he correction of speculative trades in the US related to President Trump’s economic policies running into potential difficulties in Congress worked its way around to the UK and Europe today and continued to impact trading in the US where indices are mixed.
In the UK the FTSE declined 0.6%. 11 of 12 sectors spent the day in the red with technology, real estate and financials falling the most while Utilities eked out a small gain. In the US, Financials and telecom are underperforming with technology bouncing back.
News of an automotive attack on pedestrians on Westminster Bridge and a shooting near Parliament sent Sterling down briefly but the pound then strengthened in the aftermath. What looks like a terrorist attack has not moved gold but there has been renewed interest in the Japanese Yen generally today as capital leaves risk markets like stocks and energy for traditional havens.
Crude oil is trading down 1.5% with Brent testing $50.00 and WTI testing $47.50. US DOE crude oil inventories increased by about 5.0 mmbbls last week, confirming the 4.5 mmbbl increase in API inventories reported last night. Gasoline and distillates inventories fell more than expected. Oil has been bouncing back since the DOE report as the selloff after API priced in another inventory build already.
The Canadian government is set to announce its latest budget later this afternoon. The centrepiece is expected to be the introduction of an infrastructure bank, but tax changes are also possible. What may be most important, however, is what the government's assumptions for energy prices and energy tax revenues are. If the market share war resumes and prices tumble again making assumptions optimistic, the government could struggle to meet its targets. On the other hand, higher prices could help the government to achieve its goals. Infrastructure stocks could be active on the news. Heading into the budget, CADUSD is trading just below $0.7500 clawing back earlier losses following the rebound in WTI.
The Reserve Bank of New Zealand is meeting today with a decision due at 4:00 pm EDT. The Bank is expected to maintain its official cash rate at 1.75% and to take a neutral tone in its statement. Although NZD has bounced back above $0.7000 and is climbing ahead of the meeting today, it remains well below the $0.7300-$0.7400 range it was trading in at the time of the last meeting. Because of this, the bank’s tone on the Kiwi Dollar may also be more neutral and less threatening than past statements.
Later today there is a central bank meeting in New Zealand with no changes expected. Tomorrow brings UK retail sales which are expected to rebound to 3.2% from a soft 2.6% growth rate last month. CBI retailer reports for UK retailers and distributors are also due. Thursday may see the US Dollar active as Fed Chair Yellen makes her first public comments since last week’s FOMC meeting and press conference.
There have been no major corporate reports after the US close today.
Significant announcements released overnight include:
NZ RBNZ Official Cash Rate 1.75% no change expected
US DOE crude oil inventories 4.9 mmbbls vs street 3.0 mmbbls
US DOE gasoline inventories (2.8 mmbbls) vs street (2.4 mmbbls)
US DOE distillate inventories (1.9 mmbbls) vs street (1.5 mmbbls)
US existing home sales 5.48M vs street 5.55M
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
4:00 pm AEDT Singapore consumer prices street 0.7%
4:00 pm AEDT Singapore core CPI street 1.3%
9:30 am GMT UK retail sales street 3.2% vs previous 2.6%
9:30 am GMT UK retail ex auto street 2.6% vs previous 1.5%
11:00 am GMT UK CBI retail sales 4 vs previous 9
11:00 am GMT UK CBI distributor sales 20 vs previous 25
8:30 am EDT US jobless claims street 240K
8:45 am EDT FOMC Yellen speaking
12:30 pm EDT FOMC Kashkari speaking
10:00 am EDT US new home sales street 565K
10:30 am EST US natural gas street (149 BCF)
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