Market Roundup
• US Prelim Sept Markit Mfg PMI slips 0.6 to 51.4, forecast 51.9.
• Canada's y/y inflation rate sinks to 10-mos low at 1.1%, 7th consecutive month below 2% target.
• Euro Zone Sept flash composite PMI 52.6, lowest since Jan 2015; PMIs point to Q3 GDP growth of 0.3 pct - Markit
• Fed's Rosengren (voted for hike at recent meeting): economy needs "modest, gradual tightening now".
• Fed's Kashkari (non-voter): worries about raising rates too quickly, has mixed views on use of dot plots.
• Fed’s Kaplan: expects US growth to rebound in H2 2016.
• Oil ends NY -3.65%; Iranian official says deal unlikely in Algiers, Iran hasn’t reached pre-sanction market share it requires to freeze production.
• NY Fed’s Nowcast Q3 GDP forecast down to 2.3%, 1.2% for Q4.
• Pimco says bond yields to rise gradually as central banks run out of rope.
• Goldman, Morgan shares dip after Fed proposes new limits on energy bets.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Trade - Imports* Aug forecast 4.31b, 4.40b-previous
• 21:45 New Zealand Trade Balance* Aug forecast -765.5m-433.0m- previous
• 21:45 New Zealand Trade Balance YY* Aug forecast -2.70b, -3.03b- previous
• 21:45 New Zealand Trade - Exports* Aug forecast 3.57b, 3.96b- previous
Looking Ahead - Events, Other Releases (GMT)
• 05:30 Japan- Bank of Japan Governor Haruhiko Kuroda speech w/ business leaders in Osaka and presser
Currency Summaries
EUR/USD is likely to find support at 1.1164 levels and currently trading at 1.1227 levels. The pair has made session high at 1.1240 and hit lows at 1.1198 levels. Euro inched higher against the greenback on Friday as investors kept positions tight ahead of Monday's U.S. presidential debate. The pair hit session high after Boston Fed President Eric Rosengren said he believed U.S. short-term interest rates should be raised now and warned a decline in the jobless rate below sustainable levels could derail economic recovery. Rosengren was one of three members of the Federal Open Market Committee to dissent at this week's policy meeting that left rates unchanged at a range of 0.25 to 0.50 percent. The market's gains slowed on Friday in advance of next week's U.S. government debt supply and the first U.S. presidential debate on Monday. The dollar index, which measures the dollar against six major world currencies, was flat on the day at 95.472. It fell 0.7 percent for the week, its worst weekly performance since the week of Aug. 18.
GBP/USD is supported in the range of 1.2907 and currently trading at 1.2970 levels. It reached session high at 1.2977 and hit low at 1.2912 levels. Sterling declined against dollar on Friday as Sterling was dragged down on worries over Britain's exit from the European Union kept pressure on the currency pair. The pound had jumped back over $1.31 on Thursday, after Bank of England policymaker Kristen Forbes said she saw no case for a further cut in interest rates. But sterling was knocked late on Thursday after British Foreign Secretary Boris Johnson said he expected formal divorce proceedings between Britain and the EU to begin early next year. Sterling had climbed about 5 percent from its July low as of early September, as data showed the economy holding up relatively well. But after parliament returned from its summer recess, bringing Brexit back into the headlines, worries about the fallout have weighed on sentiment and the currency alike.
USD/CAD is supported at 1.3028 levels and is trading at 1.3163 levels. It has made session high at 1.3180 and lows at 1.3116 levels. The Canadian dollar weakened sharply against its U.S. counterpart on Friday as the loonie was pressured by raised bets for a Bank of Canada rate cut as oil prices fell and domestic data disappointed. Canada's annual inflation rate in August dipped to a 10-month low and retail sales unexpectedly fell in July, disappointing markets and reviving talk that the Bank of Canada was more inclined to ease monetary policy than tighten. The central bank last cut its policy rate by 25 basis points in July 2015 to leave it at 0.50 percent. U.S. crude oil futures settled $1.84 lower at $44.48 a barrel on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production. The Canadian dollar was last trading at C$1.3163 to the greenback, or 75.92 U.S. cents, much weaker than Thursday's close of C$1.3062, or 76.56 U.S. cents.
AUD/USD is supported around 0.7440 levels and currently trading at 0.7512 levels. It hit session high at 0.7522 and made session lows at 0.7460 levels. The Australian dollar declined slightly against U.S. dollar on Friday as investors booked profits from a two-day rally after Federal Reserve kept its interest rate unchanged on Wednesday. The Aussie also got a boost after the Reserve Bank of Australia (RBA) governor gave an upbeat assessment of the economy on Thursday while adding it was not particularly useful to continue cutting rates, after already easing twice this year. The Australian dollar held at $0.7623, coming off an over two-week high hit on Thursday when it rose 0.3 percent. Traders were still eyeing 77 U.S. cents as the next stop for the Aussie. It has breached that barrier several times in the last few months but fell back each time.
Equities Recap
European shares ended weaker on Friday, pulling back from two-week highs in the previous session after the Federal Reserve signalled an increasingly cautious approach to future rate hikes, with banks leading sectoral fallers.
UK's benchmark FTSE 100 closed flat, the pan-European FTSEurofirst 300 ended the day down by 0.70 percent, Germany's Dax ended down by 0.04 percent, France’s CAC finished the day down by 0.05 percent.
Wall Street retreated on Friday as lower oil prices weighed on energy shares and Facebook and Apple declined, but major indexes still posted gains for the week.
Dow Jones closed down by 0.70 percent, S&P 500 ended down by 0.56 percent, Nasdaq finished the day down by 0.63 percent.
Treasuries Recap
U.S. Treasury prices rose on Friday with benchmark yields hitting two-week lows as a result of safe-haven demand for bonds due to losses in Wall Street stocks.
U.S. benchmark 10-year Treasury notes were up 4/32 in price for a yield of 1.618 percent, down over 1 basis point from Thursday. Earlier on Friday, it touched 1.606 percent. On the week, the 10-year yield fell 8 basis points
Commodities Recap
Oil prices tumbled 4 percent on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.
Brent crude futures settled down $1.76, or 3.7 percent, at $45.89 a barrel. For the week, it rose 0.3 percent, accounting for gains in the past two sessions.
U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 4 percent, to settle at $44.48. On the week, WTI gained 3 percent.
Gold steadied in a lackluster session as the U.S. dollar also flattened on Friday, but bullion stayed on track for its biggest weekly gain in nearly two months after the Federal Reserve sounded a cautious note on the pace of interest rate hikes.
Spot gold was up 0.03 percent at $1,337.01 an ounce by 2:57 p.m. EDT (1857 GMT), down from a two-week high reached Thursday at $1,343.64, and was more than 2 percent higher on the week, its best weekly performance since late July.
U.S. gold futures for December delivery settled down 0.2 percent at $1,341.70 per ounce.
