Market Roundup
• Key U.S. data shows strength, though U.Mich, Empire disappoint.
• U.S. June industrial output +0.6% vs expected +0.2%.
• U.S. June retail sales beat f/c, +0.6% vs expected +0.1%.
• U.S. core CPI in line at +0.2% m/m, +2.3% y/y.
• Bank of England's chief economist says UK needs prompt, muscular stimulus.
• Lockhart: Fed debate is sooner vs later, not hawks against doves
• Fed's Bullard sees upside risks to call for one rate hike in 2016
• Aug. 2 "reasonable" for Spain confidence debate on government -Deputy PM
• Bank of Italy cuts Italy's growth outlook following Brexit
• U.S. 2016 budget deficit seen USD 600 billion, 16 billion less than earlier forecast-White House.
• Markets predict decades of inflation frustration.
Looking Ahead - Economic Data (GMT)
• New Zealand 22:45 CPI QQ Q2 forecast 0.5%, 0.20%-previous
• New Zealand 22:45 CPI YY Q2 forecast 0.5%, 0.40%- previous
• China 1:30 China House Prices YY Jun 6.90%- previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1000 levels and currently trading at 1.1045 levels. The pair has made session high at 1.1090 and hit lows at 1.1023 levels. Euro declined sharply against the dollar on Friday as upbeat U.S. data and on mounting worries that Turkey's armed forces had taken power in the country boosted dollar demand across the board. Reports of the coup attempt also stoked safe-haven bids for U.S. Treasury bonds, paring their earlier losses. U.S. retail sales rose more than expected in June as Americans bought motor vehicles and a variety of other goods, bolstering views that economic growth picked up in the second quarter. The Commerce Department said retail sales rose 0.6 percent last month after gaining 0.2 percent in May. Industrial output increased 0.6 percent last month, reversing May's 0.3 percent drop. Manufacturing output rose 0.4 percent amid broad increases in production, including a 5.9 percent surge in auto assembly. It was the third straight month of increases and lifted sales 2.7 percent from a year ago. The bullish data and a rally on Wall Street could allow the Federal Reserve to raise interest rates later this year, but much will depend on policymakers' assessment of the impact on the U.S. economy of Britain's June 23 vote to leave the European Union.
GBP/USD is supported in the range of 1.3100 levels and currently trading at 1.3201 levels. It reached session high at 1.3247 and hit low at 1.3130 levels. Sterling edged lower against the U.S. dollar on Friday as the currency pair was weighted down as upbeat U.S. data boosted the greenback across the board, and the Bank of England's chief economist said Britain needed "muscular" stimulus to boost the economy. In his first speech since Britain voted last month to leave the European Union, the BoE's Andrew Haldane said the central bank needed to come up with a "package of mutually-complementary monetary policy easing measures" in time for a rate-setting meeting on Aug. 4. The pound fell almost 1 U.S. cent after the speech, and continued to weaken throughout the day, as data showed U.S. retail sales rose more than expected in June, reinforcing the view that U.S. economic growth picked up in the second quarter. For the week, though, sterling was on track for its best performance in more than four months, with a more than 2 percent rise against the dollar, boosted by the BoE's surprise decision to keep interest rates unchanged.
USD/CAD is supported at 1.2860 levels and is trading at 1.2951 levels. It has made session high at 1.2986 and lows at 1.2860 levels. The Canadian dollar weakened against its U.S. counterpart on Friday, retreating from an earlier 10-day high as firm U.S. data supported the greenback and domestic manufacturing data disappointed. Canadian factory sales fell more than expected in May, sliding 1.0 percent from April on weakness in motor vehicles and some energy products. The U.S. dollar rose against a basket of major currencies after stronger than expected retail sales added to evidence that growth in the U.S. economy has regained momentum after a first-quarter lull. Still, the Canadian dollar advanced 0.8 percent for the week as a somewhat optimistic update on Wednesday from the Bank of Canada lowered expectations for an interest rate cut.
AUD/USD is supported around 0.7530 levels and currently trading at 0.7560levels. It hit session high at 0.7608 and made session lows at 0.7560 levels. The Australian dollar declined against US dollar on Friday after US economic data beat expectations, helping dollar recover some lost ground against the Aussie dollar. Data on Friday showed that U.S. consumer prices gained for a fourth straight month in June, while retail sales also rose more than expected. Earlier in the Asian session, Australian dollar surged to a 10-week high after a swath of Chinese economic data beat expectations. China’s economy grew 6.7 percent in the second quarter from a year earlier, soothing worries about a slowdown. The Australian dollar declined to $0.7560, from $0.7650 after the US data and further declined down after Turkey's armed forces said they had taken power in the country. The Reserve Bank of Australia (RBA) could well cut its 1.75 percent cash rate next month if inflation data due on July 27 prove to be as soft as many analysts suspect.
Equities Recap
The shares of European travel and leisure companies fell on Friday, weighing on the region's stock markets, after an attack in the French city of Nice that killed more than 80 people.
UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.25 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day up by 0.4 percent.
The Dow industrials ended mixed on Friday and major indexes closed a third consecutive week of gains as upbeat economic data and the start of earnings season gave investors confidence.
Dow Jones closed up by 0.04 percent, S&P 500 ended down by 0.11 percent, Nasdaq finished the day down by 0.11 percent.
Treasuries Recap
U.S. Treasury prices trimmed losses in late U.S. trading on Friday as the Turkish military said it had taken power in the country, kindling safe-haven demand for low-risk assets on worries about a large shift in power in the Middle East.
Benchmark 10-year Treasury notes were 8/32 lower in price for a yield of 1.558 percent, up 3 basis points from late on Thursday.
Commodities Recap
Gold fell on Friday and was set for its first weekly loss since May on improving global risk sentiment and a stronger dollar after better-than-expected U.S. data.
Spot gold was down 0.5 percent at $1,327.91 an ounce by 2:48 p.m EDT (1848 GMT), while U.S. gold settled down 0.4 percent at $1,327.40 per ounce.
Oil prices rose slightly on Friday, ending the week higher, after data from top energy consumers the United States and China boosted the oil demand outlook.
Brent crude futures closed up 24 cents, or 0.5 percent, at $47.61. It slipped as much as 1.5 percent earlier to a session low of $46.65 and rose as high as $48.05.
U.S. West Texas Intermediate (WTI) futures settled up 27 cents, or 0.6 percent, at $45.95 a barrel. The intraday low was $45.05 and it touched a high of $46.31 during the session.
