- U.S. crude jumps (+6.5%) in second day of short-covering frenzy.
- OIS markets price 35% chance of Sept Fed rate hike, 54% chance of Oct Fed rate hike.
- Fed’s Fischer (voter): if decision is close recent data will influence it, can’t wait for case to be overwhelming to hike.
- Fed’s Fischer: High level of confidence moving back to 2% inflation, some factors affecting inflation are temporary.
- Fed’s Fischer: slower Chinese growth has little impact on US exports.
- Fed’s Lockhart: US economy in quite solid mode of expansion, markets make him less resolute on Sept hike.
- Fed’s Lockhart: 50/50 assessment of Sept hike is reasonable, financial turmoil must be considered.
- Fed’s Mester: Economy can sustain an increase in rates, looking at financial market volatility.
- Fed’s Kocherlakota : would consider more easing, will take some time to get to 2% inflation target.
- Fed’s Bullard : Willing to hike once then ‘hang out’ if inflation remains too low, would be hesitant to raise rates if market volatility continues through Sept meeting.
- Fed’s Bullard: Hiking rates will signal confidence in US market, US fundamentals look good.
- US Consumption, Adjusted MM Jul 0.3%, f/c 0.4%, 0.3%-previous.
- US PCE Price Index MM Jul 0.1%, 0.2%-previous.
- US U Michigan Sentiment Final Aug 91.9, f/c 93, 92.9-previous.
- Brazil markets fall as economy in deeper-than-expected recession.
Looking Ahead – Economic Data (GMT)
- 23:50 Japan Industrial output prelim mm Jul forecast-0.10%, 1.1%-previous
- 23:50 Japan IP Forecast 1 Month Ahead* Jul 0.5%-previous
- 23:50 Japan IP Forecast 2 Month Ahead* Jul 2.7%-previous
- 05:00 Japan Construction Orders YY* Jul 15.4%-previous
- 05:00 Japan Housing Starts YY* Jul forecast-11.00%, 16.3%-previous
- 01:30 Australia Business Inventories* Q2 forecast- 0.30%, 0.4%-previous
- 01:30 Australia Gross Company Profits* Q2 forecast -2.00%, 0.2%-previous
- 01:30 Australia Company Profits Pre-Tax* Q2 12.5%-previous
- 01:30 Australia Private Sector Credit* Jul forecast- 0.50%, 0.4%-previous
- 01:30 Australia Housing Credit* Jul 0.6%-previous
- 22:45 New Zealand Building Consents Jul -4.1%-previous
- 01:00 New Zealand NBNZ Business Outlook Aug -15.3%-previous
- 01:00 New Zealand NBNZ Own Activity Aug 19%-previous
Looking Ahead – Events, Other Releases (GMT)
- US Jackson Hole Economic Policy Symposium “Inflation Dynamics and Monetary Policy” to Aug. 29
EUR/USD is likely to find support at 1.1140 levels and currently trading at 1.1180 levels. The pair has made session high at 1.1254 and hit lows at 1.1154 levels. The dollar rose to one-week highs on Friday, for a fourth straight session of gains, on rate-hike remarks by a senior Fed official and supported positive U.S. data that supported the notion the world’s largest economy was on a stable growth path. The dollar index, a gauge of the greenback’s value against six major currencies, bounced back from seven-month lows struck on Monday and was on track for its largest weekly gain in a month as financial markets calmed down after recent turmoil. The dollar extended gains against euro after Federal Reserve Vice Chair Stanley Fischer said the U.S. central bank can’t wait for the case on hiking interest rates to be overwhelming. But he was undecided whether to raise rates in September. The euro, slipped 0.6 percent to $1.1180 against the dollar, well off its bullish surge above $1.1700 reached on Monday when the selloff in global markets and worries about a Chinese slowdown led investors to unwind euro-funded carry trades. To the upside, immediate resistance can be seen at 1.1312. To the downside, immediate support level is located at 1.1220 levels.
GBP/USD is supported in the range of 1.5323 levels and currently trading at 1.5401 levels. It reached session high at 1.5417 and dropped to session low at 1.5336 levels. Sterling slipped to its lowest against the dollar in more than a month on Friday, erasing earlier gains made after data confirmed that, British economy grew at a good pace in the second quarter. Earlier in European session, Sterling jumped to $1.5427 levels immediately after the UK data from $1.5400 beforehand. Then on positive US economic data and rake hike comments from Fed’s central bankers pulled it down to $1.5333 in the early New York session, it’s lowest since early July. Focus has now turned to an annual conference in Jackson Hole, Wyoming, attended by many of the world’s top central bankers. BoE Governor Mark Carney is a panelist at the symposium on Saturday where global inflation dynamics will be discussed. Earlier this month, Carney indicated a decision to raise rates could come at the turn of the year, but investors will be keen to hear the BoE’s take on recent events and whether it changes the monetary policy outlook for now. To the upside, immediate resistance can be seen at 1.5415. To the downside, immediate support level is located at 1.5332 levels.
USD/JPY is supported around 120.30 levels and currently trading at 121.35 levels. It has hit session high at 121.54 and made session lows at 120.66 levels. USD/JPY rallied on Friday, after positive economic data and rate hike comments made at summit held at Jackson Hole by Fed’s central bankers, supported the dollar to edge higher against the Japanese yen. U.S. consumer spending rose in July as households stepped up automobile purchases, offering further evidence of strength in the economy that keeps the door open to a Federal Reserve interest rate hike this year. While other data on Friday showed consumer sentiment dipped in August, likely as households fretted over a recent stock market sell-off, confidence remained at levels consistent with solid consumer spending growth. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3 percent last month after a similar gain in June. The greenback rose 0.4 percent to 121.44 yen, recovering from Monday’s seven-month low of 116.15. To the upside, immediate resistance can be seen at 121.60. To the downside, immediate support level is located at 120.40 levels.
USD/CAD is supported at 1.3177 levels and is trading at 1.3220 levels. It has made session high at 1.3301 and lows at 1.31196 levels. The Canadian dollar weakened against its U.S. counterpart on Friday, reversing almost all of the previous day’s gains, as crude oil slipped back and cautious sentiment pervaded global markets. Canadian producer prices unexpectedly rose 0.7 percent in July, the third consecutive monthly gain, on higher prices for motorized vehicles and aircraft, Statistics Canada data indicated on Friday. Analysts had forecast no change from June. Seventeen of the 21 commodity groups advanced, with two falling and two remaining unchanged. A weaker Canadian dollar helped produce a 2.5 percent increase in prices for motorized and recreational vehicles as well as aircraft. The value of the currency fell by 4.0 percent relative to the U.S. greenback in July. The currency’s strongest level of the session was C$1.3196, while its weakest was C$1.3300. To the upside, immediate resistance can be seen at 1.3245. To the downside, immediate support level is located at 1.3190 levels.
European stocks closed out a rollercoaster week with modest gains on Friday, although a leading regional equity index was still on track for its worst month in four years due to underlying concerns over China.
UK’s benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 3.7 percent, Germany’s Dax ended down by 0.4 percent, France’s CAC finished the day up by 0.1 percent.
Wall Street ended a volatile week with a flat close on Friday as investors shrugged off concerns that a September rate rise was more likely than some investors expected. Dow Jones closed down by 0.11 percent, S&P 500 ended up by 0.04 percent, Nasdaq finished the day up by 0.31 percent.
U.S. Treasuries prices fell on Friday, with most yields posting their biggest weekly rise in nine weeks as the Federal Reserve’s No. 2 official suggested a September rate increase remained a possibility in the wake of global market turbulence this week.
Benchmark 10-year Treasuries notes were down 4/32 in price to yield 2.182 percent, up over 1 basis point from Thursday, while two-year notes were down 2/32 in price, yielding 0.720 percent, up over 3 basis points.
The 30-year bond slipped 5/32 in price with a yield of 2.910 percent, down less than 1 basis point as traders bet long-dated issues will fare better than shorter-dated ones if the Fed raises rates soon.
U.S. crude rose 6 percent on Friday, notching its first weekly gain in two months, after a rally in gasoline from refinery outages and concerns about strife in Yemen fed a second frenzied day of short-covering in oil. U.S. crude gained nearly 17 percent over two sessions, ending eight straight weeks of losses. It was also the second largest two-day rise for the market in 25 years.
U.S. crude’s front-month contract settled up $2.66, or 6.3 percent, at $45.22 a barrel. At its session high, it was up more than $3, or 7 percent at nearly $46. For the week, it rose 12 percent. Brent, the global benchmark, closed up $2.49, or 5 percent, at $50.05 a barrel, after hitting a session peak at $50.98. It gained 10 percent on the week.
Gold rose on Friday as technical indicators and suggestions the U.S. central bank may delay a rate rise provided support, but the metal was still on track to post its biggest weekly drop in five weeks amid dollar strength and strong U.S. economic data.
Spot gold was up 0.8 percent at $1,134.26 an ounce by 2:55 p.m. EDT (1855 GMT), but still down more than 2 percent for the week.U.S. gold for December delivery rose 1 percent to settle at $1,134 an ounce.
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