Market Roundup
• US Q4 GDP Advance, 2.6%, 3.0% forecast, 3.2% previous.
• US Q4 Core PCE Prices Advance, 1.9%, 1.6% forecast, 1.3% previous.
• US Dec Durable Goods, 2.9%, 0.8% forecast, 1.3% previous, 1.7% revised.
• US Dec Durables Ex-Transport, 0.6%, 0.5% forecast, -0.1% previous, 0.3% revised.
• US Dec Wholesale Inventories Adv, 0.2%, 0.8% previous, 0.7% revised.
• US Dec US Retail Inventories Advance, 0.6%, 0.2% previous, 0.3% revised.
• Trump warns Davos on unfair trade, says U.S. "open for business".
• Trump says Republicans will accept citizenship for 'Dreamers'.
• U.S. hits Russian deputy minister and energy firms with sanctions.
• ECB survey sees higher inflation in years ahead.
• ECB warns against global currency war.
• UK economy unexpectedly picks up speed but Brexit effect felt.
• UK spells out Brexit transition demands as pressure mounts on PM May.
• CA Dec CPI Inflation MM, -0.4%, -0.3% forecast, 0.3% previous.
• CA Dec CPI Inflation YY, 1.9%, 1.9% forecast, 2.1% previous.
• CA Dec CPI BoC Core YY, 1.2%, 1.3% previous.
• CA Dec CPI BoC Core MM, -0.5%, -0.1% previous.
• BoJ nearing inflation target despite "deflationary mindset" – Kuroda.
• As NAFTA talks drag, Mexico suggests timeline could be extended.
• Parties aim to wrap up German coalition talks by next weekend.
• Spanish government asks court to block Puigdemont's bid to lead Catalonia.
Looking Ahead - Economic Data (GMT)
• No major economic events
Looking Ahead - Events, Other Releases (GMT)
• Jan 29 N/A ECB's Sabine Lautenschläger, Basel committee chair Stefan Ingves, European Banking Authority chair Andrea Enria and Bundesbank board member Andreas Dombret to speak on banking reforms - Frankfurt
• Jan 29 08:15 Governor Stefan Ingves will hold an opening speech on the Basel III Accord at the ILF's conference – Frankfurt
• Jan 29 11:00 Riksbank's Kerstin af Jochnick explains what responsibility the central bank has with regard to financial stability – Stockholm
Currency Summaries
EUR/USD is likely to find support at 1.2362 levels and currently trading at 1.2442 levels. The pair has made session high at 1.2445 and hit lows at 1.2400 levels. Euro edged higher against the dollar in the US session on Friday as dollar was bruised by comments by senior U.S. officials this week backing a weak dollar and after data showed U.S. economic growth unexpectedly slowed in the fourth quarter. President Donald Trump's comments on Thursday that he wanted a "strong dollar," a day after Treasury Secretary Steven Mnuchin said a weaker greenback would help U.S. trade balances in the short term, failed to put a lid on volatility and keep dollar bears in check. The euro was up 0.1 percent against the greenback at $1.2412, after hitting a more than three-year high of $1.2536 on Thursday. With European Central Bank President Mario Draghi declining to lean against the recent euro rally and instead signaling that economic data pointed to "solid and broad" growth, investors were encouraged to push the currency higher. Draghi also warned that the surge in the euro was a source of uncertainty and said the ECB might have to review strategy if U.S. comments on the benefits of a weak dollar lead to a change in monetary conditions. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.44 percent at 89.002 and on track for a weekly fall of 1.7 percent, its worst performance since May.
GBP/USD is supported in the range of 1.4079 levels and currently trading at 1.4192 levels. It reached session high at 1.4231 and dropped to session low at 1.4140 levels. Sterling gained further against the dollar on Friday after enjoying its best week since September and its sixth weekly rise in a row, amid increased optimism around Brexit and the economic backdrop. Britain’s economy unexpectedly picked up speed in the last three months of 2017, data showed earlier on Friday, adding to the view that the hit from the Brexit vote in June 2016 was not as bad as some had expected. Sterling, already up before the data, rose further for a one percent rise on the day at $1.4289 before giving up those gains to trade at $1.4147 , still up 0.2 percent on the day. For the week, the pound is up more than 2 percent. Gross domestic product grew by 0.5 percent in the three months to the end of December, faster than analyst expectations of 0.4 percent, official data showed. That was the fastest pace of quarterly growth last year, although the Office for National Statistics said the big picture remained one of slower and more uneven expansion in Britain. The pound has enjoyed a strong rally this year and is up around 5 percent against the U.S. currency, helped by a broad-based dollar sell-off that intensified this week until U.S. President Donald Trump on Thursday said he ultimately wanted a strong greenback.
USD/CAD is supported at 1.2279 levels and is trading at 1.2313 levels. It has made session high at 1.2359 and lows at 1.2291 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as the greenback broadly fell, while investors also digested domestic data showing an expected drop in headline inflation but an uptick in underlying measures. Canada's annual inflation rate dipped to 1.9 percent in December from 2.1 percent in November as higher food costs were offset by a drop in gasoline prices, data from Statistics Canada showed. The U.S. dollar fell against a basket of major currencies, weighed by comments this week by senior U.S. officials that were interpreted by some investors as favoring a weak currency. The dollar also dipped after data showed that U.S. economic growth unexpectedly slowed in the fourth quarter as the strongest pace of consumer spending in three years resulted in a surge in imports. U.S. crude prices were little changed at $65.48 a barrel. Oil is one of Canada's major exports. The Canadian dollar was trading 0.2 percent higher at C$1.2355 to the greenback, or 80.94 U.S. cents. The currency traded in a range of C$1.2298 to C$1.2391. On Thursday, the loonie touched a four-month high at C$1.2283.
USD/JPY is supported around 108.00 levels and currently trading at 108.71 levels. It peaked to hit session high at 109.06 and made session lows at 108.24 levels. The U.S. dollar declined against the Japanese yen on Friday as a report of slow economic growth pushed the U.S. dollar lower, days after the greenback was hammered by a senior U.S. official backing a weaker currency. The dollar was on track for its biggest weekly decline since May. President Donald Trump's comments on Thursday that he wanted a "strong dollar" failed to lend much support, a day after Treasury Secretary Steven Mnuchin said a weaker greenback would help short-term U.S. trade balances. Headlines from Davos have been moving the market all week, following comments about the dollar from U.S. Treasury Secretary Steven Mnuchin and Trump. The greenback pared losses after Trump contradicted Mnuchin and the Treasury secretary walked back his remarks. The U.S. economy grew 2.6 percent in the final quarter of 2017, slower than the 3 percent forecast by economists polled. In other data on Friday, orders for key U.S.-made capital goods unexpectedly fell in December, suggesting a moderation in business spending on equipment after strong gains in 2017.
Equities Recap
European shares edged up on Friday, helped by a solid update from luxury group LVMH but not enough to counter the impact of a rising euro, which spoiled a strong start to the year and left them broadly flat over the week.
UK's benchmark FTSE 100 closed up by 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 0.54 percent, Germany's Dax ended up by 0.3 percent, France’s CAC finished the day up by 0.9 percent.
Wall Street climbed on Friday as both the S&P 500 and Dow hit records on the latest round of strong earnings reports, including results from Intel and AbbVie, as well as continued weakness in the dollar.
Dow Jones closed up by 0.82 percent, S&P 500 ended down by 1.00 percent, Nasdaq finished the day up by 1.23 percent.
Treasuries Recap
U.S. Treasury yields trimmed earlier gains on Friday after data showed the nation's economy grew 2.6 percent in the final quarter of 2017, slower than the 3 percent increase forecast among economists polled.
The yield on 10-year Treasury notes was 2.634 percent, above Thursday's close at 2.621 percent, while the 30-year bond yield was 2.892 percent, up nearly 1 basis point from 2.880 percent.
Commodities Recap
Gold rose on Friday, climbing back toward the previous day's 17-month peak as suggestions that senior U.S. officials may support a weaker dollar knocked the currency lower.
Spot gold was up 0.3 percent at $1,351.86 by 1:37 p.m. EST (1837 GMT), up 1.5 percent this week. On Thursday, bullion hit $1,366.07, its highest since August 2016.
U.S. gold futures for February delivery settled down $10.80, or 0.78 percent, at $1,352.10 per ounce.
Oil prices rose on Friday after hitting fresh three-year highs in the previous session, as weakness in the dollar continued to underpin prices with crude on track for a weekly gain.
Brent crude futures were trading 28 cents higher at $70.70 per barrel at 1:30 p.m. EST (1830 GMT). On Thursday, the contract climbed to as high as $71.28, its highest since 2014.
U.S. West Texas Intermediate (WTI) crude futures were 66 cents, or nearly 1 percent higher, at $66.16 a barrel. On Thursday, they also reached their highest since December 2014, at $66.66.
