Trading across markets around the world has been mixed overnight with the waiting for a number of potentially big events this week creating confusion and indecision. US index futures are up 0.1% while in Europe, the FTSE is down 0.6%, and the Dax is flat. Italy’s MIB is up 0.9% in a relief rally after rumours Italian PM Renzi would regisn even if he won this weekend’s referendum were quickly stomped out.
The main focus today remains on the oil market and negotiations on a supply deal ahead of tomorrow’s big OPEC meeting. It looks like talks are going to go right down to the wire with countries alternating between hard line positions and openness to doing a deal which is all part of negotiations. It’s all going to come down to how much Saudi Arabia is willing to cut to make a deal happen and if Iran and Iraq are willing to at least nominally participate. Rumours, statements and reports could drive significant intraday swings today just like we saw yesterday and overnight. Currently WTI is down 1.8% but is still trading just above the middle of a $40-$50 trading range. The news of whether we get a deal this week or not could send oil to either end of this zone in a hurry.
To no surprise, the lower oil price is dragging on oil sensitive currencies like CAD, NOK and RUB a bit, but not more than other currencies like EUR for example. JPY has been hit harder overnight again despite a positive retail sales report out of Japan. USD has bounced back a bit but still looks like it could be in the process of peaking. Traders should note that last year, the US Dollar peaked in early December and was already starting to sink by the time the Fed actually held its meeting to raise interest rates.
In Canada trading today, attention may be split between the energy and financial sectors. Energy stocks could be battered like a piñata between oil price swings and OPEC speculation. Canadian banks, on the other hand, could rally today. The Bank of Nova Scotia has kicked off Canadian bank earnings season with a big beat reporting EPS of $1.58 well above the $1.51 the street had been expecting. Results from both Canadian and International banking operations were above expectations.
Last night’s comments from Bank of Canada Governor Poloz that he feels service sector growth is pointing toward a recovery for the Canadian economy have been overshadowed by oil price action but they could have an impact on the Loonie longer term particularly into next week when the OPEC dust settles and the December Bank of Canada meeting approaches. Expectations of an improving economy suggests that the central bank may not be under as much pressure to cut interest rates particularly if the loonie remains below 75 cents US.
Bank of Nova Scotia $1.58 vs street $1.51
Tiffany & Co. $0.76 vs street $0.67
Japan unemployment rate 3.0% as expected
Japan household spending (0.4%) vs street (1.0%)
Japan retail sales 2.5% vs street 1.6%
France GDP 1.1% as expected
Greece GDP 0.8% over quarter vs street 0.5%%
Upcoming significant economic announcements include:
1:00 pm GMT Germany consumer prices street 0.8%
8:30 am EST US Q3 GDP update street 3.0%
8:30 am EST US Q3 personal consumption street 2.3%
8:30 am EST US Q3 Core PCE inflation street 1.7%
10:00 am EST US consumer confidence street 101.5 vs previous 98.6
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