Market Roundup
• US Non-Farm Payrolls May +138k vs 185k forecast, +174k previous.
• US Unemployment Rate May 4.3% vs 4.4% forecast, 4.4% previous.
• US Average Earnings MM May +0.2% vs 0.2% forecast, 0.3% previous.
• US Goods Trade Balance (R) Apr -67.14b, -67.55b previous.
• US International Trade MM Apr -47.6b vs -46.1b forecast, -45.3b previous.
• US ECRI Weekly Annualized 4.6%, 5.1% previous.
• Atlanta Fed slashes US Q2 GDP growth view to 3.4% on a weaker-than-expected jobs data.
• NY Fed leaves US Q2 GDP growth view at 2.17%.
• Fed’s Kaplan: we've still got slack but we are moving toward full employment.
• Fed's Harker forecasts GDP growth of 2.3% for 2017, the unemployment rate to drop to 4.2% by end of 2018.
• Harker: inflation still on track despite recent softness; sees hitting 2% Fed goal around year end.
• Harker: Fed's unwinding of the balance sheet will be slow and "essentially on autopilot".
• Special counsel Mueller to probe ex-Trump aide Flynn's Turkey ties.
• Strong Canada trade, productivity data reflect economic recovery.
• Mexican central banker says rate hiking cycle may not be over.
• UK PM May's lead down to 5 points, model estimates 60-seat majority
Looking Ahead - Economic Data (GMT)
• 01:45 China Caixin Services PMI May 51.5 previous
• 23:30 Australia AIG Services Index May 53.0 previous
• 01:30 Australia Business Inventories Q1 0.5% forecast, 0.3% previous
• 01:30 Australia Gross Company Profit Q1 4.5% forecast, 20.1% previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1200 levels and currently trading at 1.1275 levels. The pair has made session high at 1.1280 and hit lows at 1.1204 levels. The euro rose against the dollar on Friday as the dollar declined after disappointing U.S. jobs growth data. Nonfarm payrolls increased 138,000 last month as the manufacturing, government and retail sectors lost jobs, the Labor Department said on Friday. The lackluster job growth data lifted euro to a seven-month peak as the report lowered expectations for the Federal Reserve to raise interest rates later this year after a hike that most analysts still anticipate later in June. The dollar index, which measures the greenback's strength against a basket of major currencies, fell 0.3 percent. The euro was 0.5 percent higher against the dollar to $1.1265, after earlier rising to a seven-month peak of $1.1282.
GBP/USD is supported in the range of 1.2824 levels and currently trading at 1.2880 levels. It reached session high at 1.2903 and dropped to session low at 1.2851 levels. The British pound struggled for direction against the greenback on Friday as investors were cautious after polls predicted a wide range of outcomes from a slim majority for Prime Minister Theresa May's Conservatives ahead of Britain's election next week. The pound remained choppy after weak US jobs data with investors unsure if Prime Minister Theresa May will secure a large majority in the June 8 vote following polls predicting a range of outcomes from a slim majority for her Conservatives to a hung parliament. Nevertheless, the currency has held onto its gains since May announced the vote in mid-April, as the polls still show her Conservatives winning despite the opposition labour Party narrowing down her lead. By 1930 GMT, the pound was last trading flat against the greenback at $1.2878.
USD/CAD is supported at 1.3434 levels and is trading at 1.3496 levels. It has made session high at 1.3534 and lows at 1.3480 levels. The Canadian dollar strengthened against its broadly weaker U.S. counterpart on Friday, recovering from an earlier two-week low as data showing a rise in Canada's exports offset the impact of slumping oil prices. Prices of oil, one of Canada's major exports, fell to a three-week low on worries that U.S. President Donald Trump's decision to abandon the Paris climate pact could spark more crude drilling in the United States, worsening a global glut. On the data front, Canada's trade deficit in April narrowed to C$370 million ($274 million) as exports outpaced imports for a second month in a row to hit a new record high on shipments of motor vehicles and parts, Statistics Canada said on Friday. Analysts had forecast a shortfall of just C$70 million. Statscan revised March's deficit sharply wider to C$936 million from an initial C$135 million to reflect late data on crude oil shipments. The Canadian dollar was last trading up 0.18 percent to the greenback at C$1.3492.The currency's strongest level of the session was C$1.3481 and its weakest was C$1.3547, a level not seen since May 19.
USD/JPY is supported around 110.00 levels and currently trading at 110.43 levels. It hit session high at 110.83 and made session lows at 110.31 levels. The U.S. dollar weakened sharply against the Japanese yen on Friday as the greenback tanked after data showed the U.S. economy created fewer jobs than expected last month, which could derail a possible interest rate hike by the Federal Reserve in the second half of this year. Data showed that U.S. nonfarm payrolls increased just 138,000 last month as the manufacturing, government and retail sectors lost jobs, while the consensus forecast was for 185,000 new jobs. March and April data was revised to show 66,000 fewer jobs created than previously reported. May's job gains marked a sharp deceleration from the 181,000 monthly average over the past 12 months. The unemployment rate, however, fell to a 16-year low of 4.3 percent. The dollar fell against the yen from one-week highs and last changed hands at 110.74 yen, down 0.5 percent.
Equities Recap
European shares rose on Friday as investors maintained strong flows into the region but top regional benchmarks came off earlier highs after a disappointing U.S. jobs growth.
UK's benchmark FTSE 100 closed up by 0.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.17 percent, Germany's Dax ended up by 1.24 percent, France’s CAC finished the day up by 0.34 percent.
U.S. stocks closed at record levels for a second consecutive session on Friday, as gains in technology and industrial stocks more than offset a lukewarm jobs report.
Dow Jones closed up by 0.23 percent, S&P 500 ended up 0.32 percent, Nasdaq finished the day up by 0.90 percent.
Treasuries Recap
U.S. benchmark and long-dated Treasury yields fell to nearly seven-month lows, and short-dated yields touched their lowest in more than two weeks on Friday after weaker-than-expected U.S. employment data suggested cautious Federal Reserve policy beyond June.
U.S. 10-year Treasuries were last up 16/32 in price, with yields dropping to 2.161 percent from 2.217 percent late on Thursday. The three-year was up 1/32 in price, and its yield fell to 1.427 percent from 1.446 percent.
Commodities Recap
Gold prices rose to a six-week high on Friday after disappointing U.S. non-farm payrolls data weighed on the dollar and lowered some expectations for more aggressive U.S. interest rate increases this year.
Spot gold was up 1 percent at $1,277.76 per ounce by 3:34 p.m. EDT (1934 GMT), after hitting its highest since April 21 at $1279.10 and was headed for its fourth week of gains. U.S. gold futures ended the session up 0.8 percent at $1,280.20 an ounce.
Crude closed down more than 1 percent on Friday for a second straight week of losses, on worries that U.S. President Donald Trump's withdrawal from the Paris climate accord could accelerate U.S. production and flood the global oil market.
Brent crude futures settled at $49.95 per barrel, down 68 cents or 1.3 percent, while U.S. West Texas Intermediate crude futures fell 70 cents to settle at $47.66 per barrel or 1.5 percent. Both contracts ended the week down more than 4 percent.
