Market Roundup
• Gold rises as stocks slide triggers flight to safety.
• Stocks set for worst weekly losing streak since 2013.
• US Q3 GDP Advance, 3.5%, 3.3% forecast, 4.2% previous.
• US Q3 Core PCE Prices Advance, 1.6%, 1.8% forecast, 2.1% previous.
• US Q3 PCE Prices Advance, 1.6%, 2.0% forecast, 2.0% previous.
• US Oct U Mich Sentiment Final, 98.6, 99.0 forecast 99.0 previous.
• ECB's Coeure open to change in message to smooth out stimulus exit.
• Euro zone to discuss Italy budget, despite Rome's objection - sources.
• IMF increases Argentina financing deal to $56.3 bln
• CA Aug Budget Balance (C$), -1.88B, 0.14B previous, -2.63 revised
• CA Aug Budget Year-to-Date (C$), 2.56B, 4.43B previous, -2.91B revised
Looking Ahead - Economic Data (GMT)
• 28 Oct 23:50 JP Sep Retail Sales y/y, 1.6% forecast, 2.7% previous
Looking Ahead - Events, Other Releases (GMT)
• 29 Oct NA British Finance Minister Philip Hammond delivers his autumn budget statement in London
• 29 Oct 09:00 Norway Central Bank Publishes its annual report on financial stability in Oslo
• 29 Oct 13:00 New York Fed's Ray Testa speaks at LBMA/LPPM Precious Metals Conference 2018 in Boston
• 29 Oct 13:45 Chicago Fed's Charles Evans makes opening remarks at the Sixth Annual Summit on Regional Competitiveness in Chicago
Currency Summaries
EUR/USD is likely to find support at 1.1300 levels and currently trading at 1.1403 levels. The pair has made session high at 1.1420 and hit lows at 1.1342 levels. The euro strengthened against dollar Friday as U.S. dollar declined alongside Wall Street after having risen to a two-month high in morning trade after U.S. headline third-quarter gross domestic product data exceeded estimates. The three major U.S. stock indexes fell in late morning trade, extending the week's selloff, as grim earnings reports from Amazon.com Inc and Alphabet Inc rekindled a rush to dump technology and high-growth stocks. The U.S. economy slowed less than expected in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years, keeping growth on track to hit the Trump administration's 3 percent target this year. Gross domestic product increased at a 3.5 percent annualized rate also supported by a surge in inventory investment and solid government spending, the Commerce Department said on Friday in its first estimate of third-quarter GDP growth. While that was a slowdown from a 4.2 percent pace in the second quarter, it still exceeded the economy's growth potential, which economists put at about 2 percent. But there were red flags to the economic expansion that is now in its ninth year and the second longest on record. The dollar index fell 0.35 percent, with the euro up 0.28 percent to $1.1406.
GBP/USD is supported in the range of 1.2723 levels and currently trading at 1.2834 levels. It reached session high at 1.2917 and dropped to session low at 1.2772 levels. Britain's pound traded near two-month lows against the dollar on Friday as doubt grows about whether the UK and the European Union can clinch a Brexit deal.Brexit concerns and a stronger dollar had sent the pound to as low as $1.2777 earlier on Friday, its weakest since Aug. 20. Sterling partly staged a comeback to around $1.2824 as the dollar weakened on the back of large falls on Wall Street.Bloomberg, citing people familiar with the matter, reported on Friday that Brexit talks were on hold because Prime Minister Theresa May's cabinet was not close enough to agreement on how to proceed for the negotiations to restart. The British currency was largely unchanged versus the euro, at 88.76 pence per euro, after earlier weakening to a three-week low. With Brexit dominating the news agenda, Britain's economic fortunes have taken a backseat. Next week, the Bank of England is expected to leave interest rates unchanged and stress that while there are some signs of rising wage and price pressures, it will not be ready to tighten policy until there is clarity on Brexit.
USD/CAD is supported at 1.3011 levels and is trading at 1.3088 levels. It has made session high at 1.3159 and lows at 1.3068 levels. The Canadian dollar strengthened against a greenback on Friday as a sell-off in global stock markets offset the boosted the loonie. World stocks slid lower and were set to post their biggest weekly losing streak in more than five years, as anxiety over corporate profits added to fears about global trade and economic growth. Canada runs a current account deficit and exports many commodities, including oil, so its economy could suffer if the flow of trade or capital slows. Canada's central bank on Wednesday raised its key interest rate by 25 basis points to 1.75 percent, its fifth hike since July 2017, and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus. The price of oil headed for a third weekly loss after Saudi Arabia warned of oversupply, while a slump in stock markets and concerns about trade clouded the outlook for fuel demand. The Canadian dollar was trading 0.1 percent higher at 1.3102 to the greenback. The currency touched its weakest intraday level since Sept. 11 at 1.3160.For the week, the loonie was up 0.1 percent.
USD/JPY is supported around 111.80 levels and currently trading at 111.83 levels. It peaked to hit session high at 112.66 and made session lows at 111.34 levels. The dollar declined against the Japanese yen on Friday as nervous investors retreated from stock markets and piled into safe heaven Japanese yen. Disappointing earnings reports from Amazon.com Inc and Alphabet Inc rekindled a rush to dump technology and high-growth stocks. Stock markets around the world were on track for their longest weekly losing streak since 2013. There is speculation that if the weakness in equity markets persists, it could derail the Federal Reserve’s plans to further hike interest rate.Loretta Mester, president of the Cleveland Fed, said on Thursday that the recent cratering of stock markets is nowhere near severe enough to rattle confidence and significantly hurt U.S. business and consumer spending. The Commerce Department on Friday reported that third-quarter gross domestic product increased at an annualized rate of 3.5 percent, slowing less than expected as a tariff-related drop in soybean exports partially offset by the strongest consumer spending in nearly a four years and a surge in inventory investment.The dollar index fell as much as 0.57 percent against a basket of six rivals as Wall Street sold off, last at 96.43. The Japanese yen strengthened 0.52 percent versus the greenback at 111.83 per dollar,
Equities Recap
European stocks failed to stage a recovery on Friday, posting their worst week since a market correction last February as a new sell-off hit bourses across the globe, amid worries about protectionism and fast-rising U.S. interest rates.
UK's benchmark FTSE 100 closed down 1.4 percent, the pan-European FTSEurofirst 300 ended the day down by 1.27 percent, Germany's Dax ended down by 1.4 percent, France’s CAC finished the day down by 1.8 percent.
U.S. stocks sold off further on Friday and the S&P 500 flirted with correction territory as disappointing results punished technology and internet shares.
Dow Jones closed up by 1.20 percent, S&P 500 ended down by 1.75 percent, Nasdaq finished the day down by 2.15 percent.
Treasuries Recap
U.S. Treasury yields dropped to three-week lows on Friday as stocks sank in volatile trading, boosting demand for safe-haven government debt.
Benchmark 10-year Treasury yields fell as low as 3.057 percent on Friday, the lowest since Oct. 3, before rising back to 3.077 percent. The yields are down from a more than seven-year high of 3.261 percent on Oct. 9.
Commodities Recap
Brent crude futures rose 73 cents, or 1 percent, to settle at $77.62 a barrel. The global benchmark marked a weekly loss of about 2.7 percent and is down about $10 in three weeks.
Benchmark 10-year Treasury yields fell as low as 3.057 percent on Friday, the lowest level since Oct. 3, before rising back to 3.083 percent. The yields are down from a more than seven-year high of 3.261 percent hit on Oct. 9.
U.S. West Texas Intermediate (WTI) crude futures rose 26 cents, or 0.4 percent, to end at $67.59 a barrel. It posted a weekly loss of about 2.3 percent.
Gold rose on Friday to a more than three-month peak as investors rushed to the safety of bullion as stock markets around the globe plunged, putting the metal on track for its fourth week of gains.
Spot gold rose 0.2 percent to $1,234.35 an ounce at 14:10 p.m. EDT (1810 GMT), having earlier gained nearly 1 percent to $1,243.32, its highest since mid-July. U.S. gold futures settled up $3.40, or 0.28 percent, at $1,235.80.
