Market Roundup
• US economic growth revised higher in Q1 (Q1 GDP raised to 0.8%); corporate profits rebound.
• US Q1 PCE/Core PCE prelim prices on target.
• UMich consumer current conditions index highest since Jan 2007 (109.9), expectation 84.9 v 86.6 forecast.
• UMich 1/5 yr inflation off 0.1% in May.
• NY Fed Q2 tracker updates at 2.2%.
• IMF approves 2-yr USD 88 billion flexible credit line for Mexico.
• Moody's: If ceiling on government spending is approved and implemented, Moody's would view it as a credit positive development.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Retail Sales YY Apr forecast -0.012, -1.1%-previous
• 01:00 Australia HIA New Home Sales m/m Apr 8.9%- previous
• 01:30 Australia Business Inventories* Q1 forecast-0.1%, -0.4%- previous
• 01:30 Australia Gross Company Profits Q1 forecast 0%, -2.8%- previous
• 01:30 Australia Company Profits Pre-Tax Q1 60.1%- previous
Looking Ahead - Events, Other Releases (GMT)
• 00:20 South Korea - Federal Reserve Bank of St. Louis President James Bullard speaks before the Bank of Korea International Conference 2016
Currency Summaries
EUR/USD is likely to find support at 1.1100 levels and currently trading at 1.1112 levels. The pair has made session high at 1.1115 and hit lows at 1.1110 levels. The dollar declined against the euro on Friday after Federal Reserve Chair Janet Yellen said a U.S. interest rate hike will likely be appropriate in the coming months. U.S. economic growth slowed in the first quarter although not as sharply as initially thought, as a surge in home building and steady inventory accumulation partially offset the drag from a steep decline in business investment. Yellen's comments follow a chorus of policymakers who in recent weeks have talked up expectations that an increase in borrowing costs may be near. On the data front, Gross domestic product rose at a 0.8 percent annual rate as opposed to the 0.5 percent pace reported last month, the Commerce Department said on Friday in its second GDP estimate for the January-March period.
GBP/USD is supported in the range of 1.4570 levels and currently trading at 1.4620 levels. It reached session high at 1.4653 and hit low at 1.4605 levels. Sterling fell on Friday as traders cashed in on a recent rise in the currency built on the growing belief that Britons will vote to remain in the European Union at next month's referendum, thereby avoiding market volatility that would damage the pound. A series of polls this week has pointed to the "Remain" camp opening up a lead over those favoring Brexit, lifting the pound to a three and a half-month high against the euro and a three-week high against the dollar. Sterling slipped 0.2 percent against the dollar on Friday to $1.4620, while the euro weakened 0.2 percent to 76.15 pence. Sterling's recent rebound ran out of steam as this week drew to a close, as traders took profit ahead of a key, long-term technical resistance level at $1.4764. That's the 200-day moving average, which sterling hasn't traded above since November.
AUD/USD is supported around 0.7140 levels and currently trading at 0.7184 levels. It hit session high at 0.7207 and made session lows at 0.7171 levels. The Australian dollar declined against US dollar on Friday on as US GDP data and comments from Federal Reserve Chair Janet Yellen sparked some selling interest. The Australian dollar declined up to $0.7170 in the late US session, before retreating towards $0.7184 levels. Meanwhile investors are cautious ahead of a busy week at home with gross domestic product, retail sales and trade data due for release. Still, the Aussie was on track for a 5 percent fall this month, the largest drop since July 2015. The slip was largely due to a diverging interest rate outlook between the U.S. Federal Reserve and the Reserve Bank of Australia (RBA). Data on Friday showed U.S. economic growth slowed in the first quarter, although not as sharply as initially thought.
USD/CAD is supported at 1.2975 levels and is trading at 1.3019 levels. It has made session high at 1.3070 and lows at 1.2994 levels. The Canadian dollar slipped lower against the U.S. dollar on Friday, as oil fell and a speech by Federal Reserve Chair Janet Yellen bolstered the case for a U.S. interest rate hike this summer. The U.S. dollar strengthened against a basket of major currencies after Yellen said the Federal Reserve should raise interest rates "in the coming months" if the economy picks up as expected and jobs continue to be generated. On Thursday, the loonie posted a one-week high at C$1.2912 as oil briefly moved above $50 a barrel and after the Bank of Canada was less dovish this week than some investors expected, signaling the impact on the economy of the Alberta wildfires will be transitory.
Equities Recap
European shares were steady on Friday, propped up by the Swiss stock market and pharmaceuticals companies after drug maker Roche climbed on positive results for one of its products.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day up by 0.13 percent, Germany's Dax ended flat, France’s CAC finished the day down by 0. 1 percent.
Wall Street rose on Friday and capped off its strongest week since March after U.S. Federal Reserve Chair Janet Yellen said an interest-rate hike would likely be appropriate in the coming months.
Dow Jones closed down by 0.23 percent, S&P 500 ended down by 0.41 percent, Nasdaq finished the day up by 0.62 percent.
Treasuries Recap
U.S. Treasury prices fell on Friday with short-dated yields spiking up after Federal Reserve Chair Janet Yellen said gradual U.S. interest rate increases would be appropriate if the economy improves further and the labor market tightens.
Benchmark 10-year Treasury notes were down 8/32 in price for a yield of 1.851 percent, up nearly 3 basis points from Thursday.
Two-year yield was up over 4 basis points at 0.911 percent, while five-year gained 4 basis points at 1.386 percent.
Commodities Recap
Gold slid 1 percent to a three-month low on Friday, extending losses after Federal Reserve Chair Janet Yellen indicated the U.S. central bank could raise interest rates within months if the economy continues to improve, boosting the dollar.
Spot gold was down 0.9 percent at $1,208.90 an ounce at 3:01 p.m. EDT (1901 GMT), off an earlier low of $1,206.45, the lowest level since Feb. 22.
U.S. gold futures for June delivery settled down 0.5 percent at $1,213.80 an ounce
