Coming off a really big day for economic news there has been a lot of action in the markets, mainly focused in commodities and currencies.
The biggest market moving event of the day has been the US retail sales report which came in below expectations again. Combined with soft earnings out of Macy’s it has become clear that US consumers still haven’t increased their spending and that the US economy has not accelerated out of the winter as strongly as it did last year.
With this news adding to speculation that US interest rate liftoff is likely to be pushed off to later in the year at least, USD sold off on the news sending the greenback to the bottom of the league standings. This collapse also sparked a big rally in gold, which rose over $20.00/oz on the day breaking through $1,200 and challenging $1,220 while sending silver to nearly a 4% gain.
The second worst performing currency on the day has been GBP which dropped after the Bank of England cut its UK GDP forecasts and Governor Carney their forecasts were based on the first interest rate hike potentially coming a year from now in mid-2016.
The USD drop also boosted crude oil early on helping WTI to regain $60 and continue to carry on higher despite news from the IEA that OPEC production increases have more than offset US production decreases. In other words, the market share war among suppliers continues, and the Saudis appear to be winning at the Americans expense. Although this means crude oil could struggle again if the price rises high enough to enable US producers to turn on the taps again. As the day progressed, the reality of the ongoing market share war set in and WTI fell back toward $60, but NOK was able to hold on to its gains so far. CAD trailed behind today likely on concern’s a slowing US economy could drag on Canada as well.
NZD and AUD have also turned in a strong performance with commodity prices on the rebound and USD falling. Today, the main focus of news is on New Zealand where PMI and retail sales reports may give a better indication of how much pressure the RBNZ may be under to cut interest rates at its next meeting which could keep trading in both NZDUSD and AUDUSD
active today. .
Cisco Systems $0.54 vs street $0.53
Significant announcements released overnight include:
Bank of England forecasts based on a mid-2016 start to interest rate hikes
Bank of England GDP forecasts cuts 2015 to 2.5% from 2.9%
cuts 2016 to 2.6% from 2.9%
Bank of England inflation forecast to reach 2.0% by mid-2017
UK jobless claims (12K) vs street (20K)
UK rolling 3M jobs change 202K vs street 225K
UK average weekly earnings 1.9% vs street 1.7%
UK unemployment rate 5.5% as expected
US retail sales 0.0% vs street 0.2%
US retail ex auto 0.1% vs street 0.5%
US retail ex auto and fuel 0.2% vs street 0.6%
Canada Teranet house prices 4.4% vs previous 4.7%
France GDP 0.7% as expected
Germany GDP 1.1% vs street 1.3%
Italy GDP 0.00% vs street (0.2%)
Eurozone GDP 1.0% as expected
Greece GDP 0.1% vs street 0.7%
Upcoming significant announcements include:
8:30 am AEST New Zealand Business PMI previous 54.5
8:30 am AEST New Zealand retail sales street 1.6%
8:30 am EDT US jobless claims street 273K
8:30 am EDT US producer prices street (0.8%)
8:30 am EDT US producer prices ex food and energy street 0.1%
10:30 am EDT US natural gas street 117 BCF