Market Roundup
• U.S. advance trade gap jumps to USD 62 billion from USD 56.5 billion.
• Markit US Nov services flash PMI 54.7; near forecast, October final which were both 54.8.
• China to tighten control on domestic firms' foreign investment-WSJ.
• UK firms show no Brexit vote hit in Q3 as investment grows.
• Mexico factory exports slump by most in nearly 4 years.
• Mexico current account deficit narrows slightly in Q3.
• Brazil minister at center of new government scandal resigns.
• Brazil tax revenues jump in October on asset amnesty program.
• "Mini-dollar" tag set to aid sterling in 2017.
• Brazil central gov't primary surplus 40.814 billion reais in Oct vs forecast 25.261 billion.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0554 levels and currently trading at 1.0592 levels. The pair has made session high at 1.0625 and hit lows at 1.0579 levels. Euro declined slightly against the dollar on Friday as the dollar firmed against the euro on the view that Federal Reserve would raise interest rates at the end of the year. The U.S. currency also benefited from expectations of an inflationary push from the Trump administration. Investors are betting that Trump will adopt policies that increase spending and debt as well as spur growth and inflation, which will boost US dollar. The euro initially rose 0.5 percent to $1.0601 before dropping slightly to $1.0589 on in the late US session. The euro is facing a host of political risks in the coming months, including an Italian constitutional referendum in less than two weeks and French and German elections next year, that are seen as likely to drive the currency lower.
GBP/USD is supported in the range of 1.2410 levels and currently trading at 1.2466 levels. It reached session high at 1.2480 and dropped to session low at 1.2421 levels. Sterling jumped against the dollar on Friday as sterling was supported by upbeat UK GDP data and investors switched their focus from the political risks facing Britain towards those facing the euro zone. Data showed that Britain's economy grew 0.5 percent in the third quarter, as anticipated, and that business investment expanded more than expected. Sterling hit as high as $1.2480 earlier in the US session before retreating slightly to trade at 1.2464. However, Sterling is still down 16 percent against the dollar since the Brexit vote, though it was 0.1 percent up at $1.2455 on Friday. Analysts are split over the broader outlook for sterling heading into early 2017, when Article 50 is due to be triggered, kicking off formal Brexit talks with Brussels.
USD/CAD is supported at 1.3456 levels and is trading at 1.3523 levels. It has made session high at 1.3533 and lows at 1.3487 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as a drop in oil prices offset a pullback for the greenback against a basket of major currencies. Modest losses for the loonie came as Canada's 10-year yield fell 3.2 basis points below its U.S. equivalent to leave a spread of -79.9 basis points. On Wednesday, the spread hit its widest in 10 months at -81.9 basis points. A wider spread reduces investor incentive to buy lower-yielding Canadian bonds, trimming demand for Canadian dollars. U.S. crude fell nearly 4 percent on Friday, dragged down by uncertainty over whether the Organization of the Petroleum Exporting Countries will reach an output deal. Bank of Canada opted last month to hold interest rates steady, though it acknowledged it had considered cutting for the third time in two years. The Canadian dollar was last trading at C$1.3515 to the greenback, or 74.08 U.S. cents, slightly weaker than Thursday's close of C$1.3491, or 74.12 U.S. cents.
AUD/USD is supported around 0.7382 levels and currently trading at 0.7432 levels. It hit session high at 0.7444 and made session lows at 0.7418 levels. The Australian dollar declined modestly against US dollar on Friday as the Australian dollar was weighted down by fall in oil prices and slightly firmer dollar. A resurgent U.S. dollar has been pushing basket of currencies lower as the market continued to bet that Trump's administration will increase debt-funded spending and spur higher growth and inflation. The U.S. Federal Reserve is widely expected to raise interest rates at its policy meeting next month and then to continue increasing them steadily over the course of next year, which should strengthen the dollar against most currencies. Traders will now be eyeing U.S. gross domestic product, consumer confidence, and employment data as the key determinant of strength of US economy. The Australian dollar was last trading $0.7429 and away from a five-month trough of $0.7308 touched on Monday. The Aussie is still down four cents in the two weeks since Republican Donald Trump won the U.S. Presidency and triggered a jump in inflation wagers and Treasury yields.
Equities Recap
European shares rose slightly on Friday, nearing their highest level in over two weeks, as the market was supported by a rally in drugmakers on hopes of tie-up activity in the sector.
The UK's benchmark FTSE 100 closed up by 0.1 percent, FTSEurofirst 300 ended the day up by 0.21 percent, Germany's Dax ended flat, and France’s CAC finished the day up by 0.2 percent.
Wall Street swept to record intraday and closing highs on Black Friday thanks to gains in consumer staple and technology shares, while European stocks climbed and stabilization in U.S. Treasury yields.
Dow Jones closed up by 0.33 percent, S&P 500 ended up 0.36 percent, Nasdaq finished the day up by 0.31 percent.
Treasuries Recap
U.S. Treasuries were on track for their worst monthly performance in almost eight years on Friday as investors evaluated how much further the sell-off sparked by the surprise election of Republican Donald Trump as U.S. president has to run.
Benchmark 10-year notes fell 2/32 in price to yield 2.36 percent on Friday. The yields have jumped from about 1.80 percent before Trump’s election on Nov. 8.
Two-year notes, which are the most sensitive to interest rate increases, yielded 1.14 percent. The yields rose to 1.17 percent in overnight trading, the highest since April 5.
Commodities Recap
Gold prices steadied after falling to 9-1/2 month lows on Friday, heading for a third consecutive weekly decline as investors sold on factors including expectations of a U.S. interest rate rise.
Spot gold was down 0.03 percent at $1,182.88 an ounce by 2:15 p.m. EST (1915 GMT), after tapping $1,171.21, its lowest since Feb. 8, as funds took profits on short positions.
U.S. gold futures settled down 0.9 percent at $1,178.40, after dipping to their lowest since Feb. 5 at $1,170.30.
U.S. crude fell nearly 4 percent on Friday, dragged down by uncertainty over whether the Organization of the Petroleum Exporting Countries will reach an output deal after Saudi Arabia said it will not attend talks on Monday with non-OPEC producers to discuss supply cuts.
Brent crude futures settled at $47.24 a barrel, down $1.76 or 3.59 percent. U.S. crude futures settled down $1.90 a barrel at $46.06, a 3.96 percent decline. Prices continued to decline in post-settlement trading, dropping as low as $45.88 a barrel.
