SHANGHAI, Jul 19 (SMM) — This is a roundup of global macroeconomic news last Friday and what is expected today.
The dollar edged higher on Friday, logging its largest weekly gain in a month, after upbeat retail sales data boosted expectations that economic growth accelerated in the second quarter.
The dollar index, which measures the greenback against a basket of six currencies, was 0.11% higher at 92.675. The index is up 0.6% for the week.
U.S. retail sales unexpectedly increased in June as demand for goods remained strong even as spending was shifting back to services.
A survey that showed U.S. consumer sentiment fell sharply and unexpectedly in early July to the lowest level in five months, as inflation worries dented confidence in the economic recovery, did little to dent the dollar’s stronger tone.
Solid U.S. data and a shift in interest rate expectations after the Federal Reserve flagged in June sooner-than-expected hikes in 2023 have helped lift the dollar in recent weeks and made investors nervous about shorting it.
Friday’s gains for the dollar came despite Fed Chair Jerome Powell reiterating on Thursday that rising inflation was likely to be transitory and that the U.S. central bank would continue to support the economy.
On Wall Street, U.S. stock index futures were little changed during overnight trading on Sunday, after the major averages posted their first negative week in four.
Futures contracts tied to the Dow Jones Industrial Average slid 64 points. S&P 500 futures were down 0.15%, while Nasdaq 100 futures dipped 0.11%.
The Dow and S&P fell 0.52% and 0.97% last week, respectively. The Nasdaq Composite, meanwhile, was the relative underperformer, dropping 1.87%, to post its worst week since May.
Inflation fears weighed on stocks, with a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8% over the next year. This is the steepest climb since August 2008. Earlier in the week, the June Consumer Price Index showed that inflation jumped 5.4% year-over-year, spooking investors.
Oil prices fell Friday, extending losses from the previous two sessions, and were on track for their biggest weekly drop since March after expectations of more supply put pressure on the market.
Brent crude was up 28 cents, or 0.4%, at $73.77 per barrel, heading for a 3.8% fall this week. U.S. crude futures were up 39 cents, or 0.54%, at $72.01 per barrel, on track for a 5.1% decline.
Saudi Arabia and the UAE reached a compromise this week, paving the way for OPEC+ producers to finalise a deal to increase production.
OPEC+ - which groups the Organization of the Petroleum Exporting Countries with Russia and other producers - had earlier failed to agree after the UAE sought a higher baseline for measuring its output cuts.
Gold slipped on Friday as a stronger dollar dulled its appeal and pushed the metal further from one-month highs hit in the previous session.
Spot gold dropped 0.8% to $1,814.11 per ounce by 1:43 pm ET, though it was up 0.3% so far this week. U.S. gold futures settled 0.8% lower at $1,815.
The dollar index was bound for a strong weekly gain, reducing gold’s appeal to other currency holders.
TD Securities commodity strategist Daniel Ghali said gold’s inability to benefit substantially from weaker U.S. real yields suggested it remained vulnerable to a further pull-back.
“Although gold’s valuation is more attractive on a relative basis to U.S. Treasury inflation protected securities (TIPS), the reason gold is trading at a discount to it is because it does not have the same carry advantage.”
Ghali, however, said that improving physical bullion demand, particularly from top-consumer China, and central bank purchases could limit the precious metal’s declines.
The pan-European Stoxx 600 ended the session down 0.3%, with miners tumbling 2.8% to lead losses as the majority of sectors and major bourses finished in the red. The benchmark was down about 0.7% on the week, having hit a record high on Monday.
A surge in Covid-19 cases across the continent caused by the highly-transmissible delta variant continues to weigh on investor sentiment, with several major European countries forced to reimplement social restrictions, while the U.K. will take the gamble of removing its last layer of safeguards from Monday.