Indices in the US and Europe levelled off today to consolidate recent breakouts and rallies. US economic data was positive for the most part. A decline in an obscure indicator called capital goods orders excluding defense and air sparked an early correction showing that some traders were looking for an excuse to take profits. Strong headline durable goods orders and pending home sales, however contained the declines and led to a flat day for US trading.

Crude oil spent the day with Brent and WTI bumping up against the $50.00 big round number barrier, breaking through it briefly. Oil has now nearly doubled off its lows, a huge turnaround in only a matter of months and appears to be pausing. With an OPEC meeting now only a week out and the potential further gains in the price could enable US shale producers to resume production could overhang the price in the near term. A growing US economy and improving demand prospects may provide support.   

Rising oil prices helped oil sensitive currencies to rally on the day and helped the energy-weighted S&P/TSX to outperform its US counterparts. Strong earnings from three of Canada’s largest banks, CIBC, TD and RBC met with a muted response from the street. The stocks had been rallying toward new trend highs lately and may have already priced in the results. Some traders appear to be using the news as a trigger for profit-taking instead.

For today’s Asia Pacific trading session, the spotlight remains firmly on Japan with traders looking to see what kind of statements if any about economies or currencies may come out of the G-7 summit. Signs of solidarity or strife may also attract attention. JPY pairs may be active around inflation figures. Swings in commodity prices may once again influence trading in resource stocks.

In the US tomorrow there’s a GDP update but more importantly, Fed Chair Yellen is speaking, her first public appearance since the tone from FOMC speakers turned more hawkish supported by Fed minutes and strong economic data. Dr. Yellen is one of the more dovish Fed members and a key swing vote so any leanings from her could confirm or refute the potential for a June or July rate hike. Today, Fed Governor Powell, a permanent voter who rarely speaks confirmed the hawkish outlook saying “another rate increase may be appropriate very soon.”

Corporate News

There have been no major announcements after the US close today.

Economic News

Significant announcements released overnight include:

US durable goods orders        3.4% vs street 0.5%
US durable goods orders        previous revised up to 1.9% from 0.8%

US durables ex transport        0.4% vs street 0.3%
US capital goods orders ex def ex air    (0.8%) vs street 0.3%
US capital goods shipmnts ex def ex air    0.3% vs street 0.1%

US march factory orders        previous revised up to 1.8% from 1.5%

US jobless claims            268K vs street 275K
US pending home sales            5.1% vs street 0.7%
US KC Fed                (5) vs street (3)
US natural gas storage            71 BCF vs street 67 BCF

UK GDP update                2.0% vs street 2.1%
UK private consumption            0.7% vs street 0.5%
UK total business investment vs quarter    (0.5%) vs previous (2.0%)
UK total business investment vs yr ago    (0.4%) vs previous 3.0%

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)  

9:30 am AEST        Japan consumer prices        street (0.4%)
9:30 am AEST        Japan core CPI            street 0.7%
11:30 am AEST        China industrial profits         previous 11.1%

8:00 am BST        Spain retail sales        previous 4.3%
8:30 am BST        Sweden retail sales        street 0.4%

8:30 am EDT        US Q1 GDP update        street 0.9% vs previous 0.5%
8:30 am EDT        US Q1 personal consumption    street 2.1% vs previous 1.9%
8:30 am EDT        US Q1 core PCE        street 2.1%

10:00 am EDT        US consumer sentiment        street 95.4%
11:30 am EDT        US NOAA Atlantic hurricane season forecast

1:15 pm EDT        FOMC Yellen speaking

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