Market Roundup
• Case "quite strong" for gradual rate rises, Fed monitoring markets-Fischer.
• There was no point in local intervention due to global volatility - Mexico Finmin.
• U.S. election sparks "violent rotation" to inflation plays-BAML.
• U.S. U.Mich prelim Nov 91.6, beats forecast of 87.5.
• U.Mich highest since June, but inflation expectations rise the bigger story.
• Mexican market woes deepen as peso hits fresh low, bonds slump.
• ECB's Lane shrugs off bond selloff since Trump's win.
• Brazil Goldfajn says central bank ready to act to ease fx volatility.
• Mexico industrial output falls most in over 3 yrs in Sept versus year ago.
• Fears over global populist revolt push up Italy's debt costs.
• Daily retail FX volumes rise in Q3-Finance Magnates Business Intelligence.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan GDP QQ Q3 forecast 0.2%, 0.2%-previous
• 23:50 Japan GDP QQ Annualized Q3 forecast 0.9%, 0.7%- previous
• 23:50 Japan GDP QQ Pvt Consumption Prelim Q3 forecast 0%, 0.2%- previous
• 23:50 Japan GDP QQ Capital Expend. Q3 forecast 0.1%, -0.1%- previous
• 23:50 Japan GDP QQ External Demand Q3 forecast 0.4%, -0.3%- previous
• 02:00 China Urban investment (YTD)yy* Oct forecast 8.2%, 8.2%- previous
• 02:00 China Industrial Output YY* Oct forecast 6.2%, 6.1%- previous
• 02:00 China Retail Sales YY* Oct forecast 10.7%, 10.7%- previous
• 04:30 Japan Industrial Output Rev* Sep 0%- previous
• 04:30 Japan Capacity Utilization Index Change MM* Sep 2.6%-previous
Looking Ahead - Events, Other Releases (GMT)
• --:-- Japan- Bank of Japan Governor Haruhiko Kuroda speaks to business leaders in Nagoya.
Currency Summaries
EUR/USD is supported at 1.0800 levels and currently trading at 1.0859 levels. The pair has made session high at 1.0912 hit lows at 1.0826 levels. The euro declined against US dollar on Friday as the dollar was boosted on bets that the administration of President-elect Donald Trump would pump up U.S. inflation. Investors expect Trump's proposals to deport illegal immigrants, cut free-trade deals and unleash large fiscal stimulus measures will boost U.S. inflation. Expectations of rising U.S. price pressures if Trump delivers on promises to boost public spending and put barriers on cheap imports have driven Treasury yields higher and boosted the dollar since his victory on Tuesday. In his first remarks since the election of Donald Trump as U.S. president, Fischer added that economic growth prospects appear strong enough for the Federal Reserve to proceed with a gradual increase in interest rates. The euro fell to its lowest against the dollar since March, touching $1.0836.The dollar index, which tracks the dollar against six rival world currencies, has risen more than 2 percent this week, its best one-week gain since the week of Nov. 6, 2015.
GBP/USD is supported in the range of 1.2503 levels and currently trading at 1.2598 levels. It reached session high at 1.2638 and dropped to session low at 1.2553 levels. British pound initially inched higher against the dollar on Friday but declined slightly in the late US session as investors assessed the timing of a U.S. interest rate increase. The pound was building on gains made on Thursday as investors unwound short positions and turned their minds to a slew of upcoming political risks in Europe - such as an Italian constitutional referendum next month and French and German elections next year - as Trump's shock win spread fears about a global wave of populism. Since Donald Trump's shock victory in the U.S. presidential election on Tuesday, the pound has been the best performer of any major currency, outshining even the dollar, which itself is on track to record its best week in a year against a basket of currencies. Sterling rose above $1.26 for the first time since Oct. 6, the day before it plunged as much as 10 percent in a matter of minutes in a "flash crash", and advanced as high as $1.2673 in European trade. By 1704 GMT it was around $1.2607, up 0.4 percent on the day.
USD/CAD is likely to find support at 1.3484 levels and is trading at 1.3531 levels. It has made intraday high at 1.3547 and lows at 1.3496 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as oil tumbled and the greenback continued its gains since Donald Trump won the U.S. presidential election. Trump has vowed to either renegotiate or scrap the North American Free Trade Agreement, under which Canada sends 75 percent of all its exports to the United States. Still, Canadian officials have said that Canada could fall back on a free trade agreement that excludes Mexico if Trump follows through on radical protectionist policies and predicted fears of a massive economic hit are overblown. Despite fears about trade, chances of an interest rate cut by mid-2017 have fallen to just one in 10, overnight index swaps data showed. The probability was more than 30 percent just one week ago. Lower chances for a Bank of Canada rate cut come as the market prices in the increased probability of a Federal Reserve rate hike in December. The Canadian dollar was last trading at C$1.3531 to the greenback, or 73.96 U.S. cents, weaker than Thursday's close of C$1.3483, or 74.17 U.S. cents.
AUD/USD is supported around 0.7523 levels and currently trading at 0.7548 levels. It hit session high at 0.7609 and made session lows at 0.7523 levels. The Australian dollar slipped against US dollar on Friday for a third straight session as steady rise of U.S. bond yields gave the greenback a broad boost and overshadowed further gains in key commodity prices. The Australian dollar hit a two-week low of $0.7560 in afternoon trading, before paring losses to last trade at $0.7598.It had touched a more than six-month high on Tuesday but is now set for its worst weekly drop since July 22.Its U.S. counterpart has caught an updraught from rising Treasury yields amid speculation the policies of President-elect Donald Trump could reignite inflation. Yields on 10-year Treasuries have jumped 33 basis points so far this week, pressuring emerging market currencies across Asia as well as the Antipodean currencies. The Aussie had been on an upswing recently led by a rebound in the price of iron ore and coal - Australia's two biggest exports. Iron ore alone has climbed 33 percent in the past month. Market attention will shift to local events next week with the Reserve Bank of Australia (RBA) Governor Phil Lowe due to speak on Tuesday, followed by jobs and wage reports.
Equities Recap
European shares fell on Friday as commodities stocks fell along with metal and oil prices, while stocks exposed to emerging markets slumped on concern that U.S. President-elect Donald Trump will introduce protectionist trade policies.
UK's benchmark FTSE 100 closed down by 1.5 percent, the pan-European FTSEurofirst 300 ended the day down by 0.68 percent, Germany's Dax ended up by 0.3 percent, France’s CAC finished the day down by 1.1 percent.
The Dow Jones industrial average ended at a record closing high on Friday, capping off its best week since 2011 after Donald Trump's unexpected victory in the U.S. presidential election.
Dow Jones closed up by 0.19 percent, S&P 500 ended down by 0.16 percent, Nasdaq finished the day up by 0.52 percent.
Treasuries Recap
U.S. Treasury futures declined to ten-month lows on Friday as bond investors worried that U.S. President-elect Donald Trump would enact policies that increase inflation, which reduces the value of debt.
U.S. 10-year Treasury futures fell as low as 127-5/32, the lowest since Jan. 12, before retracing back to 127-10/32.
Commodities Recap
Gold prices tumbled 3 percent to a five-month low on Friday, hit by a broad selloff in commodities as well as surging bond yields on speculation a splurge of U.S. infrastructure spending could stoke inflation.
Spot gold was down 3 percent at $1,222.38 an ounce by 3:04 p.m. EST (2004 GMT) after touching a session low of $1,219.40, the weakest since June 3. U.S. gold futures settled down 3.3 percent at $1,224.30.
Oil prices settled down more than 2 percent on Friday after OPEC said October output reached another record, casting doubt on whether its plan to limit production is achievable or enough to ease persisting oversupply in the market.
International Brent crude futures settled at $44.75 per barrel, down $1.09, or 2.4 percent. It had reached a low of $44.19, the lowest since August.
U.S. West Texas Intermediate (WTI) futures were down by $1.25, or 2.8 percent, to $43.41 per barrel, after recovering from a low of 43.04.
