dollar also weighed on the British currency. Immediate resistance can be seen at 1.2574  (21 DMA), an upside break can trigger rise towards 1.2642 (50 DMA).On the downside, immediate support is seen at 1.2474 (Daily Low), a break below could take the pair towards at 1.2385 (Lower Bollinger Band).

USD/CAD:The Canadian dollar fell to a nine-day low against its broadly stronger U.S. counterpart on Friday, as domestic data showing a surprise decline in May retail sales raised bets that the Bank of Canada would cut interest rates this year. The value of Canadian retail trade dipped by 0.1% versus an estimated 0.3% increase, the first decline in four months, as bad weather hit sales of food and drink, Statistics Canada data  indicated.  Chances of a Bank of Canada interest rate cut by December climbed to 57% from about 50% before the data, the overnight index swaps market indicated.At (1946 GMT), the Canadian dollar was trading 0.2% lower at 1.3059 to the greenback. The currency hit its weakest since July 10 at 1.3110.Immediate resistance can be seen at 1.3067 (11 DMA), an upside break can trigger rise towards 1.3094 (21 DMA).On the downside, immediate support is seen at 1.3000 (Lower Bollinger Band), a break below could take the pair towards 1.2987 (Lower Bollinger Band).

USD/JPY: The dollar strengthened against the Japanese yen on Friday, as fears of a larger-than-expected 50-basis-point interest rate cut in July abated after the New York Federal Reserve walked back dovish comments from its president the prior day. At a conference on Thursday, New York Fed President John Williams argued for pre-emptive measures to avoid having to deal with too-low inflation and interest rates.The dollar dropped before rebounding after a New York Fed representative subsequently said Williams’ comments were not about immediate policy direction. Investors are now pricing in a 24.5% chance of a 50-point cut in U.S. rates later this month, according to CME Group’s FedWatch tool, easing off the 60.2% probability hit on Thursday. Strong resistance can be seen at 108.07 (9 DMA), an upside break can trigger rise towards 108.54 (50 DMA).On the downside, immediate support is seen at 106.81 (Lower Bollinger Band), a break below could take the pair towards 106.00 (Psychological level). 

Equities Recap

European shares ended only marginally higher on Friday as worries about the stability of Italy’s government dented optimism from renewed signals the U.S. Federal Reserve will cut interest rates soon.

The UK's benchmark FTSE 100 closed up by 0.21 percent, Germany's Dax ended up by 0.26 percent, and France’s CAC finished the up by 0.03 percent.

Wall Street’s main indexes edged lower on Friday after a report that the Federal Reserve plans to cut interest rates by only a quarter-percentage point at the end of July.

Dow Jones closed down by 0.17 percent, S&P 500 ended down 0.62 percent, Nasdaq finished the day down  by 0.74 percent.

Treasuries Recap

U.S. Treasury yields rose on Friday after the Wall Street Journal wrote that the Federal Reserve is likely to cut rates by 25 basis points when it meets later this month, after comments by a Fed official on Thursday raised expectations a larger cut may be on the cards.

Benchmark 10-year notes  fell 2/32 in price on Friday and yields rose to 2.05%, from 2.04% late Thursday. 

Commodities Recap

Gold fell over 1% on Friday as the dollar firmed and investors took profits after prices briefly surpassed $1,450 to hit a six-year peak on dovish signals from the U.S. Federal Reserve and is still on course for a second week of gains.

Spot gold was down 1.5% at $1,424.13 per ounce at 1:52 p.m. EDT (1752 GMT), having touched its highest since early May 2013 at $1,452.60.U.S. gold futures settled down 0.1% at $1,426.70 per ounce.

Oil prices rose about 1 percent on Friday after steep losses in the previous session, supported by rising tensions between the United States and Iran, but weighed by concerns slowing economic growth could dent global oil demand.

Brent crude   futures settled 54 cents higher at $62.47 a barrel. West Texas Intermediate crude  futures rose 24 cents to end the session at $55.63 a barrel.

By Srikanth G
  • Market Data

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