Market Roundup
• Stocks, EUR rise, USTs hit, as Deutsche Bank (DB.N) shares rebound (+15%), Risk on.
• U.S. Aug personal consumption -0.1% v +0.3% previous, Core Inflation + 1.7% y/y vs 1.6% previous.
• US Chicago PMI (Sep) 54.2 v 52.0 forecast, 51.5 previous.
• Univ of Michigan Sep final Sent 91.2 v 91.0 forecast, expectations 82.7 v 81.0 forecast, 81.1 previous.
• Univ of Michigan 1-yr inflation forecast 2.4% v 2.3% forecast, 5-yr 2.6% v 2.5% previous.
• Fed’s Kaplan: expects much stronger US GDP growth for H2 ’16, expects 1.75% GDP growth in 2016.
• Atlanta Fed’s GDPNow: Q3 GDP growth at 2.4% vs 2.8% Sept 28.
• NY Fed’s Nowcast Q3 2.3% v 2.3%, Q4 1.2% unchanged.
• Mexico's Carstens says Trump effect on peso "a reality", also noted MXN undervalued.
Looking Ahead - Economic Data (GMT)
• Sat 01:00 China NBS Non-Mfg PMI* Sep 53.5-previous
• Sat 01:00 China NBS Mfg PMI* Sep forecast 50.4, 50.4- previous
• 22:30 Australia AIG Manufacturing Index Sep 46.90- previous
• 23:50 Japan Tankan Big Mf Idx Q3 forecast 7, 6.00- previous
• 23:50 Japan Tankan Big Mf Outlook DI Q3 forecast 8, 6.00- previous
• 23:50 Japan Tankan All Big Capex Est Q3 forecast- 6.8%, 6.20%- previous
• 23:50 Japan Tankan All Sm Capex Est Q3 forecast -8.4%, -14.90%- previous
• 00:30 Japan Nikkei Mfg PMI Sep 50.30- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is supported at 1.1180 levels and currently trading at 1.1237 levels. The pair has made session high at 1.1250 and hit lows at 1.1167 levels. Euro inched higher against US dollar in the US session as euro bounced from earlier losses as reduced concerns surrounding Deutsche Bank's health boosted the single currency. Deutsche Bank's U.S.-listed shares were last up nearly 15 percent after touching record lows on Thursday. The immediate cause of the Deutsche crisis is a fine, disputed by the bank, of up to $14 billion by the U.S. Department of Justice over its sale of mortgage-backed securities. The euro was on track to gain about 0.8 percent in September to notch its best month in six and rise 1.2 percent for the third quarter after losing 2.4 percent in the second quarter. On the data front, U.S. consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.09 percent at 95.449.
GBP/USD is supported in the range of 1.2900 levels and currently trading at 1.2976 levels. It reached session high at 1.3023 and dropped to session low at 1.2949 levels. British pound declined gained against dollar on Friday as traders kept selling pressure on sterling as uncertainty over Brexit and a drying-up of expectations from Bank of England weighed on the currency pair. Last month the BoE cut its key interest rate to another record low and relaunched an asset-purchase programme in an effort to cushion the blow dealt by the referendum outcome, and some expect it to ease policy again before the end of the year. After a media report said an agreement between Deutsche Bank and U.S. authorities was being discussed which would slash huge fines over alleged misselling, sterling jumped to a day's high of $1.3024. But declined on renewed bearish pressure. Against the euro, sterling edged up 0.1 percent to 86.42 pence EURGBP=D4, but for the quarter was down more than 3 percent against the single currency.
USD/CAD is likely to find support at 1.3045 levels and is trading at 1.3116 levels. It has made intraday high at 1.3195 and lows at 1.3083 levels. The Canadian dollar was steady against its U.S. counterpart on Friday, recouping earlier losses after data showed Canadian economy grew more than expected and oil prices further appreciated. Canada's gross domestic product grew 0.5 percent in July, fueled by a rebound in oil and gas extraction after wildfires in Alberta earlier this year, Statistics Canada data showed. The economic growth topped analysts' forecasts for a gain of 0.3 percent. In other domestic data, producer prices unexpectedly fell in August as meat and dairy products saw the largest decrease in nearly nine years. The currency pair was last trading at at C$1.3116 to the greenback, or 76.24 U.S. cents, stronger than Thursday's close of C$1.3149, or 76.05 U.S. cents.
AUD/USD is supported around 0.7590 levels and currently trading at 0.7658 levels. It hit session high at 0.7671 and made session lows at 0.7640 levels. The Australian inched higher against dollar on Friday on reports Deutsche Bank is close to reaching an accord with U.S. officials to settle charges related to its sale of toxic mortgage bonds before the financial crisis. The Australian dollar gained to trade around $0.7658, having shed 0.7 percent on Thursday. It has met heavy resistance above 77 cents since August. It was knocked overnight after Deutsche Bank shares touched an all-time low on worries about the financial stability of the largest German lender. Still, the Aussie is up 1.3 percent so far in September, having recouped all of August's loss. Part of the gains followed an upbeat assessment on the economy by Philip Lowe, the new governor of the Reserve Bank of Australia (RBA), even though he left the door open for more rate cuts. The RBA holds its monthly policy meeting on Tuesday and is seen certain to keep rates unchanged at an all-time low of 1.5 percent.
Equities Recap
European shares closed higher on Friday, lifted by a late surge in Deutsche Bank after a media report that it was close to settling with U.S. authorities over alleged misselling of mortgage-backed securities.
UK's benchmark FTSE 100 closed down by 0.3 percent, the pan-European FTSEurofirst 300 ended the day up by 0.12 percent, Germany's Dax ended up by 1.1 percent, France’s CAC finished the day up by 0.2 percent.
Wall Street rallied on Friday, lifted by a surge in Deutsche Bank shares and financial stocks after concerns eased about the health of the German bank.
Dow Jones closed up by 0.90 percent, S&P 500 ended up by 0.79 percent, Nasdaq finished the day up by 0.79 percent.
Treasuries Recap
U.S. Treasury debt yields rose on Friday as risk appetite improved with the rebound in Deutsche Bank share prices and the release of generally solid U.S. economic data that keeps the Federal Reserve on track to raise interest rates in December.
In late trading, U.S. benchmark 10-year Treasury notes were down 12/32 in price for a yield of 1.597 percent, up from 1.556 percent late on Thursday.
U.S. yields, however, remained on a downtrend, having fallen in seven of the last nine trading sessions given global geopolitical tensions and political uncertainty arising from the upcoming U.S. elections.
U.S. 30-year bonds fell one point in price, yielding 2.319 percent, up from Thursday's 2.274 percent.
Commodities Recap
Gold prices fell in volatile trading on Friday as safe-haven demand dwindled after stocks in major markets largely recovered from a sell-off on easing concerns about Deutsche Bank.
Spot gold was down 0.3 percent at $1,316.32 per ounce by 2:48 p.m. EDT (1848 GMT). U.S. gold futures settled down up 0.7 percent at $1,317.10 an ounce.
Oil prices settled mixed on Friday while posting their second straight monthly gain on OPEC's planned output cuts, even as skepticism about the cartel's pledge grew after data suggested another record high in its production
Brent for November delivery settled down 18 cents, or 0.4 percent, at $49.06 a barrel, before expiring as the front-month contract. For both the week and month, it rose about 4 percent. For the quarter it fell around 1 percent.
WTI's front-month, also November, closed up 41 cents, or nearly 1 percent, at $48.24 per barrel. It gained 8 percent on the week and month, and was almost flat on the quarter.
