- U.S. PPI above f/c but inflation pressures still tame, PPI ex- food, energy & trade edges up 0.1%.
- University Michigan consumer sentiment index for September falls to one-year low, 1/5-yr inflation forecast rises.
- Swiss franc weakest since January chaos, EUR/CHF tops 1.10 for first time since SNB lifted cap.
- US Treasuries gain before next week’s Fed meet; Traders position for curve flattening on rate increase.
- Oil slumps on Goldman call, stocks mixed before Fed meeting.
- Goldman, Commerzbank cut oil forecasts on oversupply; prices to remain lower for longer (GS).
- U.S. Treasury’s Lew urges China to open economy further.
- S&P keeps credit rating for Greece unchanged but warns of future downgrade.
- Mexico industrial output unexpectedly rises in July, Factory output fell 0.5 percent from June.
Looking Ahead – Economic Data (GMT)
- Sunday 05:30 China Urban investment (ytd)yy* Aug forecast- 11.1%, 11.2%-previous
- Sunday 05:30 China industrial Output YY* Aug forecast- 6.4%, 6%-previous
- Sunday 05:30 China Retail Sales YY* Aug forecast- 10.5%, 10.5%-previous
- 04:30 Japan Industrial Output Rev* Jul -0.6%-previous
- 04:30 Japan Capacity Utilization Index Change MM* Jul 0.7%-previous
Looking Ahead – Events, Other Releases (GMT)
- No Significant Events
EUR/USD is likely to find support at 1.1308levels and currently trading at 1.1330 levels. The pair has made session high at 1.1349 and hit lows at 1.1329 levels. The dollar drifted lower against euro on Friday in thin, listless trading ahead of next week’s Federal Reserve policymaking meeting that may yield the first interest rate increase in the United States in nearly a decade. A weak inflation, combined with a rapidly tightening labor market, are a dilemma for the Fed officials meeting on Wednesday and Thursday to decide on raising rates. A policy statement will be issued on Thursday. The dollar gave up early gains against the euro and suffered 0.60 percent decline against the euro in the US session. A key economic indicator issued on Friday, The University of Michigan’s preliminary September reading on overall U.S. consumer sentiment index, was unexpectedly soft and that briefly knocked the dollar down before it regained the losses against the euro. To the upside, immediate resistance can be seen at 1.1365. To the downside, immediate support level is located at 1.1330 levels.
GBP/USD is supported in the range of 1.5400 levels and currently trading at 1.5434 levels. It reached session high at 1.5441 and dropped to session low at 1.5398 levels. Sterling slipped from a two-week high against the dollar on Friday, but was on track for its first weekly gain in three months, bolstered by the Bank of England’s optimistic message that the recent turmoil in markets would not impact the economy. Sterling failed to get much of a liftoff after, a BoE policymaker, who said the bank might have to raise interest rates sooner than its models suggest if the pound’s surge over the past two years has less of an impact on inflation than currently thought. Sterling was trading 0.15 percent lower at $1.5425, having hit a two-week high of $1.5476 on Thursday after the minutes from the BoE latest policy meeting downplayed risks from a slowdown in China and the turmoil in global markets. To the upside, immediate resistance can be seen at 1.5475. To the downside, immediate support level is located at 1.5428 levels.
USD/JPY is supported around 120.28 levels and currently trading at 120.55 levels. It peaked to hit session high at 120.78 and made session lows at 120.45 levels. The dollar slipped against Japanese yen on Friday, after economic data released from US market showed U.S. consumer sentiment hit its lowest in a year in early September and producer prices were flat in August, signaling moderate economic growth and tame inflation that could weigh on the Federal Reserve’s decision whether to hike interest rates next week. The University of Michigan consumer sentiment index fell to 85.7 early this month, the lowest since September last year, from a reading of 91.9 in August. The survey’s gauge of consumer expectations also dropped to a one-year low, as households expected slower growth overseas to hit the U.S. economy. Consumers’ expectations for current and future personal finances also took a hit. The Japanese yen was trading flat against the dollar at 120.5 yen and mixed against other major currencies. To the upside, immediate resistance can be seen at 120.75. To the downside, immediate support level is located at 120.34 levels.
USD/CAD is supported at 1.3243 levels and is trading at 1.3258 levels. It has made session high at 1.3309 and lows at 1.3244 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as the price of oil fell after Goldman Sachs cut its crude forecast, but trading in the currency will likely be muted ahead of next week’s U.S. Federal reserve rate decision. The currency is heading for a flat week, with a Bank of Canada policy update on Wednesday providing little direction. The conviction among Wall Street banks that the Fed will hike rates next week has decreased notably in the last month due to volatility in global markets. That has in turn limited weakness in the Canadian dollar, which has lost 10 Canadian cents of value since mid-June. The currency’s strongest level of the session was C$1.3216, while its weakest level was C$1.3275. To the upside, immediate resistance can be seen at 1.3276. To the downside, immediate support level is located at 1.3243 levels.
European shares fell for a second straight day on Friday, led lower by Swiss drugmaker Actelion, but the FTSEurofirst 300 index still recorded its biggest weekly rise since July.
UK’s benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day down by 0.9 percent, Germany’s Dax ended down by 0.7 percent, France’s CAC finished the day down by 0.8 percent.
U.S. stocks closed higher on Friday and the S&P 500 posted its biggest weekly gain since July, but energy shares dropped after Goldman Sachs cut its oil price forecast through next year. Dow Jones closed up by 0.59 percent, S&P 500 ended up by 0.41 percent Nasdaq finished the day up 0.50 percent.
U.S. Treasury prices gained on Friday as investors focused on whether the Federal Reserve is likely to raise interest rates for the first time in almost a decade when it meets next week.
Benchmark 10-year notes were last up 10/32 in price to yield 2.19 percent, down from 2.22 percent late on Thursday. Thirty-year bonds gained 24/32 in price to yield 2.95 percent, down from 2.99 percent
Crude futures fell 2 percent or more on Friday after influential Wall Street trader Goldman Sachs cut its outlook on oil, but positive sentiment from rebounding U.S. stock prices and less drilling for oil helped the market pare losses.
U.S. crude settled down $1.29, or 2.8 percent, at $44.63 a barrel. Brent, the global benchmark for oil, closed down 75 cents, or 1.5 percent, at $48.59.
Gold fell to a one-month low on Friday, heading for a third successive weekly loss, as uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase in nearly a decade weighed on appetite for the metal.
Spot gold was down 0.6 percent at $1,104.96 an ounce at 2:37 p.m. EDT (1837 GMT), while U.S. gold futures for December delivery settled down 0.5 percent at $1,103.30 an ounce.
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