Market Roundup
• US April existing home sales rise for second straight month (5.45m v 5.36m previous) , inventory still tight.
• Food, shelter lifts Canada April annual inflation rate (+1.7% v 1.3% previous).
• BOJ likely set aside funds (JPY 450bn) to prepare for losses on its holdings of Japanese govt. bonds – Nikkei.
• ECB’s Nowotny: EZ will see higher inflation rates in H2 due to oil prices, may have effect on policy.
• S&P: Switzerland‘s economy will continue to weather external pressures.
Looking Ahead – Economic Data (GMT)
• 23:50 Japan Exports YY* Apr forecast -10%, -6.80%-previous
• 23:50 Japan Imports YY* Apr forecast -19%, -14.90%- previous
• 23:50 Japan Trade Balance Total Yen Apr forecast 492.8b, 755.0b- previous
Looking Ahead – Events, Other Releases (GMT)
• Sat May 21 JP Japan Finance Minister Taro Aso and Bank of Japan Governor Haruhiko Kuroda holds a news conference as chair of G7 finance leaders’ gathering.
• Mon May 23 JP BoJ Deputy Governor Hiroshi Nakaso and Bank of Italy Director General Salvatore Rossi speak at Keio University
Currency Summaries
EUR/USD is likely to find support at 1.1178 levels and currently trading at 1.1218 levels. The pair has made session high at 1.1237 and hit lows at 1.1202 levels. The euro initial inched higher in the early US session but declined after data showed U.S. home resale’s rose more than expected in April, suggesting the American economy continues to gather pace during the second quarter. The data added to a growing perception the U.S. economy will be able to withstand a rate hike next month or in July. New York Fed President William Dudley said on Thursday there was a strong sense among central bank officials that markets were underestimating the probability of policy tightening. That came a day after the minutes of the Fed’s April meeting revealed that most policymakers felt a rate increase might be appropriate as early as next month.The dollar traded close to two-month highs after it pushed past $1.12 per euro for the first time since March. The dollar index was slightly higher at 95.417 after reaching 95.502 overnight, a level last seen on March 29.
GBP/USD is supported in the range of 1.4460 currently trading at 1.4493 levels. It reached session high at 1.4523 and hit low at 1.4489 levels. Sterling slipped from a 2-1/2- week high against the dollar on Friday, but was on track for its best weekly performance against the greenback in seven months. A robust UK retail sales report for April, along with growing expectations that Britain will vote to stay in the European Union in a referendum on June 23, boosted the currency this week. Sterling was also hurt a little by dovish comments from a Bank of England policymaker. Gertjan Vlieghe, a noted dove, said on Thursday that the BOE needed to provide more stimulus if growth failed to recover as forecast after the referendum. Against the dollar, sterling slipped 0.6 percent to $1.4520, having hit a 2-1/2-week high of $1.4663 on Thursday.
USD/CAD is supported at 1.3054 levels and is trading at 1.3133 levels. It has made session high at 1.3161 and lows at 1.3085 levels. The Canadian dollar declined against its U.S. counterpart on Friday, although some losses were pared as oil pulled back from its low levels. Oil prices were mostly flat as investors cashed in on recent gains and focus shifted again to swelling global inventories that have cushioned the impact of a series on unplanned supply outages. Canadian dollar was also weighted down by weaker-than-expected retail sales data which added to evidence that the economy slowed heading into the second quarter. Canadian retail sales fell 1 percent in March, exceeding economists’ forecasts for a decrease of 0.6 percent, as consumers bought fewer cars, while separate data from Statistics Canada showed that core inflation rose to 2.2 percent.
AUD/USD is supported around 0.7173 levels and currently trading at 0.7219 levels. It hit session high at 0.7244 and made session lows at 0.7210 levels. The Australian dollar edged lower against US dollar on Friday after US dollar strengthened against commodities related currencies after markets ramped up speculation that U.S. interest rates could rise as early as June. Rising expectations for rate hikes also have come on the back of a spate of relatively robust economic data, including Friday’s stronger-than-expected existing home sales figures for April. Figures released earlier this week showed U.S. inflation rising in April by the most in three years, and the government last week reported the biggest rise in retail sales since March 2015The Australian dollar was trading at $0.7222, having briefly dipped on Thursday below 72 cents for the first time since early March. The Aussie has fallen 0.5 percent this week and if sustained, it would be the fifth consecutive weekly loss.
Equities Recap
European shares were led higher on Friday by financials and mining sector stocks, which climbed as metal prices gained ground.
UK’s benchmark FTSE 100 closed up by 1.6 percent, the pan-European FTSEurofirst 300 ended the day up by 1.21 percent, Germany’s Dax ended up by 1.2 percent, France’s CAC finished the day up by 1.5 percent.
Wall Street rallied on Friday, led by tech stocks on the back of Applied Materials’ strong profit forecast, ending a volatile week on a positive note.
Dow Jones closed up by 0.36 percent, S&P 500 ended by up 0.59 percent, Nasdaq finished the day down up 1.21 percent.
Treasuries Recap
U.S. Treasury prices were little changed on Friday as investors favored riskier assets such as stocks, but bonds still turned in one of their poorest weekly performances in six months on concerns that the Federal Reserve might lift interest rates sooner than expected.
The benchmark 10-year notes were unchanged in price to yield 1.85 percent, and 2-year note prices little moved, with their yields at 0.89 percent.
Commodities Recap
Gold edged higher on Friday after two days of losses but remained on track for its biggest weekly slide in nearly two months on growing expectations for an increase in U.S. interest rates as soon as next month.
Spot gold was down 0.2 percent at $1,252.1 an ounce by 2:43 p.m. EDT (1843 GMT), down 1.6 percent this week in its third straight week of losses.
U.S. gold futures for June delivery settled down $1.90 at $1,252.90
Oil prices slipped on Friday as a stronger dollar encouraged investors to cash in on a second week of gains and the market stayed focused on whether unplanned supply outages were reducing a stubborn global glut.
Global benchmark Brent crude settled down 9 cents at $48.72 a barrel, while U.S. crude settled down 41 cents at $47.75 per barrel.
Published: 2016-05-20 22:03:00 UTC+00
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