Market Roundup
• US Markit Composite final PMI 54.1 v 54.3; Svcs 53.8 v 53.9 previous.
• US ISM N-Mfg PMI 57.6 v 56.5 forecast, 56.5 previous; employment & new order higher, prices paid lower.
• Fed’s Yellen: March rate hike appropriate if data holds up; shifts in global economy could impact outlook along with US fiscal plans.
• Fed’s Yellen: US economy’s potential to grows looks to be about 2% unless labor force grows faster.
• Fed’s Fischer: Strongly supports recent message from colleagues at Fed, cites recent ‘animal spirits’, good economic data.
• Fed’s Bullard: Using March statement to set up May rate hike a more traditional approach.
• Fed's Lacker: citing mistakes of '60s, plugs preemptive rate hikes; warns on costs of losing control of inflation.
• Commerce Secretary Ross: BAT is powerful tool to balance deficit, sensible trade deal with Mexico will boost peso.
• SNB’s Jordan: the central bank has enough leeway with current instruments to deal with political shocks.
• German Bund yield set for biggest weekly rise since US election.
• MXN surges to strongest level since Trump election, rallies after Mexico-friendlier US Commerce Secretary comments.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Building Consents Jan -7.20%-previous
• 22:30 Australia AIG Construction Index Feb 47.7- previous
• 00:30 Australia Retail Sales MM* Jan forecast 0.4%, -0.10%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0571 levels and currently trading at 1.0609 levels. The pair has made session high at 1.0611 and hit lows at 1.0542 levels. Euro rose against the dollar on Friday as the dollar stumbled against a basket of major currencies after far-right candidate Marine Le Pen's chances in France's presidential election dimmed and economic data in Europe continued to point to a brightening recovery. Macron would win 27 percent of the vote in the April 23 first round followed by Le Pen at 25.5, the poll showed, leaving conservative Francois Fillon eliminated at 19 percent. Federal Reserve Chair Janet Yellen said that raising interest rates this month would be appropriate as long as the economy continues to improve as expected. Yellen's remarks follow hawkish comments in recent days from a slew of Fed speakers and cement a likely rate hike at the Fed's next meeting on March 15. Yellen also said rates are likely to rise faster this year as the economy for the first time in her tenure appears clear of any imminent hurdles at home or abroad. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.7 percent. It is up about 0.4 percent this week and on Thursday, hit a seven-week high of 102.26.
GBP/USD is supported in the range of 1.2212 levels and currently trading at 1.2296 levels. It reached session high at 1.2297 and dropped to session low at 1.2222 levels. Sterling hit a seven-week low on Friday against as dollar boosted by expectations of an imminent U.S. interest rate hike and downbeat data suggested that UK economy could be running out of steam. Data on Friday showed Markit/CIPS UK Services Purchasing Managers' Index (PMI) fell to a five-month low of 53.3 from 54.5 in January and suggested the economy is now expanding at a quarterly pace of around 0.4 percent - much slower than the 0.7 percent expansion during the fourth quarter of 2016.Sterling slid to a seven-week low against the dollar after the PMI was published, but recovered some ground in the late US session as investors unwound short positions against the pound amid uncertainty about the fallout from upcoming European political risks. US Non-farm payrolls, due on Friday, are expected to show an increase of 186,000 jobs, probably enough to push the Fed to move. Unemployment benefits already fell to near a 44-year low late last month, indicating further tightening of the labour market.
USD/CAD is supported at 1.3300 levels and is trading at 1.3380 levels. It has made session high at 1.3437 and lows at 1.3376 levels. The Canadian dollar firmed against its U.S. counterpart on Friday after hitting a nearly two-month low against its U.S. counterpart, as the loonie was helped by a recovery in oil prices, while the greenback pared some recent gains after a speech by Federal Reserve Chair Janet Yellen. The loonie, as the Canadian currency is colloquially known, hit a nearly two-month low before turning stronger as rising oil prices lent support. It lost more than 2 percent over the week. The U.S. dollar fell against a basket of major currencies as far-right candidate Marine Le Pen's chances in France's presidential election dimmed and economic data in Europe continued to point to a brightening recovery. Oil prices surged on Friday, as a weaker U.S. dollar encouraged buying, but investors remained cautious after Russian production figures showed weak compliance with a global deal to cut output. The loonie settled near its strongest level of the day at C$1.3379 to the greenback, or 74.74 U.S. cents on Friday, compared to Thursday's close of C$1.3399, or 74.63 U.S. cents, and after touching its weakest since Jan. 4 at C$1.3437.
AUD/USD is supported around 0.7540 levels and currently trading at 0.7593 levels. It hit session high at 0.7595 and made session lows at 0.7548 levels. Australian dollar firmed modestly against US dollar on Friday as the Australian dollar was supported by higher oil prices and the dollar declined on profit taking. U.S. dollar index fell 0.8 percent against a basket of six major currencies as investors took profits but it was still on track for its fourth straight weekly gain. The Aussie is down 1.4 percent this week so far and is set for its worst weekly performance since mid-December. The Aussie traded in a $0.7605/0.7731 range for all of February, with strong chart support at $0.7600. Technical analysts say that support was broken in a burst of selling during European trading on Thursday, triggering a series of stop losses. U.S. Federal Reserve Chair Janet Yellen capped off a seemingly coordinated push with comments that cemented the view that the Fed will raise interest rates at its March 14-15 meeting, and likely be able to move faster after that than it has in years. Meanwhile, the Labor Department is scheduled to release its monthly non-farm payrolls report on March 10.
Equities Recap
European shares posted their best weekly gains of 2017 of Friday, although they were down on the day following disappointing company updates.
UK's benchmark FTSE 100 ended the day 0.2 percent, the pan-European FTSEurofirst 300 provisionally closes down by 0.09 percent, Germany's Dax ended down by 0.3 percent, France’s CAC finished the day up by 0.7 percent.
The S&P 500 and Nasdaq closed out their sixth straight week of gains with a flat session after Janet Yellen signaled the Federal Reserve is set to raise interest rates this month if employment and other economic data hold up.
Dow Jones closed up by 0.2 percent, S&P 500 ended up by 0.02 percent, Nasdaq finished the day up by 0.14 percent.
Treasuries Recap
U.S. Treasury yields rose on Friday, with 2-year notes touching a fresh 7-1/2-year high and other maturities hitting multiweek peaks as statements from Federal Reserve officials including Chair Janet Yellen appeared supportive of an increase to U.S. overnight interest rates.
Trading was choppy during the day, with 2-year yields touching their highest level since August 2009, and benchmark 10-year yields rising to 2.507 percent, the highest since Feb. 15. Yields on 7-year notes rose to 2.347 percent, also the highest since Feb. 15.
Commodities Recap
Oil prices surged on Friday, as a weaker dollar encouraged buying but investors remained cautious after Russian production figures showed weak compliance with a global deal to cut output.
Global benchmark Brent settled up 82 cents, or 1.5 percent, to $55.90 a barrel, recovering some of Thursday's losses. WTI futures rose 72 cents to $53.33 a barrel, a 1.4 percent gain.
Gold fell 1 percent on Friday and was on track for its biggest weekly loss in 2017 as speculation grew that the U.S. Federal Reserve would press ahead with a rate increase this month.
Spot gold was down 0.03 percent at $1,234.41 an ounce by 2:22 p.m. EST (1922 GMT), after falling 1 percent to $1,222.51, the lowest since Feb. 15.U.S. gold futures for April delivery settled down 0.5 percent at $1,226.50.
