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Crude oil rallies again; retailers mixed ahead of retail sales reports

Crude oil is coming off another big day. Brent and WTI dropped back in the morning as traders took some trading profits as Canadian Oil Sands operations started toward a return to production, but that was short-lived as oil markets regained their footing and started to power ahead again in the afternoon. Energy sensitive currencies like CAD and NOK rallied in tandem with oil prices. Brent Crude completed a golden cross confirming the one completed in WTI earlier in the week to indicate the recovery trend continues.

Action in North American stock markets was mixed with indices falling in the morning and recovering in the afternoon. Utilities and Telecom were the top performing sectors suggesting defensive positioning but this was not confirmed by bigger defensive plays like gold and JPY which retreated on the day. Retailers were mixed with Kohl’s plunging 9.7% in the US on a weak earnings report while Canadian Tire rallied 3.7% on a positive report. These results suggest that the retail environment may be stronger in Canada at the moment. Nordstrom may give another indication of which way the sector is heading. Gold producers fell in Canada while base metal miners came under pressure in the US suggesting that miners in Australia could struggle today.

Heading into the weekend, there are a number of economic announcements still due that could move the markets, Retail sales may be a particular focus with reports due for New Zealand, Singapore and later the United States.  The US report may attract particular attention in the wake of disappointing earnings reports from US retailers as traders try to get a read on how strong the US economy. Boston Fed President Rosengren indicated again today he thinks the street has been too pessimistic about the US economy and underpricing the potential for rate hikes this year saying the odds of a hike are higher than the street currently thinks. In Europe, Germany headlines a flurry of GDP reports.

Corporate News

There have been no major announcements after the US close so far.

Economic News

Significant announcements released overnight include:

Bank of England interest rate and QE    0.50% and £375B no change as expected, 9-0 votes as expected    

Bank of England forecasts    

    2016 GDP        cut to 2.0% from 2.2%
    Q2 GDP        cut to 0.3% from 0.5%
    2016 inflation        maintained at 0.4% expected to rise to 2.1% in two years

Norway interest rate        0.50% no change as expected

US import prices        (5.7%) vs street (5.4%) vs previous (6.2%)
US jobless claims        294K vs street 270K
US natural gas            56 BCF vs street 58 BCF

Canada new house prices    2.0% vs street 1.9%

Germany wholesale prices    (2.7%) vs street (2.6%)
Sweden unemployment rate    3.8% as expected vs previous 4.0%
France consumer prices        (0.2%) as expected
Sweden consumer prices    0.8% vs street 0.9%
Norway GDP            1.0% vs street 0.1%
Norway mainland GDP        0.3% vs street 0.2%
Eurozone industrial production    0.2% vs street 0.9%
Greece unemployment rate    24.2% vs street 24.3%

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)  

8:45 am AEST        NZ Q1 retail sales        street 1.0% vs previous 1.2%
3:00 pm AEST        Singapore retail sales        street 3.6% vs previous (3.2%)
3:00 pm AEST        Singapore retail ex auto        street (3.9%) vs previous (9.6%)

7:00 am BST        Germany consumer prices    street (0.1%)
7:00 am BST        Germany GDP            street 1.2% vs previous 2.1%
8:00 am BST        Spain consumer prices        street (1.1%)
9:00 am BST        Italy GDP            street 0.9%

9:30 am BST        UK construction output        street (2.7%)

10:00 am BST        Greece GDP            street (1.4%)
10:00 am BST        Eurozone GDP            street 1.6%

8:30 am EDT        US retail sales            street 0.8% vs previous (0.4%)
8:30 am EDT        US retail sales ex auto        street 0.5%
8:30 am EDT        US producer prices        street 0.2%
8:30 am EDT        US core PPI            street 0.9%

10:00 am EDT        US consumer sentiment        street 89.5


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