Market Roundup
• US Jul Non-Farm Payrolls, 157k, 190k forecast, 213k prev 248k revised.
• US Jul Private Payrolls, 170k, 189k forecast, 202k prev 234k revised.
• US Jul Unemployment Rate, 3.9%, 3.9% forecast, 4.0% previous.
• US Jul Average Earnings y/y, 2.7%, 2.7 forecast 2.7% previous.
• US Jun Int’l Trade (USD), -46.3 bln, -46.5 bln forecast, -43.1 bln revised.
• US Jul ISM Non-Mfg PMI, 55.7, 58.6 forecast, 59.1 previous.
• Atlanta Fed pares U.S. Q3 GDP growth view to 4.4 pct.
• China plans tariffs on $60 bln of U.S. goods in latest trade salvo.
• White House says Trump's resolve is firm on China trade.
• China c.bank to raise reserve requirements for forex settlements to 20 pct.
• Mexico eyes NAFTA breakthrough next week, says Canada joining soon.
• BoE's Carney sees "uncomfortably high" risk of no-deal Brexit.
• CA Jun Trade Balance (C$), 81.817.0 mln, 81.765.9 mln previous.
Looking Ahead - Economic Data (GMT)
• No major economic data is scheduled
Looking Ahead - Events, Other Releases (GMT)
• No major events are scheduled
Currency Summaries
EUR/USD is likely to find support at 1.1500 levels and currently trading at 1.1569 levels. The pair has made session high at 1.1603 and hit lows at 1.1558 levels. The euro declined against dollar on Friday as dollar strengthened after data showed U.S. job growth slowed more than expected in July, but tightening labor market conditions supported investors' expectations for two more interest rate hikes this year from the Federal Reserve. U.S. job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that labor market conditions continued to tighten. With manufacturing payrolls increasing by the most in seven months, the moderation in hiring reported by the Labor Department on Friday likely does not reflect the rising trade tensions between the United States and other nations including China. Nonfarm payrolls increased by 157,000 jobs last month, still more than the roughly 120,000 jobs per month needed to keep up with growth in the working-age population. The economy created 59,000 more jobs in May and June than previously reported. The dollar index, which measures the greenback against a basket of six other major currencies, was about flat on the day at 95.148, after dipping as low as 94.98. The index was up 0.5 percent for the week.
GBP/USD is supported in the range of 1.2955 levels and currently trading at 1.3000 levels. It reached session high at 1.3025 and dropped to session low at 1.2990 levels. Sterling declined against dollar on Friday after Bank of England Governor Mark Carney said there was an "uncomfortably high" risk of Britain leaving the European Union without a deal. The BoE raised interest rates from crisis-era lows on Thursday but that failed to boost the pound as the central bank also signalled it was in no rush to tighten policy further. Raising questions over Thursday's hike, growth in Britain's crucial service sector slowed in July; the UK services Purchasing Managers' Index (PMI) came in softer than all forecasts in a poll. With less than eight months to go until Britain leaves the EU, the government has begun talking more publicly about the prospect of leaving without a formal agreement on its future relationship with the bloc. The pound dropped 0.3 percent to an 11-day low of $1.2975, close to the 10-month low of $1.2958, before recovering slightly as the dollar fell. Sterling's weakness this week has coincided with a broad rally in the greenback. Against the euro, sterling recovered and was flat at 89.040 pence. Britain's economy has recovered from a weather-induced slowdown in the first quarter but sentiment is fragile. Inflation remains above the BoE's target of 2 percent but domestic sources of price rises are limited and have yet to feed through to significant upward pressures on wages, particularly given historically low levels of unemployment.
USD/CAD is supported at 1.2949 levels and is trading at 1.2983 levels. It has made session high at 1.3000 and lows at 1.2965 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday after domestic data showing a record high for exports boosted bets for another Bank of Canada interest rate hike as soon as next month. Canadian exports shrugged off the effects of U.S. metals tariffs to rise 4.1 percent in June, cutting the country's trade deficit to its lowest in 17 months at C$626 million, Statistics Canada data indicated. The Bank of Canada hiked its benchmark interest rate by 25 basis points in July to 1.50 percent, its fourth increase in a year. Chances of another increase in September nudged up to more than 30 percent from about 25 percent before the trade data, the overnight index swaps market showed. Gains for the loonie on Friday came as U.S. job growth slowed more than expected in July and China announced retaliatory tariffs on $60 billion worth of U.S. goods. Canada, which has its own trade feud with the United States, runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows. The price of oil, one of Canada's major exports, steadied as the market focused on bearish longer term factors. The Canadian dollar was trading 0.3 percent higher at C$1.3000 to the greenback. On Wednesday, the currency touched its strongest in nearly seven weeks at C$1.2975
USD/JPY is supported around 110.70 levels and currently trading at 111.23 levels. It peaked to hit session high at 111.46 and made session lows at 111.08 levels. Japanese yen strengthened against the U.S. dollar on Friday as trade spat between the United States and China along with tepid U.S. jobs numbers increased demand for safe heaven assets. U.S. job growth slowed more than expected in July as employment in transportation and utilities fell, but analysts said the numbers didn't change their expectations for a September interest rate hike. The trade war intensified on Friday, with China's Commerce Ministry proposing import tariffs on $60 billion worth of U.S. goods and warning that it reserved the right of further countermeasures. China proposed retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft on Friday, as a senior Chinese diplomat cast doubt on prospects of talks with Washington to solve their bitter trade conflict. The Trump administration tightened pressure for trade concessions from Beijing this week by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports. China vowed to retaliate while also urging Washington to act rationally and return to talks to resolve the dispute. China's finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, with the extra levies ranging from 5 to 25 percent.
Equities Recap
Earnings, particularly in the banking sector, lifted European shares on Friday at the end of a volatile week, as investors drew encouragement from Apple becoming the world's first trillion-dollar company.
UK's benchmark FTSE 100 closed up by 1.2 percent, the pan-European FTSEurofirst 300 ended the day up by 0.72 percent, Germany's Dax ended up by 0.6 percent, France’s CAC finished the day up by 0.4 percent.
U.S. stocks advanced on Friday as upbeat earnings helped investors shrug off heightened trade anxieties and weaker-than-expected July jobs growth.
Dow Jones closed up by 0.51 percent, S&P 500 ended up by 0.45 percent, Nasdaq finished the day up by 0.11 percent.
Treasuries Recap
The middle of U.S. yield curve fell faster than the short and long ends on Friday as China unveiled retaliatory tariffs on $60 billion of U.S.-made goods and the White House said President Donald Trump's resolve was firm on China trade matters.
The five-, seven- and 10-year note yields all fell more than 3 basis points with the five- and seven-year yields both down 3.5 basis points from late Thursday. The benchmark 10-year note yield was last at 2.954 percent, down 3.2 basis points from Thursday and 6.2 basis points below the week's high of 3.016 percent.
Commodities Recap
Gold rallied 1 percent on Friday, after falling to the lowest in nearly 17 months when weaker-than-expected U.S. jobs data pushed the dollar lower and a move by the Chinese central bank lifted its currency.
Spot gold was up 0.60 percent at $1,214.79 an ounce by 2:02 p.m. EDT (1802 GMT), after rallying 1 percent to $1,220.01. Earlier it dropped to $1,204, the lowest since March 15, 2017.U.S. gold futures settled up 0.3 percent at $1,223.20 an ounce.
Crude futures pulled back on Friday, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand.
U.S. West Texas Intermediate (WTI) crude futures were down 61 cents at $68.35 a barrel by 1:26 p.m. EDT (1726 GMT). Brent crude futures were at $73.16 per barrel, down 29 cents from their last close.
