Much of the trading action overnight has been centred in commodities and currencies rather than stocks. The Hang Seng, which had been outperforming of late, fell back to Earth in a 1.2% tumble, The Nikkei, FTSE, Dax and US index futures are all down about 0.2%.

The US Dollar has been on a roller coaster ride over the last 24 hours. The greenback sold off yesterday afternoon as traders took disagreement over what to do about stubbornly low inflation as dovish. It then bounced back after SF Fed President Williams suggested the Fed is about halfway through its rate hike cycle, indicating rate hikes could resume at some point and continue through 2018.  

The Euro has been hit particularly hard in the USD rebound, falling 0.6% overnight. The single currency has been under pressure following reports that ECB President Draghi would rather talk tapering in the fall and not at the upcoming Jackson Hole Fed conference. Another leg downward has started on the release of ECB minutes are due this morning but may not have an impact unless there are comments related to when we might get more news about the future of the ECB’s asset purchase program. 

CAD and MXN are down 0.2% and 0.4% today as the first round of NAFTA talks continue. So far there haven’t been any tweets or threats from President Trump on the matter but if he does say anything, it could spark short-term currency trading moves. 

This morning Thursday morning brings a number of mid-tier economic announcements out of the US plus earnings from Wal-Mart which could keep the spotlight on retailers. Wal-Mart beat the street by a penny but guidance was a bit mixed. Competitor Target gained 3.4% yesterday after beating the street on earnings and raising guidance. 

 

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