Market Roundup
• US Nov new home sales 0.592 mln rate vs consensus 0.575 mln.
• US U.Mich sentiment December final 98.2 vs forecast 98.0.
• U.Mich consumer sentiment now highest since Jan 2004.
• N.Y. Fed leaves Q4 U.S. GDP growth forecast at 1.8 pct.
• Trump on nuclear weapons tweet: "Let it be an arms race" -MSNBC.
• Canada October GDP declines unexpectedly on lower manufacturing output.
• Canada budget deficit widens in Oct with higher benefit payments.
• Brazil loan defaults fall slightly in November - central bank.
• Mexican factory exports jump in Nov; jobless rate steady
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• --:-- Bank of Japan Governor Haruhiko Kuroda to speak at a meeting of the Councilors of Nippon Keidanren (Japan Business Federation), Tokyo
• 23:50 – BOJ meeting minutes
Currency Summaries
EUR/USD is likely to find support at 1.0406 levels and currently trading at 1.0414 levels. The pair has made session high at 1.0470 and hit lows at 1.0424 levels. The euro declined slightly against the U.S. dollar on Friday as the dollar recovered from modest losses in overseas trade ahead of the Christmas holiday weekend. The greenback will likely test fresh multi-year heights when investors return from their year-end holiday break. The dollar has rallied more than 5 percent against a basket of currencies since Donald Trump's surprise U.S. presidential election win on Nov. 8. Bets that Trump's economic policies would promote faster U.S. growth and inflation have fed appetite for the dollar, stocks and corporate bonds and stoked selling in the yen, gold and U.S. Treasuries. Federal Reserve's hint that it might raise U.S. interest rates at a faster pace in 2017, together with European Central Bank and Bank of Japan maintaining their ultra-loose policy stance, have further bolstered the dollar in recent days. The dollar index was marginally firmer at 103.14, recovering from an earlier low of 102.89. It was not far from the 14-year peak of 103.65 reached on Tuesday. The euro was little changed after the Italian government approved a rescue package for Monte dei Paschi di Siena after the world's oldest bank failed to raise needed capital from investors.
GBP/USD is supported in the range of 1.2221 levels and currently trading at 1.2273 levels. It reached session high at 1.2775 and dropped to session low at 1.2221 levels. Sterling slipped to its biggest weekly fall in almost three months on Friday, although data showing that the UK economy grew faster than expected in the third quarter helped lift it from a seven-week trough against the dollar. Britain's economy expanded at a 0.6 percent pace in the three months to September, faster than the original estimate of 0.5 percent, suggesting there has been no 'Brexit' hit to the economy since the June 23 vote to leave the European Union. But the latest UK balance of payments figures also released on Friday underlined sterling's longer-term vulnerabilities. The current account deficit widened to 5.2 percent of gross domestic product from 4.6 percent the quarter before. Sterling was last trading flat against the dollar at $1.2273 having hit a seven-week low of $1.2243 before the GDP and current account data were released. Sterling has for the past six months been less sensitive than usual to economic data, driven more by concerns over Britain's departure from the EU.
USD/CAD is supported at 1.3470 levels and is trading at 1.3538 levels. It has made session high at 1.3557 and lows at 1.3514 levels. The Canadian dollar lost ground against its U.S. counterpart on Friday as oil fell and domestic data that showed an unexpected contraction in Canada's economy at the start of the fourth quarter. The country's gross domestic product was down 0.3 percent in October, falling below economists' expectations for no growth, due to widespread weakness in the manufacturing sector and a decline in oil and gas extraction, data from Statistics Canada showed. September was revised slightly higher to growth of 0.4 percent from an originally reported 0.3 percent. Expected policy divergence between the Bank of Canada and the U.S. Federal Reserve, which last week raised interest rates and signaled a faster pace of increases in 2017, has widened the spread between Canada's bond yields and U.S. Treasuries and has weighed on the loonie. The Canadian dollar was last trading at C$1.3542 to the greenback, or 73.84 U.S. cents, weaker than Thursday's close of C$1.3497, or 74.09 U.S.
AUD/USD is supported around 0.7159 levels and currently trading at 0.7168 levels. It hit session high at 0.7178 and made session lows at 0.7159 levels. The Australian dollar stayed near seven-month low against the dollar on Friday in thin trading as investors wound down ahead of the Christmas holidays. The Australian dollar was last trading at $0.7168, after hitting a trough of $0.7159, a level not seen since May 31. The Aussie has erased all of the gains made this year after climbing as much as 6.5 percent before the Nov. 8 election. On top of this, data this month showing the economy shrank for the first time since 2011 raising the spectre of a possible recession has also weighed on the currency. The Aussie is set to finish 2016 down 0.8 percent its fourth straight year of losses. The near-term outlook for the Aussie appears gloomy, with the next stop seen at $0.7150. Key resistance lies at 73 U.S. cents, a breach of which could spur a small rally.
Equities Recap
European shares were steady on Friday with the focus on lenders after Deutsche Bank DBKGn.DE and Credit Suisse settled mortgage securities fraud suits in the United States, and Italy's Monte dei Paschi agreed to a bailout.
The UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day down by 0.02 percent, Germany's Dax ended down 0.1, and France’s CAC finished the day up by 0.1 percent.
Wall Street was lower in afternoon trading on Friday as investors held back from making big bets ahead of the holiday season, but the three major indexes were still on track to post weekly gains.
Dow Jones closed up by 0.06 percent, S&P 500 ended up 0.11 percent, Nasdaq finished the day up by 0.26 percent.
Treasuries Recap
U.S. Treasury prices were firmer on Friday in thin volumes as investors prepared for the three-day Christmas holiday weekend.
Benchmark 10-year notes gained 4/32 in price to yield 2.54 percent, down from 2.55 percent late on Thursday.
Commodities Recap
Gold edged higher on Friday as the dollar retreated from this week's 14-year high and some buyers were tempted to take advantage of prices near a 10-month low after six weeks of decline.
Spot gold was up 0.32 pct at $1,132.24 per ounce by 1:50 p.m. EST (1850 GMT), but still set to finish the week lower for a sixth straight week.
The most-active U.S. gold futures for February delivery settled up $2.90, or 0.26 percent, at $1,133.60 per ounce.
U.S. oil prices closed at a 17-month high on Friday in quiet trade ahead of the Christmas and New Year holiday week, even though the gain was small, as the market waits to see how OPEC manages its planned output cuts with Libya expecting to boost production.
Brent futures gained 11 cents, or 0.2 percent, to settle at $55.16 a barrel, while U.S. West Texas Intermediate (WTI) crude gained seven cents, or 0.1 percent, to settle at $53.02, its highest close since July 2015.
