Americas Roundup: U.S. dollar rallies after strong jobs data, Loonie hits a 2-week low as trade deficit widens, Gold slips, US stocks edge higher, Oil prices rise -August 5th 2017

Market Roundup

• US Non-Farm Payrolls Jul 209k, 183k forecast, 231k previous.

• US Private Payrolls Jul 205k, 178k forecast, 194k previous.

• US Manufacturing Payrolls Jul 16k, 5k forecast, 12k previous.

• US Unemployment Rate Jul 4.3%, 4.3% forecast, 4.4% previous.

• US Average Earnings MM Jul 0.3%, 0.3% forecast, 0.2% previous.

• US Average Earnings YY Jul 2.5%, 2.5% previous.

• US International Trade MM $ Jun -43.6b, -45.0b forecast, -46.4b previous.

• US Goods Trade Balance (R) Jun -64.01b, -63.86b previous.

• US Dallas Fed PCE Jun 1.3%, 1.6% previous.

• NY Fed lifts US Q3 GDP growth view near 2%.

• Atlanta Fed pares US Q3 GDP growth forecast to an annualized pace of 3.7%.

• White House considers lower deduction for US homeowners -Politico.

• US Vice President Pence's hawkish tone on Russia contrasts with Trump approach.

• Venezuela inaugurates new legislative superbody despite protests.

• US aims for UN vote Saturday on new N.Korea sanctions -diplomats.

• Canada trade deficit swells in June, but hiring continues in July.

Looking Ahead – Economic Data (GMT)

• 23:30 Australia AIG Construction Index Jul 56.0 previous (Aug 6)

• 23:50 Japan Foreign Reserves Jul 1249.8b (Aug 6)

• 05:00 Japan Coincident Indicator MM Jun -1.6 previous (Aug 7)

• 05:00 Japan Leading Indicator Jun 0.5 previous (Aug 7)

• 23:50 Japan Bank Lending YY 3.3% previous (Aug 7)

• 23:50 Japan Current Account NSA JPY Jun 814.0b forecast, 1653.9 prev (Aug 7)

• China FX Reserves (Monthly) Jul 3.069t forecast, 3.057t previous (Aug 7)

Looking Ahead – Events, Other Releases (GMT)

• 15:45 St. Louis Fed's James Bullard to give a presentation on monetary policy – Nashville (Aug 7) 

• 17:45 Minneapolis Fed's Kashkiri participates in a Q & A session – South Dakota (Aug 7)

Currency Summaries

EUR/USD is likely to find support at 1.1720 levels and currently trading at 1.1757 levels. The pair has made session high at 1.1765 and hit lows at 1.1724 levels. The euro declined against dollar on Friday as stronger-than-expected U.S. jobs figures bolstered the case for a third U.S. interest rate hike this year, spurring demand for the dollar. U.S. nonfarm payrolls increased by 209,000 jobs last month, above analyst expectations, while June's report was revised to show a bigger gain than previously reported. Average hourly earnings rose 0.3 percent after gaining 0.2 percent in June. The positive numbers followed mixed U.S. economic figures that had cast doubt over the likelihood the Federal Reserve would raise rates once more this year and three times next year. The job and average hourly earnings numbers could clear the way for the Fed to announce a plan to start shrinking its $4.5 trillion bond portfolio in September, a key step in its plan to unravel monetary stimulus. The dollar index's gains put it on track for its biggest one-day percentage increase since Dec. 15. The euro fell more than 1 percent against the dollar to a four-day low of $1.1729 after touching a more than 2-1/2-year high of $1.1909 Wednesday.

GBP/USD is supported in the range of 1.3020 levels and currently trading at 1.3034 levels. It reached session high at 1.3149 and dropped to session low at 1.3024 levels. Sterling declined against the dollar on Friday as sterling came under selling pressure after data showed U.S. employers hired more workers than expected in July. The jobs figure beat expectations of economists for a gain of 183,000. June's employment gain was revised up to 231,000 from the previously reported 222,000, while average hourly earnings increased 0.3 percent to match expectations after rising 0.2 percent in June. Ahead of the U.S. jobs report, sterling was already nursing big losses sustained after the Bank of England kept interest rates at record lows and lowered growth and inflation forecasts. Before Thursday's central bank vote, sterling briefly rose to an 11-month high of $1.3267 per dollar, rounding off a strong 4.5 percent rise over the last six weeks. The British pound fell 0.7 percent after the data to $1.3021. Over the past two days, it has declined 1.4 percent, its biggest two-day losing streak since June. 12. Against the euro, sterling was a shade stronger at 90.20 pence after falling 0.8 percent on Thursday.

USD/CAD is supported at 1.2552 levels and is trading at 1.2656 levels. It has made session high at 1.2667 and lows at 1.2554 levels. The Canadian dollar declined against its U.S. counterpart on Friday as Canadian dollar was pressured after data showed a jump in Canada's trade deficit, while a stronger-than-expected U.S. jobs gain boosted the greenback. Canada's economy added 10,900 jobs in July, mostly in full-time employment, Statistics Canada said, while the jobless rate fell to its lowest level since October 2008. But separate data showed Canada's trade deficit in June swelled to C$3.60 billion from a revised C$1.36 billion shortfall in May, with gold bullion leading the growth in imports. The U.S. dollar rallied against a basket of major currencies after U.S. employers hired more workers than expected in July and raised their wages, signs of labor market tightness that is likely to clear the way for the Federal Reserve to announce a plan next month to start shrinking its massive bond portfolio. The Canadian dollar was last trading at C$1.2650 to the greenback, down 0.42 percent. The currency's strongest level of the session was C$1.2554, while it touched its weakest since July 20 at C$1.2660. For the week, the loonie has lost 1.4 percent. Still, it has rallied more than 9 percent since early May, helped by the Bank of Canada raising interest rates last month for the first time in nearly seven years.

USD/JPY is supported around 109.92 levels and currently trading at 110.80 levels. It peaked to hit session high at 111.04 and made session lows at 109.99 levels. The U.S. dollar rose sharply against the Japanese yen on Friday as upbeat U.S. jobs data boosted the beleaguered dollar. The U.S. Labor Department said nonfarm payrolls rose by 209,000 jobs last month. June's employment gain was revised up to 231,000 from a previously reported 222,000. The unemployment rate fell to 4.3 percent while average hourly earnings rose 0.3 percent, the largest increase in five months. The report may pave the way for the U.S. Federal Reserve to start shrinking its $4.5 billion balance sheet. The dollar gained as much as 0.9 percent against Japanese yen, rising off recent seven-week lows. The dollar has suffered in recent months, largely on increased doubts that the Federal Reserve would raise interest rates again this year and obstacles to U.S. President Donald Trump's pro-growth agenda. The outlook for a December rate hike remained uncertain despite the jobs data, with federal funds futures last implying traders saw a roughly 47 percent chance of a December increase on Friday, according to CME Group's FedWatch tool.

Equities Recap

European shares ended the week on a strong note as a drop in the euro helped shares in exporters, while investors also focused on a raft of company results with insurance firm Swiss Re hit after missing profit estimates.

UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 1.00 percent, Germany's Dax ended up by 1.2 percent, France’s CAC finished the day up by 1.4 percent.

The Dow Jones Industrial Average headed for its eighth straight record high close on Friday, with strong gains in JPMorgan Chase and other banks after data showed U.S. employers hired more workers than expected in July.

Dow Jones closed up by 0.26 percent, S&P 500 ended up 0.16 percent, Nasdaq finished the day down by 0.16 percent.

Treasuries Recap 

U.S. Treasury yields rose on Friday after data showed that U.S. employers hired more workers than expected in July, while wage growth also met economists’ expectations.
Benchmark 10-year notes were last down 7/32 in price to yield 2.25 percent, up from 2.23 percent late on Thursday.

The yield curve between five-year notes and 30-year bonds briefly flattened below 100 basis points, the lowest level since July 11, before steepening back to 101 basis points.

Commodities Recap

Gold fell 1 percent on Friday after better-than-expected U.S. jobs data boosted the beleaguered dollar and potentially cleared the way for the U.S. Federal Reserve to raise interest rates for the third time this year.

Spot gold was down 0.8 percent at $1,257.66 an ounce by 2:02 p.m. EDT (1802 GMT), after falling 1.1 percent. It was on track to end the week down 0.9 percent following three straight weeks higher. U.S. gold futures for December delivery settled down 0.8 percent at $1,264.60.

Oil prices rose after a strong U.S. jobs report bolstered hopes for growing energy demand, but crude prices remained on track for a small weekly decline, pressured by rising OPEC exports and strong output from the United States.

Global benchmark Brent futures gained 41 cents, or 0.8 percent, to settle at $52.42 a barrel, while U.S. West Texas Intermediate crude rose 55 cents, or 1.1 percent, to settle at $49.58.

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