Market Roundup
• US Dec producer prices +0.3 percent m/m, 1.6% y/y both as per forecast; core beats forecast slightly.
• US Dec Retail Sales m/m 0.6% v 0.7% forecast, 0.2% previous, strong auto demand lifts sales.
• US Retail control 0.2% v 0.4% forecast, 0% previous.
• Univ of Michigan Sentiment prelim Jan 98.1 v 98.5 forecast, 98.2 previous.
• Univ of Michigan 1-yr inflation prelim 2.6% v 2.2% previous; 5-yr 2.5% v 2.3% previous.
• DBRS cuts Italy sovereign rating to BBB (high) from A (low).
• Euro Zone yields edge higher on Fed warnings, Italy rating review looms.
• Bank earnings boost S&P and Nasdaq, retailers weigh on Dow.
• Euro Zone economy registering surprisingly strong growth spurt; Euro-Zone industrial production jumps in November.
• BoE's Saunders: British jobless rate unlikely to rise much in 2017.
• China posts worst export fall since 2009 as fears of US trade war loom.
• Despite Saudi signals, OPEC unlikely to deliver all promised oil cuts; OPEC compliance peaked at 80 pct during cut in 2009-IEA.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Food Price Index* Dec -0.1%-previous
• 23:50 Japan Corp Goods Price MM* Dec forecast 0.3%, 0.4%- previous
• 23:50 Japan Corp Goods Price YY* Dec forecast -1.5%, -2.2%- previous
• 23:50 Japan Machinery Orders MM* Nov forecast -1.7%, 4.1%- previous
• 23:50 Japan Machinery Orders YY* Nov forecast 8.1%, -5.6%- previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0561 levels and currently trading at 1.0642 levels. The pair has made session high at 1.0653 and hit lows at 1.0596 levels. Euro declined against the dollar on Friday as dollar strengthened after U.S. retail sales data fueled expectations that the Federal Reserve would hike interest rates three times this year. The Commerce Department said retail sales increased 0.6 percent in December, while November's retail sales were revised up to show a 0.2 percent rise instead of the previously reported 0.1 percent gain. The retail sales data also suggested the Fed would follow through with its forecast in December for three projected rate hikes this year, analysts said. The U.S. central bank's rate hikes are expected to boost the dollar by driving investment flows into the United States. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.16 percent at 101.190. The minor gains combined with losses on Wednesday and Thursday to lead to a roughly 1 percent drop for the week. The euro was last trading at $1.0639 after touching a session low of $1.0597 after the U.S. retail sales data.
GBP/USD is supported in the range of 1.2000 levels and currently trading at 1.2182 levels. It reached session high at 1.2312 and dropped to session low at 1.2113 levels. Sterling lost ground against the dollar on Friday as sterling was weighted down, as investors braced for a speech by Prime Minister Theresa May on Tuesday that will detail her plans for Brexit. The pound has been on the defensive all week, driven by an interview with the prime minister last Sunday in which she signaled immigration control would take priority over membership of the EU's lucrative single market - a scenario that has come to be known as a hard Brexit. On Friday, Sterling made session lows at 1.2113 but recovered slightly to trade at 1.2192. That left it less than two cents off its lowest levels bar the October flash crash in almost 32 years against the dollar, hit on Wednesday. Sterling has fallen almost 20 percent against the dollar since June's Brexit vote and is on course for its fifth week of falls in the last six. Against the euro, it has lost 13 percent since June.
USD/CAD is supported at 1.3000 levels and is trading at 1.3122 levels. It has made session high at 1.3166 and lows at 1.3078 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday even as oil prices fell, with recent upbeat domestic data helping to underpin the currency ahead of a Bank of Canada interest rate decision next week. As recently as October the central bank said it had considered easing interest rates as it downgraded its economic outlook. But data last week showed a surge in jobs in December and the first trade surplus in more than two years in November, while a Bank of Canada survey this week pointed to improving business conditions. Prices of oil, one of Canada's major exports, are on track to end the week lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the health of the Chinese economy after it reported the steepest falls in exports since 2009. The Canadian dollar was last trading at C$1.3119 to the greenback, or 76.04 U.S. cents, slightly stronger than Thursday's close of C$1.3132, or 76.15 U.S. cents.
AUD/USD is supported around 0.7412 levels and currently trading at 0.7497 levels. It hit session high at 0.7503 and made session lows at 0.7448 levels. The Australian dollar strengthened against its US counterpart as the dollar turned lower after initially rising on strong retail sales as some investors were disappointed that Trump did not disclose details at his Wednesday news conference on his plans for tax cuts, looser regulation and more infrastructure spending. Investors were looking ahead to Trump's inauguration on Jan. 20, when they will again be looking for detail on his plans for the U.S. economy. U.S. retail sales rose in December amid strong demand for automobiles and furniture, providing further evidence that the economy ended the fourth quarter with momentum and is poised for stronger growth this year. A second report showed the University of Michigan's consumer sentiment index slipped one-tenth of a percentage point to 98.1 in early January. Still, sentiment remained near a 13-year high. The Australian dollar is the best performing major currency of the year so far, climbing nearly 4 percent to $0.7477.That's a marked turnaround from late December when it hit a seven-month trough of $0.7160 as the U.S. dollar rode high on wagers that President-elect Donald Trump's policies would stoke U.S. inflation.
Equities Recap
European shares rose on Monday, led higher by banks stocks, with Britain's blue chip index finishing at an all-time high after extending a record winning streak to 14 days.
UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day up by 0.93 percent, Germany's Dax ended up by 0.9 percent, France’s CAC finished the day up by 1.1 percent.
An increase in Facebook pushed the Nasdaq to a record high on Friday and the S&P 500 also rose after major U.S. banks kicked off the fourth-quarter earnings season with strong results.
Dow Jones closed down by 0.04 percent, S&P 500 ended up 0.17 percent, Nasdaq finished the day up by 0.47 percent.
Treasuries Recap
U.S. Treasury yields rose Friday as data supporting the notion of a steady U.S. economic expansion and rising Wall Street stock prices stoked selling in low-risk government bonds.
The benchmark 10-year Treasury yield was up 3 basis points at 2.391 percent after it fell to 2.307 percent, its lowest in six weeks.
The 10-year yield fell for a fourth straight week, a decline not seen since late May to early July last year, when it fell for seven consecutive weeks.
Commodities Recap
The price of gold turned higher on Friday, hovering below the prior session's seven-week top as the U.S. dollar weakened and U.S. Treasury yields came off their highs, with the metal on track for a third straight weekly gain.
Spot gold was 0.2 percent higher at $1,197.99 an ounce by 3:09 p.m. EST (2009 GMT). It was up 2.1 percent on the week.
U.S. gold futures settled down 0.3 percent at $1,196.20 per ounce, ahead of the U.S. holiday on Monday, when the market will close early.
Oil prices fell on Friday and ended the week 3 percent lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of the world's second-largest oil consumer, China, after it reported the steepest falls in overall exports since 2009.
Brent crude futures settled 56 cents lower at $55.45 a barrel, ending the week with a loss of about 3 percent.
U.S. West Texas Intermediate crude futures fell by 64 cents to close at $52.37 also notching a weekly drop of nearly 3 percent.
