Market Roundup
- Sept import prices fall 0.1 percent m/m, non-petroleum import prices fall 0.2%, -3.3% y/y.
- U.S. wholesale inventories rise 0.1% in August, inventory build may hinder Mfg in near-term.
- Fed’s Dudley: Predicts rate hike this year but not commitment; negative rates an option but not realistic at this time, Fed not contemplating additional bond purchases.
- Fed’s Lockhart: Sees ’15 hike despite recent red flags, expects inflation rebound as transitory factors fade.
- Fed’s Lockhart: Doesn’t expect US recession in next 3+ years, market volatility to play role in Fed hike decision.
- Fed’s Evans wants more confidence inflation headed higher before hiking, could be appropriate for rates sub-1% at YE ’16.
- Japan’s Aso: BOJ will continue QQE for as long as needed to achieve 2% inflation in stable manner.
- ECB’s Draghi: Headline inflation to remain very low in near-term; ready to use all instruments available w/in mandate to act if warranted.
- Germany’s Schaeuble: slowdown in EM poses a downside risk to German econ outlook.
- UK’s Osborne: Sees global risks rising, but sanguine on China; UK much better prepared than 5 years ago to handle what global econ throws at it.
Looking Ahead – Economic Data (GMT)
- No Significant Data
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency SummariesEUR/USD is likely to find support at 1.1315 levels and currently trading at 1.1358 levels. The pair has made session high at 1.1386 and hit lows at 1.1334 levels. The U.S. dollar hit multi-week lows against the euro on Friday after Thursday’s minutes from the Federal Reserve’s September meeting bolstered expectations for a later interest rate hike, while growth-linked currencies surged. The euro hit a three-week high against the greenback of $1.13790, while the dollar hit a three-week low against the Swiss franc of 0.95870 franc. The dollar index also hit a three-week low of 94.721. On the data front, French industry increased production by the most in over two years in August, beating expectations by a wide margin, in contrast with slumps in other big euro zone countries such as Germany, data showed on Friday. France’s official statistics office, said industrial output jumped 1.6 percent over one month, largely reversing a 1.1 percent drop in July. French growth stalled in the second quarter as companies drew down inventories rather than increasing production, but business sentiment surveys since have pointed to a pick-up in activity. To the upside, immediate resistance can be seen at 1.1370. To the downside, immediate support level is located at 1.3156 levels.GBP/USD is supported in the range of 1.5280 levels and currently trading at 1.5312 levels. It reached session high at 1.5347 and dropped to session low at 1.5298 levels. Sterling sank along with the dollar against the euro on Friday, with further arguments for holding off on any bets on rises in UK and U.S. interest rates prodding it a full percentage point lowers against the single currency. Data showed Britain racked up a larger than expected trade deficit in August, while construction output surprised by sinking in both annual and monthly terms, following the cautious tone of U.S. Federal Reserve minutes on Thursday. The UK construction data, down 1.3 percent on the year, were the latest to cast doubts on the pace of an economic recovery that had provoked expectations, now cooled, of a rise in interest rates around the end of this year. It was all in stark contrast to the rhetoric of Bank of England Governor Mark Carney, who stressed in Peru on Thursday that the bank is not bound to wait for a move in U.S. interest rates before it raises its own. To the upside, immediate resistance can be seen at 1.5382. To the downside, immediate support level is located at 1.5315 levels.USD/JPY is supported around 120.13 levels and currently trading at 120.25 levels. It peaked to hit session high at 120.35 and made session lows at 120.20 levels. The dollar edged higher against the safe-haven yen on Friday, after market remained somewhat cautious, taking note that the minutes released by Fed yesterday revealed most Fed policymakers thought the central bank’s first rate increase in nearly a decade should still come in 2015. Weak U.S. economic data and worries about the global economy have prompted many to push back expectations for an interest rate hike, which has helped yen rise against greenback so far this month. U.S. import prices fell only slightly in September, offset by recovering oil prices, suggesting a slowdown in the rate of imported deflation is occurring which may eventually allow the Federal Reserve to raise interest rates. U.S. import prices fell only 0.1 percent last month in data reported by the Labor Department on Friday, and import prices, excluding oil, fell 0.2 percent, which was half the pace of the declines registered in July and August. To the upside, immediate resistance can be seen at 120.35. To the downside, immediate support level is located at 120.14 levels. USD/CAD is supported at 1.2900 levels and is trading at 1.2943 levels. It has made session high at 1.2960 and lows at 1.2900 levels. The Canadian dollar rallied against its U.S. counterpart on Friday, at one point touching its strongest level since late July, as investors took on more risk, relieved by indications of a more dovish U.S. Federal Reserve. The currency surged to a session high immediately after data showed the Canadian economy created 12,100 jobs last month, but quickly pared gains as market participants digested the report, which included an unexpected rise in the unemployment rate to 7.1 percent. The loonie traded as strong as C$1.2901, a level not seen in nearly 2-1/2 months, while its weakest was C$1.3022. Global markets rallied after minutes from the Fed’s September policy meeting indicated the U.S. central bank was in no hurry to hike interest rates, given uncertainty in the global economy. To the upside, immediate resistance can be seen at 1.2960. To the downside, immediate support level is located at 1.2900 levels.Equities RecapEuropean shares rose to a one-month high on Friday after making their biggest weekly gain since January as mining stocks gained and hopes grew that interest rates would stay low for longer.UK’s benchmark FTSE 100 closed up by 0.69 percent, the pan-European FTSEurofirst 300 ended the day up by 0.36 percent, Germany’s Dax ended up by 1.07 percent, France’s CAC finished the day up by 0.53 percent.U.S. stocks closed slightly higher on Friday, ending the S&P 500’s best week for 2015 on a quiet note as investors waited for U.S. companies to report third-quarter earnings.Dow Jones closed up by 0.21 percent, S&P 500 ended up by 0.09 percent, Nasdaq finished the day up 0.40 percent.Treasuries RecapPrices on longer-dated U.S. Treasuries rose on Friday in light, choppy trading, as several Federal Reserve officials hinted that an interest rate increase later this year remains possible even after the soft September payrolls report.The yield on two-year Treasuries edged up fractionally to 0.641 percent, near its highest level in a week, while the five-year yield moved up 0.4 basis point to 1.403 percent after hitting its highest level in about 1-1/2 weeks.Benchmark 10-year Treasuries prices erased losses to trade up 4/32 with a yield of 2.093 percent, down 1.5 basis points from late on 30-year bond was up 14/32 points in price to yield 2.924 percent, down 2.2 basis points from Thursday. The yield briefly touched a two-week high of 2.970 percent.Commodities RecapOil prices remained little changed in choppy trade on Friday as traders flip-flopped between the negative fundamentals of persistent oversupply and support cushions from a sixth weekly decline in U.S. oil rig counts.U.S. closed up 20 cents at $49.63, the highest settle since late July, while Brent crude ended 40 cents down at $52.65 on Friday.Gold rose to a seven-week high on Friday after minutes from the Federal Reserve’s last policy meeting showed the U.S. central bank was in no hurry to raise interest rates, pressuring the U.S. dollar.Spot gold was up 1.6 percent at $1,156.70 an ounce at 2:44 p.m. EDT (1844 GMT), after touching a peak of $1,159.80, its highest since Aug. 24. It is on course to gain 1.5 percent this week. The U.S. futures contract for December delivery settled up 1 percent at $1,155.90 an ounce.
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