US stocks started the day off but recovered in the afternoon to finish pretty much where it started. Stocks were pulled down initially by weaker than expected retail sales and a downward revision to last month’s report, partially offset by a much better than expected Empire manufacturing survey. US data this week is being viewed through the prism of what it could mean for the Fed decision today’s data was a wash giving support to both the hawks and the doves.
Crude oil also started to day off soft but WTI held $35.00 and clawed back some of its losses through the day to finish down 1.8%. The trading correction blamed on Iran’s continued intention to ramp production back up to pre-sanctions levels appears to have run its course. WTI has picked up on a smaller than expected increase in API inventories and could be active through tomorrow morning’s DOE reports.
Currency markets saw a number of significant swings in both directions. JPY remained king of the hill following yesterday’s decision to not bring in additional stimulus pausing after introducing negative rates at the last meeting. SEK was also strong on indications the Riksbank may be done lowering interest rates and could start to raise rates in 2017.
Oil sensitive currencies fell along with commodity prices with NOK down 1.0%, CAD down 0.7% and RUB down 0.3% with its blow cushioned by a positive reaction to Russia’s decision to pull out of Syria. Canadian stocks had a mixed day with oil producers under pressure, gold miners picking up and Valeant Pharmaceuticals falling 48% after reporting earnings and guidance well below expectations.
GBP also fell on a new Brexit poll published in the Telegraph showing the Leave camp leading 49%-47%. After factoring in the Leave camp’s higher interest in coming out to the pools, among likely voters, Leave has opened up a 52%-45% lead over Stay. This news didn’t have any impact on the FTSE, but GBP took a hit relative to USD and EUR falling about 1%. Sterling could be active again Wednesday around the UK employment report.
NZD also fell 1% against USD over the last 24 hours while AUD has declined 0.7% with USD strengthening relative to resource currencies ahead of Wednesday’s FOMC meeting.
The US central bank is not expected to raise rates this meeting but with inflation pressures growing and the US economy still strong, the Fed is likely to use the statement, forecasts and press conference to signal another hike is likely in the spring (April most likely). Hawkish news or signals may boost USD and could send stocks initially lower then higher as a signal of tighter monetary policy driven by a stronger economy. Neutral to dovish news or signals could undermine confidence in the US economy and stock market while also sending USD lower.
Oracle $0.64 vs street $0.62
Chipotle Mexican same store sales (26.1%), guides Q1 EPS ($1.00) way below street $0.02
Significant announcements released overnight include:
US API crude oil inventories 1.5 mmbbls vs street 2.5 mmbbls
US retail sales (0.1%) vs street (0.2%) US retail ex auto (0.1%) vs street (0.2%) US retail previous month revised down to (0.4%) from 0.2%
US producer prices 0.0% vs street 0.1% US core PPI 1.2% as expected
US Empire manufacturing 0.6 vs street (10.5) and previous (16.64) US NAHB housing market 58 vs street 59
Canada existing home sales 0.8% vs previous 0.5%
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)
TBA US Primaries results from Florida, Ohio, Illinois, Missouri and North Carolina
9:30 am GMT UK jobless claims change street (9K) 9:30 am GMT UK 3M employment change street 144K vs previous 205K 9:30 am GMT UK unemployment rate street 5.1% 9:30 am GMT UK average weekly earnings street 2.0%
12:30 pm GMT UK Osborne budget speech to Parliament
10:00 am GMT Eurozone construction output previous (0.4%)
8:30 am EDT Canada manufacturing sales street 0.5% vs previous 1.2%
8:30 am EDT US consumer prices street 0.9% vs previous 1.4% 8:30 am EDT US core CPI street 2.2% 8:30 am EDT US real avg weekly earnings previous 1.2%
8:30 am EDT US housing starts street 1,150K 8:30 am EDT US building permits street 1,200K
9:15 am EDT US industrial production street (0.3%) vs previous 0.9% 9:15 am EDT US manufacturing production street 0.1% vs previous 0.5%
10:30 am EDT US DOE crude oil inventories street 3.2 mmbbls 10:30 am EDT US DOE gasoline inventories street (2.2 mmbbls)
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