Market Roundup
- U.S. consumer sentiment rebounds; industrial output weak (-0.2% vs 0.1% dip in Aug ).
- University Michigan Oct consumer sentiment index 92.1 versus final Sept 87.2.
- Stocks, USD rise after data; oil up in choppy trade; S&P puts in third week of gains, EUR lower on more stimulus.
- Gold slips from 3-1/2 month high, but set for weekly gain.
- Bank of England’s Forbes sees UK rate hike sooner rather than later.
- Canadian factory sales fall less than expected in Aug.
Looking Ahead – Economic Data (GMT)
- 02:00 China Urban investment (ytd) yy*Sep forecast 10.8%, 10.9%-previous
- 02:00 China Industrial Output YY*Sep forecast 6%, 6.1%-previous
- 02:00 China Retail Sales YY*Sep forecast 10.8%, 10.8%-previous
- 02:00 China GDP YY*Q3 forecast 6.8%, 7%-previous
- 02:00 China GDP QQ SA Q3 forecast 1.7%, 1.7%-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.1326 levels and currently trading at 1.1350 levels. The pair has made session high at 1.1394 and hit lows at 1.1346 levels. The dollar rose against euro on Friday, as traders reckoned the Federal Reserve might raise interest rates later this year and the European Central Bank may provide more stimulus to help the euro zone economy. The dollar index, which measures the greenback against six major currencies, climbed for the second day from a seven-week low after news that annual U.S. core inflation picked up more than forecast in September to 2 percent. Meanwhile, Annual inflation in the euro zone turned negative in September due to sharply lower energy prices, the EU’s statistics office confirmed on Friday, maintaining pressure on the European Central Bank to increase its asset purchases to boost prices. Eurostat said consumer prices in the 19 countries sharing the euro fell by 0.1 percent in the year to September, dipping below zero for the first time since March, and confirming its earlier estimate. Compared to the previous month, prices were 0.2 percent higher in September. Against the euro, the greenback dipped nearly 0.1 percent at $1.1374, on track for a slim 0.1 percent on the week. It hit a seven-week low against the euro on Thursday at $1.13630. To the upside, immediate resistance can be seen at 1.1380. To the downside, immediate support level is located at 1.1326 levels.GBP/USD is supported in the range of 1.5409 levels and currently trading at 1.5437 levels. It reached session high at 1.5467 and dropped to session low at 1.5425 levels. Sterling racked up its third week of gains against the dollar on Friday but was again lower against the euro, a promise from one policymaker that Bank of England interest rates would rise sooner rather than later not enough to drive the pound higher. Concerns over growth in China and other major emerging markets have been the chief driver of a repricing of expectations for a first rise in interest rates in both Britain and the United States far into next year. A poor Chinese growth figure would be likely to encourage such fears and hurt the dollar and sterling further, although it might also spur expectations of another round of policy easing by the European Central Bank – a potential negative for the euro. By late afternoon in London, sterling was trading flat on the day against the dollar around $1.5440, having climbed as high as $1.5464 following BoE official Kristin Forbes’ comments. Forbes, who is seen as a likely early advocate for a BoE rate hike, said Britain had limited direct exposure to the problems seen so far in developing nations, even taking into account how they might hit key trading partners such as Germany. To the downside, immediate support level is located at 1.5411 levels. To the upside, immediate resistance can be seen at 1.5462.USD/JPY is supported around 118.88 levels and currently trading at 119.47 levels. It peaked to hit session high at 119.60 and made session lows at 118.97 levels. US dollar was firmer against Japanese yen on Friday, after U.S. consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track despite headwinds from a strong dollar and weak global demand that have weighed on the industrial sector, particularly manufacturing. The University of Michigan said its consumer sentiment index rose to 92.1 in early October from a reading of 87.2 September. The survey’s current conditions sub-index shot up to 106.7 this month from 101.2 in September. In a separate report, the Federal Reserve said industrial output slipped 0.2 percent on renewed weakness in oil and gas drilling after dipping 0.1 percent in August. Industrial production rose at an annual rate of 1.8 percent in the third quarter.The dollar was up 0.45 percent at 119.40 yen, recovering from a seven-week low near 118 yen on Thursday. It was on track for its steepest weekly loss against the yen in six weeks. To the upside, immediate resistance can be seen at 119.53. To the downside, immediate support level is located at 119.21 levels.USD/CAD is supported at 1.2855 levels and is trading at 1.2915 levels. It has made session high at 1.2936 and lows at 1.2880 levels. The Canadian dollar pulled back from its strongest level in three months against its U.S. counterpart on Friday, as oil rose after a week of losses and other commodity prices slipped on slowing demand growth. The loonie, as Canada’s currency is colloquially known, is on track for a 0.3 percent gain on the week despite oil’s decline, fueled by investor concerns that weak economic conditions will convince the U.S Federal Reserve not to raise rates this year. Meanwhile, Canadian manufacturing sales decreased far less than expected in August after three consecutive months of gains, weighed by lower sales of petroleum and coal products, data from Statistics Canada showed on Friday. Factory sales fell 0.2 percent, not as steep as the 1.0 percent decline economists had forecast. Sales were down in eight out of the 21 main industries, accounting for about half the sector. In volume terms, sales fell by 0.1 percent. To the upside, immediate resistance can be seen at 1.2940. To the downside, immediate support level is located at 1.2900 levels.Equities RecapEuropean shares closed on Friday at their highest level in five weeks, helped by expectations monetary policy will remain accommodative, with French retailer Carrefour leading the advance on good quarterly results. The pan-European FTSEurofirst 300 ended the day up by 0.7 percent, UK’s benchmark FTSE 100 closed up by 0.6 percent, Germany’s Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.6 percent.U.S. stocks edged up in late afternoon trading Friday, helped by upbeat consumer sentiment data and gains in General Electric, putting the S&P 500 on track for a third week of gains.Dow Jones closed up by 0.44 percent, S&P 500 ended up by 0.45 percent, Nasdaq finished the day up 0.32 percent.Treasuries RecapU.S. 30-year Treasury yields dipped on Friday on views the outlook for inflation looked weak, while short-dated yields edged up as U.S. industrial production data supported a potential December Federal Reserve rate hike.U.S. three-year Treasury notes were down 1/32 in price to yield 0.90 percent from a yield of 0.89 percent late Thursday.Benchmark 10-year Treasury notes were up 1/32 in price to yield 2.02 percent, roughly unchangedCommodities RecapGold eased on Friday as a recovering dollar pulled prices from 3-1/2 month highs, but doubts over whether the Federal Reserve will press ahead with a U.S. rate rise this year kept the metal on track for a second weekly rise.Spot gold was down 0.1 percent at $1,181.66 an ounce at 1400 GMT, while U.S. gold futures for December delivery were down $5.40 an ounce at $1,182. gold is on track to rise 2 percent this week after peaking at $1,190 an ounce, its strongest since late June.Oil prices rose nearly 2 percent on Friday as traders covered short positions after four days of sharp losses, and the U.S. oil rig count fell for a seventh week in a row.U.S. crude settled up 88 cents at $47.26 per barrel, down almost 5 percent on the week. Brent for December delivery settled up 73 cents at $50.46 a barrel, down about 4 percent on the week.
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