Market Roundup
• US May Non-Farm Payrolls, 223k, 188k forecast, 164k previous.
• US May Private Payrolls, 218k, 183k forecast, 168k previous.
• US May Manufacturing Payrolls, 18k, 20k forecast, 24k previous.
• US May Government Payrolls, 5k, -4k previous.
• US May Unemployment Rate, 3.8%, 3.9% forecast, 3.9% previous.
• US May Average Earnings YY, 2.7%, 2.7% forecast, 2.6% previous.
• US May Average Earnings MM, 0.3%, 0.2% forecast, 0.1% previous.
• US May Average Workweek Hrs, 34.5, 34.5 forecast, 34.5 previous.
• US May Markit Mfg PMI Final, 56.4, 56.6 previous.
• US May Construction Spending MM, 1.8%, 0.8% forecast, -1.7% previous.
• US May ISM Manufacturing PMI, 58.7, 58.1 forecast, 57.3 previous.
• CA May Markit Mfg PMI SA, 56.2, 55.5 previous.
• Trump says will hold June 12 summit with N. Korea's Kim after all.
• U.S. isolated at G7 meeting as tariffs prompt retaliation.
• U.S. Commerce chief set for China trade talks amid metals tariff rancor.
• Italy's Conte sworn in as PM of anti-establishment government.
Looking Ahead - Economic Data (GMT)
• 01:00 Australia Oct HIA New Home Sales m/m, -6.1% previous
• 01:30 Australia Q1 Business Inventories, 0.1% forecast, 0.2% previous
• 01:30 Australia Q1 Gross Company Profits, 3.0% forecast, 2.2% previous
• 01:30 Australia Q1 Company Profits Pre-tax, 19.0% previous
• 01:30 Australia Apr Retail Sales MM, 0.2% forecast, 0.0% previous
Looking Ahead - Events, Other Releases (GMT)
• 10:00 Riksbank Governor Stefan Ingves talks about what is happening in the payment area and what it means to Sweden in Stockholm
• 17:00 Bank of England Member of Monetary Policy Committee Silvana Tenreyro speaks in Guildford, UK
Currency Summaries
EUR/USD is likely to find support at 1.1516 levels and currently trading at 1.1655 levels. The pair has made session high 1.1680 and hit lows at 1.1612 levels. The euro declined against US dollar on Friday after better-than-expected U.S. employment data boosted dollar. U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation. The closely watched employment report released by the Labor Department on Friday also showed wages rising solidly, cementing expectations that the Federal Reserve will raise interest rates this month and boosting the probability of two more hikes later in the year. It renewed fears about the economy overheating. Nonfarm payrolls surged by 223,000 jobs last month as warm weather bolstered hiring at construction sites. There were also big gains in retail and leisure and hospitality payrolls. The economy created 15,000 more jobs than previously reported in March and April. Against a basket of six currencies, the dollar rose half a percent to a session high of 94.45. The move, however, was relatively muted compared to the blockbuster jobs numbers. Political turmoil in Italy earlier this week drove the dollar index to a 6-1/2 month high. The euro failed to sustain gains it made earlier against the dollar after the apparent end of a political crisis in Italy that had rattled markets this week.
GBP/USD is supported in the range of 1.3226 levels and currently trading at 1.3345 levels. It reached session high at 1.3361 and dropped to session low at 1.3305 levels. Sterling rose against the dollar on Friday as data showed UK manufacturing growth picking up speed in May while Italy's political crisis dominated the market psyche. The pound languished near a six-month low of $1.3205 for much of the week, curtailed by weakness in the UK economy and influenced by non-UK factors including new U.S. trade tariffs and possible snap elections in Italy. On Friday, however, it was headed for its biggest daily gain in eight weeks. It climbed 0.5 percent to a five-day high $1.3360. Against the euro, sterling strengthened 0.7 percent to 87.26.The single currency was hurt by news that European Union lawmakers from two parties forming Italy's new government coalition had backed a proposal to help countries quit the euro. Growth among British manufacturers picked up speed in May for the first time in six months, but the improvement masked underlying weakness, a survey showed on Friday. Risks around the sort of relationship Britain can agree with the EU for after Britain leaves the bloc continues to influence the pound. The pound had been one of the best-performing currencies in 2018 but it has given up all its gains for the year following a broad rally in the dollar and signs Britain's economy is slowing.
USD/CAD is supported at 1.2851 levels and is trading at 1.2965 levels. It has made session high at 1.3006 and lows at 1.2935 levels. The Canadian dollar was little changed against its U.S. counterpart on Friday as data showing acceleration in domestic manufacturing growth offset lower oil prices and the prospect of an escalating trade quarrel. Growth in the Canadian manufacturing sector accelerated in May to its fastest pace in more than seven years as new orders and inventories climbed. The IHS Markit Canada Manufacturing Purchasing Managers' Index rose to a seasonally-adjusted 56.2 last month from 55.5 in April. U.S. crude oil futures were down 1.2 percent at $66.24 a barrel as U.S. oil output comes close to matching that of top producer Russia. Oil is one of Canada's major exports. U.S. President Donald Trump fired back at Canada after Ottawa and other American allies retaliated against Washington's steel and aluminum tariffs, and appeared to threaten possible action against Canada's lumber industry. The Canadian dollar was nearly unchanged at C$1.2961 to the greenback, or 77.15 U.S. cents. The currency traded in a range of C$1.2931 to C$1.3006.For the week, the loonie is on track to rise 0.1 percent. It was boosted on Wednesday by a more hawkish than expected policy statement from the Bank of Canada, which increased chances of an interest rate hike as soon as July.
USD/JPY is supported around 108.94 levels and currently trading at 109.50 levels. It peaked to hit session high at 109.70 and made session lows at 109.40 levels. The dollar edged higher against the Japanese yen on Friday as dollar got a lift from upbeat US jobs data and easing political uncertainty in Italy. Trading was cautious as global trade war concerns revived after the United States moved ahead with tariffs on aluminium and steel imports from Canada, Mexico and the European Union, ending the two-month exemption it had given earlier. Global risk appetite got knocked earlier in the week after Italy's two anti-establishment parties scrapped plans to form a coalition. That raised the prospect of a general election, stoking fears such a vote will effectively be a referendum on the country's euro membership. U.S. non-farm payrolls increased by 223,000 jobs last month, data showed. Data for March and April was revised to show the economy creating 15,000 more jobs than previously reported. Following upbeat data, traders overall remained confident of rate increases in June and September, prices of short-term interest-rate futures show, and they see about a 36 percent chance of a rate hike in December, up from about 32 percent before the employment report. Traders also increased bets on further rate increases in 2019.
Equities Recap
European shares breathed a sigh of relief on Friday with Italian stocks supported after a deal to form a coalition government ended three months of political deadlock and removed the risk of another general election.
The UK's benchmark FTSE 100 closed up by 0.23 percent, FTSEurofirst 300 ended the day up by 0.97 percent, Germany's Dax ended up by 0.75 percent, and France’s CAC finished the down by 1.24 percent.
Wall Street stocks rose on Friday after the latest monthly jobs report pointed to strength in the U.S. economy and geopolitical tensions eased.
Dow Jones closed up by 0.89 percent, S&P 500 ended up 1.07 percent, Nasdaq finished the day up by 1.49 percent.
Treasuries Recap
U.S. Treasury yields rose on Friday after data showed the world's largest economy created more jobs than expected in May, fueling expectations that the Federal Reserve could increase the pace of interest rate rises this year.
U.S. 10-year yields rose to 2.894 percent, from Thursday's 2.822 percent.
U.S. 30-year yields also advanced to 3.045 percent, compared with 2.985 percent late Thursday.
U.S. two-year yields, meanwhile, were likewise up at 2.471 percent, from 2.411 percent on Thursday.
Commodities Recap
Gold fell on Friday after stronger than forecast U.S. payrolls data boosted expectations that the Federal Reserve will press ahead with another U.S. interest rate hike this month, lifting the dollar.
Spot gold lost 0.2 percent at $1,295.19 by 1:32 p.m. EDT (1732 GMT), earlier peaking above $1,300 an ounce. U.S. gold futures for August delivery settled down $5.40, or 0.4 percent, at $1,299.3 per ounce.
Oil prices retreated on Friday, after the dollar rose on better-than-expected U.S. employment data, which pressured greenback-denominated commodities, including crude.
U.S. West Texas Intermediate (WTI) crude futures fell $1.23 a barrel to settle at $65.81 a barrel. For the week, WTI was on track to drop about 3 percent, adding to last week's near 5 percent decline.
Global benchmark Brent fell 77 cents to $76.79 a barrel. It was set for a 0.4 percent gain for the week.
WTI's discount to Brent widened, settling at $11.02 a barrel after ballooning to as much $11.57 during the session, largest since 2015
