Market Roundup
- Fed’s Bullard says Fed needs to hike rates despite markets.
- Traders further pare bets on Fed rate hike in September,OIS prices 27% chance of Sept hike.
- Stocks post worst week of year after China data.
- Oil sinks below $40 first time since ’09, logs longest weekly losing streak in 29 years.
- Copper clocks up seventh weekly loss on China gloom.
- Gold set for biggest weekly rise since January as stocks, dollar slide.
- Fitch says Greek elections highlight risks that uncertainty in politics pose to the success of its bailout programme.
- US Markit Mfg PMI Flash Aug 52.9, f/c 54, 53.8.
- Canada CPI Inflation YY Jul 1.3%, f/c 1.4%, 1%-previous.
- Canada CPI BoC Core YY Jul 2.4%, f/c 2.4%, 2.3%-previous.
- Brazil IPCA-15 Mid-Month CPI YY* Aug 9.57%, f/c 9.57%, 9.25%-previous.
- Mexico Retail Sales MM Jun 1.1%, f/c 0.3%, 0.2%-previous.
- Brazil’s largest party to leave Rousseff government (Valor).
- Equity outflows at 15-wk high as investors seek bond safety -report.
Looking Ahead – Economic Data (GMT)
- No Significant Data
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1347 levels and currently trading at 1.1365 levels. The pair has made session high at 1.1385 and hit lows at 1.1228 levels. The dollar fell broadly on Friday, dropping to a two-month low against the euro, as weak factory data from economic giant China added to doubts the Federal Reserve will raise U.S. interest rates next month. Markets had been reckoning that a solid U.S. economy could prompt the Fed to raise rates for the first time in nearly ten years as soon as September. However, weak Chinese data, sliding commodity prices and unconvincing U.S. inflation data have poured cold water on expectations of a near-term U.S. rate hike. Higher rates would raise borrowing costs for consumers and companies, possibly hurting spending and economic growth. Euro rose against the green back in the New York session, from 1.1270 levels to reach 1.1377 levels gaining almost 100pips in a single session by hitting 2months high against the Dollar. To the upside, immediate resistance can be seen at 1.1393. To the downside, immediate support level is located at 1.1309 levels.
GBP/USD is supported in the range of 1.5670 levels and currently trading at 1.5690levels. It reached session high at 1.5714 and dropped to session low at 1.5662 levels. Sterling rose to its highest level in seven weeks against the dollar on Friday as investors pushed back expectations of when the Federal Reserve will raise interest rates given concerns about global growth and subdued U.S. inflation. And while investors are unsure about whether the Fed will raise rates from September, they are pretty confident that the Bank of England will hike rates in the first quarter of next year, given a robust picture in Britain. Sterling hit a high of $1.5724, its highest level since July 1. Data released on Friday showed Britain’s public sector finances were improving, another sign that the economy was picking up. Britain’s public finances recorded their first July surplus in three years, driven by the strongest tax receipts for the month since records began in 1997. To the upside, immediate resistance can be seen at 1.5725. To the downside, immediate support level is located at 1.5660 levels.
USD/JPY is supported around 121.80 levels and currently trading at 122.05 levels. It peaked to hit session high at 123.36 and made session lows at 123.31 levels. The US dollar continued to slide against Japanese Yen on Friday, as the US dollar was broadly widely sold off on Thursday. The dollar tumbled more than 1 percent against the yen on Friday as strikingly weak Chinese factory data fanned global growth worries and cooled betting that the Federal Reserve will raise U.S. interest rates next month. Japanese the yen, which is also used as a funding currency and is a more traditional safe haven, against which, the dollar fell to its weakest in six weeks, down 1.10 percent on the day at 122.28 yen. Meanwhile, Activity in China’s factory sector in August shrank at its fastest pace since March 2009 on dwindling domestic and export demand, a private survey showed earlier. That accelerated losses in regional currencies and stocks. Most Asian government bond prices also slid. A sluggish China economy raised the prospects for slower inflation, weaker demand for commodities and a currency war after Beijing’s currency devaluation last week. To the upside, immediate resistance can be seen at 122.40. To the downside, immediate support level is located at 121.79 levels.
USD/CAD is supported at 1.3151 levels and is trading at 1.3178 levels. It has made session high at 1.3193 and lows at 1.3151 levels. The Canadian dollar was steady against its U.S. counterpart on Friday, recouping earlier losses after data showed Canadian inflation was mostly in line with expectations in July, while retail sales for June rose more than forecast. The annual inflation rate in July rose 1.3 percent, just shy of the 1.4 percent forecast by economists and up from 1 percent in June, as higher prices for food and clothing offset the moderating effect of cheaper energy. Retail sales rose 0.6 percent in June, topping expectations for a 0.2 percent rise. The currency briefly rallied to a session high after the data, before paring gains. The pair traded between C$1.3110 and C$1.3178 in US session the session. Meanwhile, Canada’s annual inflation rate rose to its highest level in seven months in July as higher prices for food and clothing offset the moderating effect of cheaper energy. Annual inflation rose to 1.3 percent in July, just shy of economists’ expectations for 1.4 percent, and the highest level since December. Core inflation, which strips out volatile items and is closely watched by the bank, rose to 2.4 percent, as forecast. To the upside, immediate resistance can be seen at 1.3190. To the downside, immediate support level is located at 1.3152 levels.
Equities Recap
European stock markets slipped lower on Friday, as European shares suffered their worst one-day fall in almost 4 years ,as growing concerns over China’s economy and declining oil prices hit world markets.
UK’s benchmark FTSE 100 closed down by 2.5 percent, the pan-European FTSEurofirst 300 ended the day down by 3.1 percent, Germany’s Dax ended down by 2.7 percent, France’s CAC finished the day down by 2.9 percent.
U.S. stocks slumped more than 2 percent on Friday, as the S&P broke below the 2,000 level and the Dow slipped closer towards correction territory as fears of a China-led global slowdown continued to rattle investors.
Dow Jones closed down by 3.10 percent, S&P 500 ended down by 3.13 percent, Nasdaq finished the day down by 3.44 percent.
Treasuries Recap
U.S. Treasury debt prices rose on Friday as rattled investors fled tumbling stock markets for the safety of U.S. bonds, and as traders reduced bets that the Federal Reserve will begin raising interest rates in September.
U.S. benchmark 10-year Treasury notes last yielded 2.06 percent, down from 2.08 percent late on Thursday and 2.20 percent a week ago.
Commodities Recap
U.S. oil prices traded below $40 a barrel for the first time since the 2009 financial crisis, ending 2 percent lower on Friday on signs of U.S. oversupply and weak Chinese manufacturing and notching the longest weekly losing streak in almost three decades.U.S. October crude settled 87 cents, or 2.1 percent, lower at $40.45 a barrel, having touched a new 6-1/2-year low of $39.86 a barrel. Front-month U.S. crude has fallen 33 percent over eight consecutive weeks of losses, the longest such losing streak since 1986.
Brent oil ended $1.16, or 2.5 percent, lower at $45.46 a barrel. It hit a low of $45.07 and threatened to break below $45 a barrel for the first time since March 2009.
Gold rose in choppy dealings on Friday, hitting a six-week high and putting it on track for its biggest weekly climb since mid-January as more bad economic data from China rattled financial markets, pushing the U.S. dollar broadly lower.
Spot gold hit a peak of $1,168.40 an ounce and was up 0.5 percent at $1,158.31 at 2:39 p.m. EDT (1839 GMT), up 4 percent on the week. U.S. gold futures for December delivery settled up 0.6 percent at $1,159.60.
The material has been provided by InstaForex Company – www.instaforex.com