Market Roundup
• DXY charges to 13-yr high, bond tantrum in full swing US bond yields set for biggest 2-wk rise in 13 years.
• Fed’s Dudley: Markets seem to expect more stimulus, more rate hikes; but remains unclear for Fed.
• Fed’s Dudley: Economy growing above trend, should be optimistic about reaching inflation goal over next few years.
• Fed’s George: High int rates will not serve the US econ well, Fed has to move ‘more systematically.
• Fed’s Bullard: One rate hike per year is almost nothing, too slow to be categorized as normalization.
• Fed’s Kaplan: US consumer strong, ready to remove some accommodation (Fox).
• Fed’s Kaplan: Predicts more bouts of weakness in Chinese currency as GDP growth floats down.
• NY Fed’s Nowcast sees US econ growing 2.36% in Q4 v 1.63% on Nov 9.
• China ready to slow CNY descent, worried about capital outflows, seen slowing CNY decline ahead of 7/USD, Yuan outlook seen clouded by Trump's election win, China would hit back at punitive actions from US-sources.
• ECB’s Praet: Euro area recovery is showing signs of resilience, fully committed to substantial accommodation.
• ECB's Draghi, Weidmann differ on inflation ahead of key ECB decision on QE extension.
• Ahead of Italy referendum Italy bonds set for 4th straight wk of losses, Italy 10-yr yields twice as high as Aug.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Exports YY* Oct forecast -8.6%, -6.9%-previous
• 23:50 Japan Imports YY* Oct forecast 16.3%, -16.3%- previous
• 23:50 Japan Trade Balance Total Yen* Oct forecast 615.4b, 498.3b- previous
Looking Ahead - Events, Other Releases (GMT)
• 01:30 Japan- Bank of Japan policy board member Takako Masai speaks to business leaders in Saitama
Currency Summaries
EUR/USD is likely to find support at 1.0553 levels and currently trading at 1.0594 levels. The pair has made session high at 1.0626 and hit lows at 1.0566 levels. Euro slipped lower against dollar on Friday as expectations for a U.S. rate hike next month increased and higher fiscal spending from U.S. President-elect Donald Trump's incoming administration. Last week's unexpected U.S. election victory from political neophyte Donald Trump has led to a repricing of assets, most notably in currency and bond markets. Federal Reserve policymaker James Bullard said on Friday he is leaning towards supporting a rate rise in December, adding that a plethora of potential changes under Trump could affect future policy. The euro, which is vulnerable to a slew of political risks, including an Italian constitutional referendum next month and French and German elections next year, hit an 11-month low of $1.0567 .It was last down 0.3 percent at $1.0592. The dollar was on track for its best fortnight since 1988 against the yen, and hit its highest level since early 2003 against a basket of currencies.
GBP/USD is supported in the range of 1.2300 and currently trading at 1.2360 levels. It reached session high at 1.2367 and hit low at 1.2300 levels. Sterling slipped lower on Friday against the dollar as the sterling was dragged down by rallying dollar which been on the upswing, since Republican Donald Trump's victory on Nov. 8 over Democrat rival Hillary Clinton. A growing perception that the economic policies of U.S. President-elect Donald Trump will lift consumer prices also pushed the dollar higher, weighing on Sterling. Fed Chair Janet Yellen said on Thursday in congressional testimony that Trump's election has done nothing to change the Fed's plans for a rate increase "relatively soon. The dollar index hit a high of 101.48, its highest level since April 2003. It has risen over 4 percent in the last two weeks, its biggest fortnightly rise since March 2015. Sterling fell as low as $1.2300 but recovered slightly to trade at 1.2348 in the late US session.
USD/CAD is supported at 1.3491 levels and is trading at 1.3508 levels. It has made session high at 1.3512 and lows at 1.3495 levels. The Canadian dollar edged lower against its U.S. counterpart on Friday as higher oil prices were offset by broader gains for the greenback and data showing cooler domestic core inflation. Canada’s annual inflation rate picked up to an annual rate of 1.5 percent in October, matching analysts' expectations, as gasoline prices rose, data from Statistics Canada showed. The core rate, which strips out some volatile items, cooled slightly to 1.7 percent from 1.8 percent, hitting the lowest level since July 2014. U.S. crude prices were up 0.42 percent to $45.61 a barrel, buoyed by renewed hopes that OPEC might agree to production cuts. The Canadian dollar was last trading at C$1.3510 to the greenback, or 74.01 U.S. cents, slightly weaker than Thursday's close of C$1.3507, or 74.04 U.S. cents.
USD/JPY is supported around 109.81 levels and currently trading at 110.70 levels. It has made session high at 109.35 and low at 108.92 levels. The dollar rose against Japanese yen on Friday as risk appetite improved for a second straight session, undermining traditional safe havens such as the Japanese currency. Also stoking the dollar rally were growing expectations that Federal Reserve would raise interest rates next month on signs of rising inflation and improved economic growth. The greenback has climbed about 7 percent against the yen in two weeks, which would be its steepest such gain since January 1988 and its second-strongest performance in the era of floating exchange rates. The U.S. dollar's rise against the yen raised hopes of an earnings boost to Japanese exporters, helping lift the Nikkei average to a 10-month high. The blue-chip Japanese stock index closed 0.6 percent higher.
Equities Recap
European equities ended lower on Friday, with mining and energy stocks bearing the brunt of the sell-off after commodities prices slipped following a rally in the dollar.
UK's benchmark FTSE 100 closed down by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.44 percent, Germany's Dax ended down by 0.1 percent, France’s CAC finished the day down by 0.4 percent.
U.S. stocks ended lower on Friday, with healthcare stocks leading the declines, as investors cashed in on a post-election rally and waited for clarity on the next administration's policies.
Dow Jones closed down by 0.19 percent, S&P 500 ended down by 0.24 percent, Nasdaq finished the day down by 0.24 percent.
Treasuries Recap
U.S. Treasury yields rose to their highest levels of the year on Friday, spurred by technical positioning and expectations of higher inflation and interest rates after the election of Republican Donald Trump as U.S. president.
Yields on the 2-year Treasury note rose to 1.071 percent, the highest since Jan. 4.
Yields on the 30-year bond rose to 3.051 percent, near their 2016 high and on pace to close above 3 percent for the first time since Jan. 5.
Commodities Recap
Gold on Friday fell to its lowest level since late May as the dollar surged to its highest in more than 13-1/2 years on expectations for a U.S. rate hike next month and higher fiscal spending from U.S. President-elect Donald Trump's incoming administration.
Spot gold was down 0.6 percent at $1,208.71 by 3:06 p.m. EST (2006 GMT). The 50-day moving average appeared on track to cross below the 200-day moving average above the market, potentially forming a "death cross," which technical traders often consider a bearish signal.
U.S. gold futures for December delivery were settled down 0.7 percent at $1,208.70, after falling to $1,201.30, their weakest since mid-February.
Oil prices settled higher on Friday, closing out a strong week that saw crude buoyed by growing expectations that OPEC will find a way to cap production at the end of the month.
Brent notched a daily rise of 37 cents, or 0.8 percent, to $46.86 per barrel. Brent also had its first weekly increase in five weeks.
U.S. West Texas Intermediate crude was up 27 cents, or 0.6 percent, for the day, at $45.69 a barrel. It posted its first weekly increase in four.
