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13 July: US stocks have rallied, with the Dow hitting a new high, while the dollar is mixed and bond yields have tumbled on Wednesday after Janet Yellen dampened growing expectations of more than one interest rate hike later this year. In the first part of her testimony to Congress, she indicated that the US economy is strong enough to absorb further gradual rate increases and the slow wind-down of the Fed’s massive bond portfolio. She added that, given current estimates, the federal funds rate “would not have to rise all that much further” to reach a neutral level that neither encourages nor discourages economic activity. In the currency markets, the all up effect has seen the dollar fall against the Yen and the commodity bloc currencies while gaining mildly against the other majors including the Euro. The metals a re slightly firmer, while WTI reversed early gains despite a bigger-than-expected decline in U.S. crude stocks as the drawdown was not as big as reported by the American Petroleum Institute on Tuesday.
The NZ Business PMI and Food Price Index will kick the day off in Asia, to be followed later by the China Trade Balance. After that, there is not a great deal to go on, with the German (CPI, exp 0.2%mm, 1.6%yy; HICP, exp 0.2%mm, 1.5%yy) and US PPI being the other main events. More likely, traders will hold their fire while waiting on tomorrow’s US CPI and Retail Sales data, although the Fed’s Evans and Brainard will be speaking, as will Janet Yellen in the second day of her testimony to the US Senate, which could combine to produce some volatility. http://ow.ly/FmDJ30dAsbs
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27 June: The US$ has largely survived the underperforming Durable Goods Orders figure (-1.1% v exp -0.6%) and is trading on a firm note against the majors although slightly softer against the commodity bloc currencies. Cable remained within its recent range, with UK politic/Brexit dominating the action and with traders seemingly standing on the sidelines. Stocks are rangebound, unable to hold on to early session gains, weighed down by the tech sector. Gold and Silver both seemed to suffer a mini flash-crash, falling hard at the London open for no apparent reason. Big sell order? Concerns of further Fed rate hikes? Who knows? Not me. WTI was rangebound.
Tuesday will be particularly quiet in terms of economic data although we do have speeches from both ECB Governor, Mario Draghi and also from Janet Yellen to contend with, which will be the day’s focus.. The NZ Trade Balance will kick things off on Tuesday, which may test the recent strength of the Kiwi, but then there is nothing until Europe opens, when we only have the UK CBI Distributive Trade Survey – (Realised – June) to provide direction. From the US, the main events will be the Case Shiller House Price Index and the Richmond Fed Mfg Index to go on. The API Weekly Crude Oil Stock Inventory may provide some choppy action in the oil markets. It looks set to be a day driven by central bankers. http://ow.ly/RUkx30cUEtS
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22 June: Once again it was Sterling and Oil that were at the centre of the action, in what was otherwise a choppy but relatively rangebound session which saw mixed results for the US$; higher against the Aud$ but generally steady/lower elsewhere. Sterling bounced strongly as hawkish comments from the BoE’s chief economist Andy Haldane propelled it higher, counteracting BOE Governor, Mark Carney’s dovish outlook of the previous session, by saying that a partial removal of monetary stimulus would be “prudent relatively soon”.
In the oil market, WTI fell by 2% despite the Energy Information Administration reporting that weekly inventories fell by more than expected, by 2.45 mio barrels. The price action was volatile but ended lower due to the ongoing concerns over the growing oil glut, and it looks as though there may have plenty of room on the downside in the days/week’s ahead. Stocks were a little lower, once again dragged down by the oil price.
Thursday will be fairly thin on the ground although we start off the 20 June with the RBNZ Interest Rate Decision, which could create some waves although no change to policy is expected. That aside, there is nothing else from either Asia or the EU, and just we weekly Jobless Claims and the House Price Index to come from the US. Expect it to be mostly rangebound until Friday, although WTI may remain volatile. Have a good day http://ow.ly/30QY30cN82z
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20 June: The US$ is higher on Monday after New York Fed President, William Dudley expressed confidence that rising wages will help revive domestic inflation, which has shown signs of softening recently. He added that he thought that tightening labor market should help drive up inflation, offsetting concerns that stubbornly low inflation might not allow policy-makers to raise rates further the rest of this year. US stocks liked his comments with both the S+P and the DJI finishing at yet another all-time high, while commodities remain under pressure on the back of the higher dollar.
Tuesday may be a relatively quiet affair given the lack of market-moving economic data although there are several central bank speeches due. The RBA Minutes will probably be the highlight of the Asian session, with the EU Current Account, German PPI being the points of focus in Europe. Traders will also look to the BOE Governor, Mark Carney, who will be making his Mansion House speech, which could cause some volatility in Cable although I suspect most of the focus will be on the ongoing Brexit talks. Both the SNB’s Jordan and the Fed’s Fischer and Kaplan are also speaking, with Fischer’s comments likely to be the main focus. Elsewhere, the API Weekly Crude Oil Stock Inventory will also be released late in the US session, but that aside, there is nothing else to come from the US apart from the Current Account. Kiwi traders should note that the Global Dairy Trade Index will be released at midday, London time. http://ow.ly/FniB30cJ3Zr
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15 June: It was a tale of two halves today, with the US data (CPI/Retail Sales) missing expectations and sending the US$ lower, ahead of the Fed rate hike which ensured a quick reversal, especially after Janet Yellen was slightly more hawkish than expected. The Fed kept its inflation forecast for 2018 and 2019 unchanged and also maintained its previous interest rate projections for 2017 and 2018, with one more hike proposed for this year. The upshot has been a selloff/recovery in the US$, with the opposite result in the metals. WTI has been the main directional mover of the session, falling 3.5% after the release of the US inventory data, which came in a long way above the expected declines. Stocks have been choppy/sideways although the DJI did squeeze to a new record high and made a new record-high close.
Thursday will be another busy session, leading off with the NZ GDP (exp 0.7% qq, 2.7%yy) and the Australian Unemployment (exp +10K, 5.7%, PR; 64.8%). The focus in Europe will be on the BOE Interest Rate Decision (No change expected to policy or to the MPC Vote count (7/1)) and on the UK Retail Sales (exp -0.8%mm, +1.9%yy). The US will be busy again in disseminating the Fed decision, but also with plenty of secondary data, including the New York State Empire Mfg Index, Jobless Claims, Philadelphia Fed Mfg Survey, Import/Export Index, Capacity Utilisation, Industrial Production and the NAHB Housing Market Index. http://ow.ly/wUmD30cBo0t
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14 June: Tuesday has been a choppy & rangebound session, with little direction seen anywhere apart from Sterling which is higher after the UK CPI unexpectedly rose to a 4 year high of 2.9% yy, as traders wait on today’s FOMC outcome. US stocks are a little higher too, trading just below their record highs.
Wednesday is going to be a busy one, starting with the NZ Current Account and Food Price Index , to be followed later in the Asian session by the Australian WBC Consumer Confidence (June) , the China Retail Sales, Industrial Production and Urban Investment figures (all for May). Europe will focus on the German (CPI, exp -0.2%mm, +1.5%yy; HICP, exp 1.4%yy) the EU Industrial Production and Unemployment and also the UK Unemployment Change (exp +10k). The US will be busy ahead of the main act, being the FOMC interest rate decision, with the release of the May CPI (exp 0.0% mm, 2.0% yy), Retail Sales (exp +0.2% mm) and Business Inventories (exp -0.2%). The Fed will be the focus though at which a hike is still expected, but given the recently soft tone to the US data and employment growth, Janet Yellen may provide a slightly more dovish/cautious outlook than previously anticipated. If she remains hawkish, then look for a surge in the dollar. http://ow.ly/TLpQ30czql6
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13 June: The dollar is mixed against the major counterparts on Tuesday, with Cable lower on the UK political uncertainty while the Yen is stronger, as some mild safe-haven demand appeared following the selloff in the NASDAQ which has continued at the start of the week. Elsewhere it has been mostly choppy, but without much direction, with the Euro doing little and the commodity bloc also more or less unchanged. The S+P and the DJI are both fairly steady, as is WTI, while the metals are slightly lower.
Tuesday will have some secondary data to deal with, although the real focus will be on tomorrow’s FOMC Meeting/IR Decision /Press Conference/Statement at which a rate hike is generally expected despite the recent soft bout of US data. Ahead of that though, today sees the NAB Australian Business Conditions/Confidence, while Europe gets the UK CPI for May (exp 0.2% mm, 2.7% yy), the German Wage Price Index and the German/EU ZEW Economic Sentiment Survey. The US has just the PPI and the US NFIB Business Optimism Index, although oil traders will look to the API Weekly Crude Oil Stock Inventory for guidance. Have a good day. http://ow.ly/4GfK30cxnS2
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7 June: Markets have generally been relatively steady on Tuesday although the Yen has seen a decent rally, inspired by some safe haven demand due to the sudden escalation in tension in the Middle East/Qatar, the uncertainties over the UK election result and also on concern over of the outcome of Thursday’s testimony of former FBI director James Comey and its possible impact on Donald Trump. Other currencies are generally steady, although the commodity bloc have had a good day, with the Aud underpinned following the RBA decision to leave rates unchanged, ahead of today’s Q1 GDP outcome. Gold is breaking higher, as we mentioned yesterday. WTI is choppy, but finishing towards the top end of its range, after oil ministers assured markets that the diplomatic rift between Qatar and other Arab states would not undermine the pact to cut the glut in supply.
Most of the focus on Wednesday will be on Thursday’s ECB Meeting and UK election although before then there is a fair bit to work through. The NZ Manufacturing Sales, Australian Q1 GDP (exp +0.2%) and Construction PMI and the China FX reserves will be the main features in Asia, to be followed in Europe by the German Factory Orders and the EU Q1 GDP (exp +0.5%). There is little to come from the US, apart from the Consumer Credit and the EIA Crude Oil Stocks Weekly Change. http://ow.ly/G3d630cntr8
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1 June: Currency markets were mixed again on Wednesday, with the Euro heading higher, shrugging off some soft data that showed that the EU CPI slowed to 1.4% yy in May, down from 1.9% yy, missing expectation of 1.5% yy, while the core figure also slowed to 0.9% yy, down from 1.2% yy and missed expectation of 1.0% yy. Also from the EU, German unemployment dropped -9k in May, fewer than expectation of -14k. Cable is struggling higher too but is weighed down by the election poll results, while the Yen remains choppy but rather directionless although safe haven buying – given the political scene in Washington – is weighing on the dollar. The commodity bloc is mixed, with the Kiwi looking healthy on an upbeat economic outlook, while the Aud remain soft ahead of next week’s Q1 GDP, which looks likely to be very soft. Stocks were a little heavy, led down by banks and energy stocks, which in turn were hit by a lower oil price, down by around 2.5%. The US data was mixed, with the Pending Home Sales missing expectations, while the Chicago Purchasing Managers Index beat expectations, but leaves the likelihood of a Fed June rate hike as more likely than not. The political scene in Washington is doing little to help the dollar and this looks likely to be an ongoing scenario.
Thursday get off to an active start, with the NZ Terms of Trade, which will be closely followed by the Australian Q1 CAPEX (exp +0.8%), the April Retail Sales (exp +0.3%) and the Caixin China Mfg PMI (exp 50.1). The busy schedule will continue through Europe with the EU Flash Manufacturing/ Services/Composite PMIs and then through the US with both the Markit and ISM Mfg data. The ADP Jobs data will also be released ahead of tomorrow’s NFP, while Oil traders should look out for the EIA Crude Oil Stocks Weekly Change. Have a good day. http://ow.ly/x6l330ccVsb
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29 May: he US$ was generally mixed at the end of the week after an upbeat US Q1 GDP figure, while Sterling suffered its worst fall since mid-January after a poll showed a narrowing lead for the Conservatives ahead of the June 8 General Election. US GDP growth was revised up to 1.2% annualised, beating expectation of 0.9% and was much better than the first estimate of 0.7%. In other US data, the April Durable Goods Orders beat expectations (-0.7% vs exp -1.2%), while the University of Michigan Consumer Sentiment Index came in at May 97.1 vs exp of 97.5. Elsewhere, WTI regained some of the losses of the previous 25 May and Gold headed to a 4 week high, shrugging off a rise in the dollar. Stocks were flat ahead of the US long weekend.
The coming week will be another busy one although most of the focus will be on Friday’s US Jobs data (exp; 4.5%, +183K, AHE; 2.5%). Monday may be quiet as it is a holiday in both the UK and the US but other highlights through the week will be the German CPI and US Personal Consumption/Expenditure (Tue), Australian Q1 GDP, German/EU Unemployment, Retail Sales, EU CPI & US Pending Home Sales, (Wed), Australian Retail Sales and the global Manufacturing/Services/ Composite PMIs (Thur). It will be all about the NFP though and the prospects of a June rate hike from the Fed. have a good week.
Over the weekend German Chancellor Angela Merkel has said that Europe can no longer completely rely on its allies, the US and the UK, pointing to bruising meetings of G7 wealthy nations and NATO last week. There has been little reaction in early Monday trade to the comments. http://ow.ly/65F030c73rL
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