Dollar falls as investors rebalance their positions

Market Summary

•Dow up 1.19%, S&P 500 up 1.53%, Nasdaq up 2.11%

•Next week, focus on US inflation data

•Feds Waller: needs aggressive rate hikes now while the economy can handle it

•Putin threatens to cut off all energy supplies

• Oil benchmarks head for second weekly decline

• August employment change in Canada -39.7 thousand, forecast 15.0 thousand, -30.6 thousand previous

•August Canadian unemployment rate 5.4%, forecast 5.0%, previous 4.9%

•Canada August Capacity Utilization Rate (Q2) 83.8%, 82.0% previous

•Canada participation rate in August 64.8%, previous 64.7%.

•Canada in August Total change in employment -77.2 thousand, -13.1 thousand previous

•Canada August Job change to part-time 37.5 thousand, previous -17.5 thousand

• July US Wholesale Sales (MoM) -1.4% , forecast 1.4%, previous 1.8%

• US wholesale inventories (MoM) 0.6%, forecast 0.8%, previous 1.8%

• U.S. Baker Hughes Oil Rig Count 591, 596 previous

•U.S. Baker Hughes Total Kits 759, 760 Prev

Looking ahead - Economic data (GMT)

•No dates ahead

Look Ahead - Economic events and other news (GMT)

•No significant events

Currency overviews

EUR/USD: The euro returned above parity to a three-week high against the dollar on Friday after a big rate hike and hawkish comments from the European Central Bank. The euro posted 1.2% gains for the week after the ECB raised rates by a record 75 basis points on Thursday, signaling further increases in the fight against inflation, even as the bloc's economies watched for a winter recession. Europe continues to struggle with a weak economic outlook, with sky-high energy prices weighing on consumers and businesses. European Union energy ministers were divided on Friday over whether to cap Russian gas prices as they met to work out steps to protect citizens. The euro rose 0.50% to $1.0044, slightly off earlier highs but off the two-decade lows of $0.9864 hit earlier this week. Immediate resistance can be seen at 1.0093 (38.2% fib), a break above could trigger a rise towards 1.0153 (higher BB On the other hand, immediate support is seen at 0.9976 (9DMA), a break below could couple move towards 0.9892 (23.6% fib).

GBP/USD: Sterling jumped against the dollar on Friday as most majors bucked recent dollar strength, capping a volatile week in which the pound hit a 35-year low, Britain saw a new prime minister and Queen Elizabeth died. . New British Prime Minister Liz Truss added to the wider narrative of action by European governments on Thursday when she announced a plan to cut energy bills for two years and direct billions to support energy companies. Investors are still waiting for concrete details on how the plan will be funded, as well as how Truss and her new government will manage a very difficult situation with rising inflation and a slowing economy. Immediate resistance can be seen at 1.1688 (38.2% fib), a break to the upside may trigger a move towards 1.1754 (21 DMA). On the downside, immediate support is seen at 1.1480 (23.6% fib), a break below could push the pair towards 1.1398 (September 7 Low).

USD/CAD: The Canadian dollar climbed to a 10-day high against its US counterpart on Friday as the greenback gave back some of its recent gains, but bullish progress was capped by weaker-than-expected domestic employment data. Canada's economy lost 39,700 jobs in August, a third straight month of contraction and missing analysts' estimates for a gain of 15,000. After the jobs data, money markets cut the volume of additional tightening expected from the Bank of Canada by the end of the year to 49 basis points from 58 basis points. The loonie traded 0.5% higher at 1.3030 against the dollar after touching its strongest since Aug. 30 at 1.2983. The price of crude oil, one of Canada's main exports, settled 3.9% higher at $86.79 a barrel. Immediate resistance can be seen at 1.3098 (23.6% fib), a break to the upside may trigger a rally towards 1.3158 (8 September high). On the downside, immediate support is seen at 1.3015 (21 DMA), a break below could take the pair towards 1.2977 (38.2% fib).

 USD/JPY: The dollar fell against the yen on Friday as investors consolidated gains after a sharp rise against most currencies, ahead of a US inflation report that could determine the size of the Federal Reserve's rate hike at this month's policy meeting. US rate futures have an 87% chance of a 75bps Fed hike this month, with fresh US consumer price data likely to be closely watched next week. The dollar soared to a 24-year high against the yen this week, a 37-year high against the pound, with the dollar index soaring to more than a 20-year high. On Friday, the dollar index fell as low as 108.35 and was last down 0.5% at 108.96. Strong resistance is seen at 142.92 (38.2% fib), an upside break may trigger a rally to 144.67 (23 .6% fib). On the downside, immediate support is seen at 141.48 (50% fib), and a break below could take the pair to 141.00 (psychic level).

Stock recap

European stocks closed on a strong note on Friday despite concerns about slowing global growth and a massive interest rate hike by the European Central Bank.

Britain's benchmark FTSE 100 closed up 1.23 percent, Germany's Dax ended up 1.43 percent and France's CAC ended up 1.43 percent.

U.S. stocks edged higher on Friday, with major indexes posting their first weekly gain in four weeks as investors continued their buying spree and shrugged off worries about the economic outlook.

 The Dow Jones closed up 1.19 percent, the S&P 500 closed up 1.53 percent, the Nasdaq ended up 2.11 percent.

Treasuries Recap Interest-sensitive two-year Treasury yields hit more than 14-year highs on Friday and the yield curve inverted further as Federal Reserve officials stressed the need for more rate hikes to stem surging inflation.

Benchmark 10-year bond yields were last at 3.321%. They rose from a four-month low of 2.516% on August 2, but remain below the 11-year high of 3.498% reached on June 14.

Commodity recap

Gold rose on Friday as the dollar's retreat appeared to temporarily take some pressure off the precious metal from the prospect of more interest rate hikes.

Spot gold was up 0.5% at $1,716.30 an ounce by 13:55 CET. ET (1755 GMT), after rising to its highest since Aug. 30 during the session. U.S. gold futures settled 0.5% higher at $1,728.6.

Oil prices rose about 4% on Friday, supported by real and looming supply constraints, although futures posted a second weekly decline as aggressive interest rate hikes and China's COVID-19 restrictions weighed on the demand outlook.

Brent crude rose $3.69, or 4.1%, to settle at $92.84 a barrel. U.S. West Texas Intermediate (WTI) crude rose $3.25, or 3.9%, to settle at $86.79 a barr