Market Roundup
• US ECRI Weekly index 144.5, 144.8 –previous.
• US ECRI Weekly annualized 5.0%, 5.1% - previous.
• US economy seen growing 2.32% in Q2 vs 1.88% estimate may 12 - N.Y. Fed's Nowcast model.
• Fed’s Bullard: Would not object to June hike; disagrees with steady rate hikes from there.
• Fed’s Bullard: Expects "minimal" impact from balance sheet reduction on bond markets.
• Fed’s Williams: US dollar is still seen as stable, world reserve currency.
• Fed's Williams: Biggest threats to US economic growth now are outside the US.
• Fed's Williams: Won't get a lot of jobs back in manufacturing; US economy excels at svcs.
• ECB'S Coeure: Monetary policy cannot “run the economy hot” as insurance against labour market risks.
• US Stocks pare gains after report person close to Trump is "person of interest" in Russia probe.
• Mexican Foreign Min Videgaray: Mexico will not accept tariffs and quotas in NAFTA renegotiation.
• Trump's budget proposal to include $200 bln for infrastructure over 10 years -White House official.
• OPEC Panel considering scenario of extending oil supply cut to bring inventories down -sources.
Looking Ahead - Economic Data (GMT)
• 23:50 Japan Trade balance total yen 520.7 bln forecast, 614.7 bln – previous
• 23:50 Japan Exports YY* 7.8% forecast, 12.0% - previous
• 23:50 Japan Imports YY* 14.8% forecast, 15.8% - previous
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.1145 levels and currently trading at 1.1203 levels. The pair has made session high at 1.1211 and hit lows at 1.1175 levels. Euro rose against the dollar on Friday as dollar declined as investors worried that allegations against U.S. President Donald Trump would disrupt efforts to cut taxes and increase spending. The greenback weakened sharply this week on news that the U.S. Department of Justice will investigate whether Russian interfered with the U.S. election and whether there was collusion between the Trump campaign and Moscow. The dollar index, which measures the greenback against a basket of six major rivals including a heavily weighted euro, has fallen around 1.8 percent this week. On Wednesday it hit its lowest since Nov. 9, the day of the U.S. election results, and traded close to that level on Friday. The U.S. currency has also suffered from a resurgent euro, which has gained more than 2 percent this week on track for its best performance since June and rose 0.7 percent on Friday to hit a six-month high of $1.1203.
GBP/USD is supported in the range of 1.2993 levels and currently trading at 1.3033 levels. It reached session high at 1.3039 and dropped to session low at 1.3010 levels. Sterling inched higher against the dollar on Friday as the greenback fell across the board and Thursday’s upbeat U.K retail data boosted sterling. The sterling surged to an eight-month high of $1.3048 after strong retail sales figures on Thursday, losing momentum later in the day in what some traders called a "flash crash". By 1800 GMT on Friday, it had recovered and was up half a percent on the day at $1.3032. Sterling was 0.1 percent higher at 85.77 pence per euro. But analysts said the pound which has gained more than 3 percent in the past month on the announcement of a snap UK election would find it hard to advance further. Investors are confident that a widely expected big win for British Prime Minister Theresa May on June 8 will give her more room for manoeuvre in Brexit talks. Her Conservatives are expected to outspend the opposition labour party in campaigning, and many of their traditional business backers are opting to stick with them despite concerns over Brexit.
USD/CAD is supported at 1.3483 levels and is trading at 1.3514 levels. It has made session high at 1.3599 and lows at 1.3508 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as oil extended its rally after investors expected output cut extension next week and dollar continued its downward march against a basket of major currencies. The U.S. dollar fell to a fresh six-month low against a basket of major currencies, having given up almost all the gains made since Donald Trump, now surrounded by political worries, was elected U.S. president last year. Prices of oil, one of Canada's major exports, were heading for the second week of gains on expectations big crude exporters will extend output cuts to curb a persistent glut in inventories. On the data front, Canada's annual inflation rate held steady at 1.6 percent in April, missing economists' forecasts for 1.7 percent, as higher energy prices offset a decline in food costs for the seventh month in a row, data from Statistics Canada showed. The Canadian dollar was trading at C$1.3516 to the greenback, or 73.64 U.S. cents, up 0.6 percent.
USD/JPY is supported around 110.69 levels and currently trading at 111.16 levels. It peaked to hit session high at 111.65 and made session lows at 111.02 levels. The U.S. dollar dipped against the Japanese yen on Friday as the dollar weakened on political turbulence in the United States, boosting demand safe-haven Japanese yen. The Washington Post on Friday reported that a legal investigation into possible coordination between the Trump campaign and Russia includes a person of interest that is a current White House official. Trump on Thursday denied asking former FBI Director James Comey to drop a probe into his former national security adviser, Michael Flynn, and Russia. The dollar index, which measures the greenback against a basket of six major currencies, was poised for its worst week in more than a year while safe haven assets edged up. The Fed is expected to raise rates when it meets in June. Traders are not pricing in additional increases, though, as investors are reluctant to take short positions. Softening economic data in recent weeks has also reduced some expectations of a more aggressive Fed. The dollar fell 0.3 percent against the yen to 111.14 and had its first weekly drop in five against the Japanese currency.
Equities Recap
European shares staged a modest recovery on Friday after suffering heavy losses this week prompted by political turmoil in the United States that fuelled worries over President Donald Trump's stimulus plans and dented appetite for riskier assets.
The UK's benchmark FTSE 100 closed up by 0.4 percent, FTSEurofirst 300 ended the day up by 0.51 percent, Germany's Dax ended up 0.4, and France’s CAC finished the day up by 0.6 percent.
U.S. stocks ended up but well off the session highs on Friday after two new reports related to a U.S. federal investigation into possible coordination between Russia and President Donald Trump's campaign renewed concerns about his political future.
Dow Jones closed up by 0.67 percent, S&P 500 ended up 0.66 percent, Nasdaq finished the day up by 0.45 percent.
Treasuries Recap
U.S. Treasury yields fell on Friday as investors worried that allegations against U.S. President Donald Trump would disrupt efforts to cut taxes and increase spending.
Benchmark 10-year note yields were unchanged on the day at 2.23 percent, after earlier rising as high as 2.26 percent. The yields fell as low as 2.18 percent on Thursday, their lowest since April 19.
Commodities Recap
Gold rose on Friday and was on track for its best week in five as the dollar softened on political turbulence in the United States, boosting bullion's safe-haven appeal.
Spot gold was up 0.6 percent at $1,253.87 an ounce by 2:47 p.m. EDT (1847 GMT), putting it up 2 percent for the week. U.S. gold futures settled up 0.06 percent at $1,253.60.
Oil prices rose on Friday, closing out a second week of gains on growing expectations that OPEC and other producing countries will agree next week to extend output cuts.
Brent crude settled up $1.10, or 2.1 percent, at $53.61, the highest settlement for the international benchmark since April 18. U.S. benchmark crude oil rose 98 cents to $50.33, the highest close since April 19.
