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Breakouts for SPX and NASDAQ, Oil drops into OPEC meeting

Overseas stock markets have been trading flat to up slightly overnight but the big news has been in the US where the S&P 500 and NASDAQ 100 have broken out to new all-time highs overnight, calling off double tops and showing that the bull market still has some legs left despite political turmoil. 

Yesterday’s Fed minutes which showed Fed members see the soft Q1 as transitory and indicated planning on how to start running down the Fed’s balance sheet is underway, was seen as staying the course. This has been echoed from Fed member speeches this week which have indicated continued plans for two more rate hikes this year, keeping June on the table with September likely off the table due to the upcoming budget battle. Today, Fed Governor Brainard, one of the most dovish members of the panel is scheduled to speak. She could throw a monkey wrench into rate hike speculation, or hint that the doves have thrown in the towel on June, either of which could have a significant impact on trading in stocks and currencies. So far, USD is trading up a bit against other majors as June rate hike speculation regains momentum.

Oil has come under pressure this morning with both Brent and WTI trading down 1.7% with losses accelerating. Reports indicate that OPEC has agreed to a nine month extension to current production cuts running through March 2018. A nine-month extension had already been priced in by the recent rally so traders appear to be taking profits against the news. Traders who had speculated on deeper cuts may also be unwinding their position. OPEC is scheduled to meet with Russia and other non-OPEC countries later today where a nine-month extension to the non-OPEC cuts is also expected. 

CAD is down slightly today, but not much compared with the oil price drop as the depressed Loonie continues to attract support from Wednesday’s Bank of Canada meeting. JPY has been underperforming other majors so far today with the rest down aa similar amount of about 0.1%-0.2% against USD. 

It’s a big day for Canada bank earnings. Results have come in a lot stronger today with TD, CIBC and RBC all beating the street by wide margins. Bank of Montreal dropped yesterday after missing expectations but raising its dividend. Today, we will see if traders are ready to respond to good news from the big banks or not. 

Corporate News

CIBC            $2.64 vs street $2.58

RBC            $1.85 vs street $1.81

TD Bank        $1.34 vs street $1.25

Best Buy        $0.60 vs street $0.40

Economic News

Significant announcements released overnight include:

UK GDP            2.0% vs street 2.1%

Upcoming significant economic announcements include:

TBA             OPEC decision on the future of production cuts

8:30 am EDT        US advance goods trade bal    street ($64.5B)
8:30 am EDT        US jobless claims        street 238K

10:00 am EDT        FOMC Brainard speaking

10:30 am EDT        US natural gas            

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