Market Roundup
• US Core CPI MM, SA Jul 0.1%, 0.2% forecast, 0.1% previous.
• US Core CPI YY, NSA Jul 1.7%, 1.7% forecast, 1.7% previous.
• US CPI Index, NSA Jul 244.79, 244.90 forecast, 244.96 previous.
• US Core CPI Index, SA Jul 251.91, 251.63 previous.
• US CPI MM, SA Jul 0.1%, 0.2% forecast, 0.0% previous.
• US CPI MM, NSA Jul 1.7%, 1.8% forecast, 1.6% previous.
• Fed’s Kaplan: Key rate closer to 'neutral,' should be patient on inflation.
• Kaplan: Fed to soon shed bonds, should hold off rate hikes.
• Fed's Kashkari: Weak CPI data another reason to pause rate hikes.
• US Q3 GDP growth seen at 2.6% vs previous forecast 2.5% - Philly Fed survey.
• IEA says strong oil demand growth helping market rebalance.
• Bank of England's Saunders says may need to be "more activist" –paper.
• China central bank says to keep yuan basically stable, neutral monetary policy to continue.
• Brazil central bank chief: Economy set to recover gradually.
• Mexico industrial production rises 0.1% in June.
Looking Ahead - Economic Data (GMT)
• (Aug 13) 23:50 Japan GDP QQ Q2 0.6% % previous, 0.3% previous
• (Aug 13) 23:50 Japan GDP QQ Annualised 2.5% % previous, 1.0% previous
• (Aug 14) 02:00 China Industrial Output YY Jul 7.2% % previous,7.6% previous
• (Aug 14) 02:00 China Retail Sales YY Jul 10.8% % previous, 11.0% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1748 levels and currently trading at 1.1826 levels. The pair has made session high at 1.1848 and hit lows at 1.1776 levels. The euro inched higher against the U.S. dollar on Friday as the dollar weakened after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year. The Labor Department said on Friday its Consumer Price Index edged up 0.1 percent last month after being unchanged in June. That lifted the year-on-year increase in the CPI to 1.7 percent from 1.6 percent in June. Economists had forecast the CPI rising 0.2 percent in July and climbing 1.8 percent year-on-year. The dollar index, which tracks the greenback against six major currencies, was down 0.13 percent to 93.28, after earlier falling to a one-week low of 92.992.The euro was up 0.15 percent to $1.1788 after Morgan Stanley raised its currency forecasts for the currency, predicting it would hit $1.25 early next year.
GBP/USD is supported in the range of 1.2935 levels and currently trading at 1.3018 levels. It reached session high at 1.3030 and dropped to session low at 1.2935 levels. Sterling held near a three-week low against the dollar on Friday as investors grew wary about the outlook of the British economy after a mixed bag of data this week. Sterling was broadly steady at $1.3011, a shade above a three-week low of $1.2952 hit in the previous session. It is on track to post its biggest two-week decline against the dollar since March 2017.The pound has lost more than 13 percent in trade-weighted terms since last year's decision to leave the European Union, but Britain's trade deficit with the rest of the world remains huge. Data this week showed falling car production and a slide in construction, which bode poorly for future months after a more general slowdown in the first half of 2017.Inflation data next week will be the big driver for sterling. Data last month showed an unexpected slowdown in price pressures for the first time since October. Against the euro, the pound rose 0.2 percent to 90.56 pence. Morgan Stanley strategists predicted euro parity with the pound in the first quarter of 2018.
USD/CAD is supported at 1.2650 levels and is trading at 1.2680 levels. It has made session high at 1.2714 and lows at 1.2660 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from an earlier four-week low as softer-than-expected U.S. inflation data pressured the greenback. The U.S. dollar fell against a basket of major currencies after data showed consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year. Prices of oil, one of Canada's major exports, fell to their lowest in more than a week after the International Energy Agency said market rebalancing was taking time despite strong demand growth due to weak Organization of the Petroleum Exporting Countries compliance with output cuts. The Canadian dollar was trading at C$1.2680 to the greenback, or 78.86 U.S. cents, up 0.5 percent. The currency's strongest level of the session was C$1.2653. But it touched its weakest since July 13 at C$1.2753 and was on track to fall 0.2 percent for the week.
AUD/USD is supported around 0.7830 levels and currently trading at 0.7897 levels. It hit session high at 0.7909 and made session lows at 0.7866 levels. The Australian dollar hovered near one-week lows on Friday against its US counterpart as Australian dollar was hurt by weak commodity prices. The Aussie had been on an uptrend since the beginning of June but a drop in commodity prices last week saw it falter after touching a 2-1/2-month high of $0.7636. The Aussie has also been pressured by an interest rate hike in the United States this month, while the Reserve Bank of Australia (RBA) has held rates at a record low 1.50 percent since last easing in August 2016.That has narrowed the rate differential between the two to plus 25 basis points, with some traders speculating the spread might turn negative if the U.S. Federal Reserve continued to tighten further. Meanwhile, tensions between the United States and North Korea continued to escalate, though the geopolitical fears still drove safe-haven buying of gold and the yen.
Equities Recap
A sell-off in heavyweight basic resources stocks prompted a third day of losses for European shares on Friday, posting their worst week this year amid a ramp-up of tensions between the United States and North Korea.
UK's benchmark FTSE 100 closed down by 1.1 percent, FTSEurofirst 300 ended the day up by 1.06 percent, Germany's Dax ended flat, and France’s CAC finished the day down by 1.2 percent.
U.S. stocks ended higher on Friday, snapping three days of losses, as investors bet on slower U.S. rate hikes, but gains were muted by increasingly aggressive exchanges between the United States and North Korea.
Dow Jones closed up by 0.07 percent, S&P 500 ended up 0.13 percent, Nasdaq finished the day up by 0.64 percent.
Treasuries Recap
U.S. Treasury yields slipped on Friday as softer-than-expected inflation data for July further eroded expectations of an interest rate hike by the Federal Reserve at its December monetary policy meeting.
In late trading, U.S. 10-year yields dropped to six-week lows of 2.182 percent after the data, compared with 2.211 percent late Thursday. Ten-year yields were last at 2.188 percent. U.S. 30-year bond yields also fell to a six-week trough of 2.769 percent.
U.S. two-year yields sank to an eight-week low of 1.314 percent, down from Thursday's 1.335 percent. Two-year yields last traded at 1.294 percent.
Commodities Recap
Gold prices climbed to two-month highs on Friday, rising for the fourth straight day as investors sought refuge amid escalating tensions between North Korea and the United States, while bullion also received support from weak U.S. inflation data.
Spot gold was up 0.2 percent at $1,287.91 an ounce by 2:03 p.m. EDT (1803 GMT), and set for its biggest weekly gain since mid-April. It earlier hit $1,291.86, its highest level since June 7.U.S. gold futures settled up 0.3 percent at $1,294.
Oil prices rose slightly on Friday in volatile trading as the market weighed lower U.S. crude stocks, Nigerian instability and strong global demand growth against a persistently slow rebalancing.
Brent crude settled up 20 cents or 0.39 percent to $52.10 a barrel. U.S. West Texas Intermediate crude was up 23 cents or 0.47 percent to $48.82 a barrel.
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