Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
Commentary: Dollars and Energy active to wrap up the week
00:00, 22 November 2013
Overnight action in currency markets shows how trading in money can be influenced by many factors, particularly economic data it’s influence on central bank thinking. EUR has been on the rebound overnight boosted by better than expected German IFO business survey results. Similarly, SEK has spiked up over 1% after Swedish consumer and manufacturing confidence came in very strong. In both cases support for the currency has been shored up as data takes pressure off the central bank to ease. CAD has started to claw back yesterday’s losses after Canadian data took a positive turn. Retail sales came in well above expectations. Meanwhile, even though headline inflation dropped off sharply, core inflation remained well above 1.0% easing deflation risks at the moment. The combined effect of these releases has been to take some of the pressure off the Bank of Canada to cut interest rates to fight off deflation and boost the economy for now. AUD and NZD have been selling off tonight in fear of central bank interventions. Both the RBA and RBNZ have raised concerns that their Dollars appear overvalued and complained about the effect of that on their economies. Earlier this year the RBNZ intervened in FX markets to knock NZD back. Comments yesterday from RBA Governor Stevens indicating he is open to active intervention has raised concerns that a second round of actions this time from both central banks against their Dollars could be on the way. USD has resumed its downtrend after the latest round of December tapering speculation topped out with the Dollar Index at another lower high. CHF has started to rebound while JPY remains soft after the BoJ left the door open to more easing. Gold and silver have been showing signs of life but still need to break through $1,250 or $20.00 respectively to signal an upturn. Stocks have been moving higher again overnight particularly in Asia Pacific where the Hang Seng and S&P/ASX rebounded. European indices have been moving higher on the positive German and Swedish survey results. US markets continue to attract support but also continue to struggle with resistance for the Dow near 16,000 and the S&P near 1,800. Energy commodities continue to attract attention on improving demand prospects and better than expected US inventories this week. Natural gas continues its seasonal rally with temperatures falling and snow potentially on the way. US crude has been consolidating yesterday’s rally while US crude builds on yesterday’s breakout. Economic News Significant economic announcements released yesterday afternoon and overnight include: Canada retail sales 1.0% vs street 0.3% Canada sales ex auto 0.0% vs street 0.3% Canada consumer prices 0.7% vs street 0.8% vs previous 1.1% Canada core CPI 1.2% in line Germany GDP 1.1% as expected Germany IFO bus climate 109.3 vs street 107.7 Germany IFO current 112.2 vs street 111.5 Germany IFO expectations 106.3 vs street 104.0 Italy retail sales (2.8%) vs previous 0.2% Sweden consumer confidence 104 9 vs street 102.0 Sweden manuf confidence 105.8 vs street 100.6 and previous 101.7 Economic reports due later today include: There are no major reports scheduled for later today or on the weekend.