Market Roundup
- US existing home sales surge a record 14.7%, beats 8.9% forecast, well above Dec 19-month low.
- Canada inflation rises in Dec as food costs surge, inflation rises 1.6% just below 1.7% consensus.
- Germany trims 2016 growth forecast to 1.7 percent - Der Spiegel.
- China shares end up on global stimulus hopes, PBOC keeps yuan steady, officials try to reassure.
- China's central bank says won't rush to cut bank reserve ratio despite liquidity squeeze, could use other tools.
- Brazil inflation reaches 12-year high in mid-January, IPCA-15 Index +10.74% in 12-mos.
- Wall St set for first weekly gain of 2016 as oil soars 8+%.
- Copper hits two-week high on oil rally, Chinese demand.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Exports YY* Dec forecast -6.8%, -3.3%-previous
- 23:50 Japan Imports YY*Dec forecast -16.4%, -10.2%-previous
- 23:50 Japan Trade Balance Total Yen* Dec forecast 100.0b, -379.7b-previous
Looking Ahead - Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0780 levels and currently trading at 1.0795 levels. The pair has made session high at 1.0835 and hit lows at 1.0786 levels. The dollar rose against euro on Friday, as the view supported that European central bank will ease its monetary policy further in March and rebound in global equities and oil prices that renewed market risk appetite. The euro was down 1.6 percent against the pound at 75.33, retreating from a one-year high of 77.56 struck on Wednesday. The euro has been losing ground since Thursday afternoon on a hint from ECB chief Mario Draghi that it will add more stimulus to an already expansive easing programme at its next meeting in March. On the data front, U.S. home resales rebounded strongly in December from a 19-month low and prices surged, indicating the housing market recovery remained intact despite signs of a sharp deceleration in economic growth in recent months. The National Association of Realtors said on Friday existing home sales jumped a record 14.7 percent to an annual rate of 5.46 million units. The euro fell below $1.08 to the dollar for the second time in as many days, nearing a two-week low. The euro zone single currency was last down 0.75 percent at $1.0790.
GBP/USD is supported in the range of 1.4250 and currently trading at 1.4270 levels. It reached session high at 1.4360 and hit low at 1.4270 levels. Sterling edged up against US dollar on Friday as investors regained some risk appetite in a market calmed by a halt in the oil slide and expectation that the European Central Bank will ease policy further in March. Macroeconomic data came mixed as UK government borrowing dropped sharply in December while retail spending declined to print worst figures in more than over six years, sent sterling briefly down for a short time. However the decline was short lived as the pair climbed back in quick succession above $1.43 to trade at $1.4346, up 1 percent on the day. The dollar index, which measures the greenback against a basket of six other major currencies, rose 0.51 percent to 99.557. Sterling had lost nearly 4.5 percent on a trade-weighted basis in the past five weeks as investors have pushed back bets on when British interest rates will start to rise and on speculation over a possible Brexit exit from the Europe Union. The currency's strongest level of the session was $1.4358, while it hit its weakest level at $1.4254.
USD/JPY is supported around 118.30 levels and currently trading at 118.82 levels. It peaked to hit session high at 118.89 and made session lows at 118.41 levels. The dollar surged against Japanese yen on Friday after Bank of Japan Governor Haruhiko Kuroda said, there is further room for the BoJ to expand its quantitative easing program if inflation continues to wane. Immediately after the comments Kuroda Japanese dollar rose against yen. Kuroda's comments came a day after European Central Bank chief Mario Draghi said the bank would need to review its policy in March, which was read by markets as a promise of more easing. The dollar rose to a two-week high against the yen, which has had its year-to-date gains versus the greenback cut nearly in half over the past two days. The dollar rose 0.9 percent to 118.75 at the time of writing. Meanwhile Oil prices advanced higher gaining as much as 10 percent on Friday, oil mad one its biggest rally in a single day after short traders exited the market booking profits for the week .
USD/CAD is supported at 1.4056 levels and is trading at 1.4141 levels. It has made session high at 1.4209 and lows at 1.4114 levels. The Canadian dollar continued its gain against US dollar Friday, for the third consecutive day following Bank of Canada's steady rate decision during mid-week, and also supported by strong rebound in crude oil prices and positive economic data. Canadian retail sales jumped 1.7 percent in November, far more than expected, due to higher sales at new car dealers and Black Friday purchases, data from Statistics Canada showed. On the other hand, Canada's annual inflation rate edged up less than expected to 1.6 percent from 1.4 percent in November, Statistics Canada said. The core inflation rate continued to edge downward, falling to 1.9 percent from 2.0 percent the previous month. The currency's strongest level of the session was C$1.4148, while it hit its weakest since April 2003 at C$1.4296.
Equities Recap
Europe's top equity index posted its biggest one-day gain since October and its first weekly rise this year on Friday, buoyed by a rally in energy shares from close to a 12-year low.
Britain's blue-chip FTSE 100 index was up by 2.4 percent, France's benchmark CAC-40 index was up by 3.3 percent, Germany's DAX ended up 2.3 percent, meanwhile the pan-European FTSEurofirst 300 index edged up to close by 3.15 percent.
Wall Street surged 2 percent on Friday to wrap up its first positive week of 2016 as a cold snap in the United States and Europe sent oil prices sharply higher.
Dow Jones closed up by 1.33 percent, S&P 500 ended up by 2.02 percent, Nasdaq finished the day up by 2.65 percent.
Treasuries Recap
U.S. Treasuries prices slumped on Friday as a resurgence in oil and stock prices that had been battered by fears over slowing global growth and a glut of crude sparked a fresh wave of selling of safe-haven government debt.
Benchmark 10-year Treasury notes were down 9/32 in price to yield of 2.052 percent, up 3 basis points from late on Thursday.
The 30-year bond was down 19/32 in price, yielding 2.825 percent, up 3 basis points.
The 30-year yield touched 2.711 percent on Wednesday, the lowest since Aug. 24.
The two-year yield, more sensitive to changes in traders' view of Fed policy, rose 4 basis points to 0.869 percent.
Commodities Recap
Oil prices surged as much as 10 percent on Friday, one of the biggest daily rallies ever, as bearish traders who had taken out record short positions scrambled to close them, betting the market's long rout may finally be over.
Brent rose $2.93, or 10 percent, to settle at $32.18 a barrel. It was the biggest daily rise since a fierce short-covering rally in late August, when prices had just tested post-financial crisis lows around $42 a barrel.
U.S. crude rose $2.66 or 9 percent to settle at $32.19 per barrel.
Gold fell on Friday as hints of more monetary stimulus from the European Central Bank weighed on the euro and pushed stocks higher, denting appetite for alternative assets.
Spot gold was down 0.6 percent at $1,095.16 an ounce at 2 p.m. EST (1900 GMT), while U.S. gold futures for February delivery closed down $1.90, or 0.2 percent, at $1,096.30. The metal rose to a two-month high of $1,112 last week as equities.
