Market Roundup
• Northern Irish unionists to open talks with UK's May about support.
• UK's May keeps Hammond as finance minister, others stay in top jobs.
• No appetite among UK Conservatives to oust PM May - key lawmaker.
• UK rating not immediately affected by election - S&P.
• US Wholesale inventories, R MM -0.5% v forecast 0.2%, -0.3% -previous.
• US ECRI Weekly annualized 4.2%, 4.5% - previous.
• US Economy seen growing 1.80% in Q3 vs 1.82% estimate June 2 -
NY Fed's Nowcast model.
• Atlanta Fed GDPNow model downgrades US. Q2 GDP view to 3.0%.
• Palladium hits highest since Feb 2001 after a surge in speculative demand
forced industrial users to close out short positions.
• Democratic leader Pelosi: Hopes there will be no debate on raising US debt ceiling.
• White House, Congress Republicans nearing key tax overhaul decisions.
• EU'S Juncker: Hopes UK will stay ready to open Brexit negotiations.
• ECB'S Nowotny: I don't rule out a fall in inflation in 2017 and 2018 if euro appreciates.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Corps goods price YY* 2.2% forecast, 2.1% – previous
• 23:50 Japan Machinery Orders YY* 6.3% forecast, -0.7% – previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1072 levels and currently trading at 1.1195 levels. The pair has made session high at 1.1203 and hit lows at 1.1164 levels. Euro declined against the dollar on Friday as the dollar strengthened across the board ahead of next week's government debt auctions and a widely expected interest rate increase by the Federal Reserve. Investors were anticipating another rate increase by the Fed at the conclusion of a two-day monetary policy meeting on Wednesday. While, investors largely shrugged off Thursday's UK election, which resulted in a hung parliament for Britain, as they did scathing congressional testimony by former Federal Bureau of Investigation director James Comey. The dollar index, which tracks the greenback against six major rivals, was up 0.46 percent at 97.364. The euro was down 0.24 percent to $1.1190 against the dollar, a day after the European Central Bank closed the door on more interest rate cuts.
GBP/USD is supported in the range of 1.2625 levels and currently trading at 1.2725 levels. It reached session high at 1.2748 and dropped to session low at 1.2704 levels. Sterling declined against the U.S. dollar on Friday as sterling was weighed down after a shock election result cast doubt on Britain's talks to leave the European Union, but global equity markets rallied with key indices on Wall Street hitting new record highs. British Prime Minister Theresa May said she would form a government backed by a small Northern Irish party after her Conservative Party lost its parliamentary majority in a vote on Thursday just days before the EU departure talks begin. After an initial plunge, Sterling pared losses against the dollar and euro, while the dollar gained. The pound shed more than 2 percent against the dollar, dropping as low as $1.2633 before trimming losses. The impact of the British election on the U.S. markets was limited.
USD/CAD is supported at 1.3400 levels and is trading at 1.3460 levels. It has made session high at 1.3471 and lows at 1.3420 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as upbeat Canadian jobs data supported the view that the Bank of Canada will raise interest rates earlier than previously thought. Canada's job growth accelerated in May at its fastest pace in eight months, Statistics Canada said. Employers added 54,500 jobs, handily topping economists' forecast for a gain of 11,000. In other domestic data, industrial capacity rose to its highest level since 2007 in the first quarter, lifted by the manufacturing and construction sectors, data from Statistics Canada showed. Prices of oil, one of Canada's major exports, steadied after steep falls earlier in the week under pressure from the widespread evidence of a fuel glut despite efforts led by Organization of the Petroleum Exporting Countries to tighten the market. The Canadian dollar was last trading at C$1.3461 to the greenback, or 74.29 U.S. cents, up 0.3 percent.
USD/JPY is supported around 109.80 levels and currently trading at 110.25 levels. It peaked to hit session high at 110.78 and made session lows at 110.11 levels. The U.S. dollar strengthened against the yen on Friday as the greenback was boosted by a weaker British pound after Prime Minister Theresa May's Conservative Party lost its parliamentary majority in national elections. The dollar index, which tracks the greenback against six major rivals, was up 0.46 percent at 97.364. The dollar had fallen to a seven-month low midweek on caution ahead of U.S. Senate testimony by former FBI Director James Comey and the British election. But on Friday, it added to gains from the previous session. Comey on Thursday accused President Donald Trump of firing him to try to undermine the bureau's investigation of possible collusion between his 2016 presidential campaign team and Russia, but did not say whether he thought the president sought to obstruct justice. Traders will turn their attention to next week's U.S. Federal Reserve policy meeting, where the central bank is widely expected to deliver this year's second rate hike.
Equities Recap
European stocks were choppy on Friday after Britain's election delivered no clear winner on the eve of Brexit talks, though a slump in sterling gave an edge to shares in UK exporters.
UK's benchmark FTSE 100 closed up by 1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.34 percent, Germany's Dax ended up by 0.7 percent, France’s CAC finished the day up by 0.6 percent.
Technology stocks sold off sharply on Friday, wounding the Nasdaq and holding down other major Wall Street indexes, which had touched record highs earlier in the session.
Dow Jones closed up by 0.40 percent, S&P 500 ended down by 0.10 percent, Nasdaq finished the day down by 1.84 percent.
Treasuries Recap
U.S. Treasury long-dated yields rose to one-week highs on Friday as investors consolidated positions ahead of next week's government debt auctions and a widely expected interest rate increase by the Federal Reserve.
In late trading, U.S. 10-year Treasuries were last down 3/32, yielding 2.204 percent, compared with 2.194 percent on Thursday. Ten-year yields earlier hit a one-week high of 2.228 percent.
U.S. 30-year bonds slipped 2/32 to yield 2.857 percent, up from Thursday's 2.855 percent. Earlier in the session, 30-year yields rose to one-week peaks of 2.883 percent.
On the front end, U.S. two-year yields were at 1.338 percent, rising from 1.322 percent late Thursday after reaching a four-week high of 1.351 percent.
Commodities Recap
Gold prices fell about 1 percent on Friday as the dollar strengthened while palladium leapt more than 7 percent as a surge in speculative demand forced industrial users to close out short positions.
Spot gold was down 0.7 percent at $1,270.17 an ounce, while U.S. gold futures for August delivery settled at $1,271.40.
Oil prices rose on Friday after a pipeline stoppage in Nigeria, but crude still ended the week down nearly 4 percent on persistent worries about global oversupply.
Brent crude oil settled up 29 cents at $48.15 a barrel. U.S. crude futures rose 19 cents to $45.83 a barrel
