Market Roundup
• Brexit brings down May, Johnson stakes leadership claim
• China denounces U.S. "rumours" and "lies" about Huawei ties to Beijing
• Weak U.S. manufacturing underscores slowing economic growth
• US Apr Durable Goods, -2.1%, -2.0% forecast, 2.6% previous
• US Apr Durables Ex-Transport, 0.0%, 0.2% forecast, 0.3% previous
• Oil edges higher but set for biggest weekly loss of 2019
Looking Ahead - Economic Data (GMT)
• 27 May 01:30 China Apr Industrial profit YY, 13.90% previous
Looking Ahead - Events, Other Releases (GMT)
• 26 May 11:45 ECB's Sabine Lautenschlager participates in interview on the role of the ECB in Europe at open-door day of Deutsche Bundesbank in Frankfurt, Germany
• 27 May 03:00 Bank of Japan Governor Haruhiko Kuroda delivers a speech at T20 Summit in Tokyo
Currency Summaries
EUR/USD: The euro strengthened against the U.S. dollar on Friday, as weak U.S. manufacturing activity data sparked worries the trade conflict with China may hurt the world's largest economy. The weaker-than-expected data, a closely watched proxy for business spending plans, drove the dollar lower and added to a fall which began Thursday following a report that showed manufacturing activity hit its lowest level in almost a decade in May. Taken together, the reports suggested a sharp slowdown in U.S. economic growth is under way, which could affect the dollar's safe-haven status. The euro was up 0.20 percent at $1.1205. An index that tracks the dollar versus a basket of six major currencies was down 0.28 at 97.58. Immediate resistance can be seen at 1.1230 (50 DMA), an upside break can trigger rise towards 1.1246 (Higher Bollinger Band).On the downside, immediate support is seen at 1.1177 (9 DMA), a break below could take the pair towards 1.1135 (Lower Bollinger Band).
GBP/USD: The pound rose against dollar on Friday, after British Prime Minister Theresa May set out a departure date after failing to push through a Brexit divorce deal. Trading was volatile as concerns rose that she is likely to be succeeded by a eurosceptic leader, potentially increasing the chances of a 'no-deal' Brexit. The process to elect a new party leader will begin next month - markets are concerned that a tougher stance with the European Union might prompt investors to turn more negative on the outlook for the pound in the coming months. Those concerns have pulled the rug from under the pound over the last two weeks, prompting traders to sell the currency against the euro and the dollar aggressively and dialling up expectations of Britain leaving the EU without a deal to smooth the transition. Immediate resistance can be seen at 1.2744 (9 DMA), an upside break can trigger rise towards 1.2794 (11 DMA).On the downside, immediate support is seen at 1.2603 (Lower Bollinger Band), a break below could take the pair towards 1.2546 (Dec 17th Low).
USD/CAD: The Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from a six-day low the day before as the greenback broadly fell and investors dialed back fears of a protracted trade war between the United States and China. Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt by a slowdown in the global flow of capital or trade. The price of oil rose after two sessions of losses, but had its biggest weekly drop this year due to rising inventories and concerns about an economic slowdown. U.S. crude oil futures settled 1.2% higher at $58.63 a barrel. At (2043 GMT), the Canadian dollar was trading 0.3% higher at 1.3437 to the greenback. Immediate resistance can be seen at 1.3460 (23.6% retracement level), an upside break can trigger rise towards 1.3500 (Psychological level).On the downside, immediate support is seen at 1.3424 (38.2% retracement level), a break below could take the pair towards 1.3400 (Psychological level).
USD/JPY: The dollar declined against Japanese yen on Friday, as tensions between the United States and China increased demand for safe-haven yen. U.S. President Donald Trump said complaints against China's Huawei Technologies Co Ltd might be resolved within the framework of a Sino-U.S. trade deal.Tensions remained high, with China accusing U.S. Secretary of State Mike Pompeo of fabricating rumors after he said Huawei's chief executive was lying about the telecom network gear maker's ties to the Chinese government. The dollar was 0.29 percent lower versus the Japanese yen at 109.30. Strong resistance can be seen at 109.82 (11 DMA), an upside break can trigger rise towards 110.36 (21 DMA).On the downside, immediate support is seen at 109.00 (Psychological level), a break below could take the pair towards 108.59 (Lower Bollinger Band).
Equities Recap
European shares rose on Friday after U.S. President Donald Trump predicted a swift end to a damaging trade war with China.
UK's benchmark FTSE 100 closed up by 0.65 percent, the pan-European FTSEurofirst 300 ended the day up by 0.57 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.67 percent.
Wall Street's major stock indexes edged higher on Friday after falling in the previous session, as hopeful comments from U.S. President Donald Trump regarding trade relations with China assuaged concerns among some investors.
Dow Jones closed up by 0.39 percent, S&P 500 ended up by 0.14 percent, Nasdaq finished the day up by 0.10 percent.
Treasuries Recap
U.S. Treasury prices fell on Friday as investors booked profits from the previous day's steep rally, although the decline was seen as a blip as the festering U.S.-China trade conflict could fuel further safe-haven buying.
In afternoon trading, U.S. 10-year note yields rose to 2.323% from 2.296% late on Thursday.Yields on U.S. 30-year bonds advanced to 2.751%, from 2.732% on Thursday. On the short end of the curve, U.S. 2-year yields were up at 2.168% from Thursday's 2.129%
Commodities Recap
Gold steadied on Friday, after rising more than 1% in the previous session en route to a weekly gain, propped up by a weaker dollar and expectations for a U.S. interest rate cut, offsetting pressure from a rebound in equities.
Spot gold gained 0.1% to $1,283.91 per ounce as of 1:33 p.m. EDT (1733 GMT). Prices rose as much as 1.1% to a one-week peak of 1,287.23 on Thursday. The metal has risen about 0.5% so far this week.U.S. gold futures for June settled down 0.1% at $1,283.60.
Oil prices climbed more than 1% on Friday ahead of long U.S. and UK holiday weekends, but posted the biggest weekly drop of the year, pressured by rising inventories and worries about the global economy.
Brent crude rose 93 cents, or 1.4%, to settle at $68.69 a barrel, but the global benchmark notched a weekly decline of about 4.5%.
U.S. West Texas Intermediate crude rose 72 cents, or 1.2%, to end at $58.63 a barrel. It notched a weekly decline of about 6.4%, its steepest since December.
