The US returns to trading this morning from the Memorial Day weekend to USD rallying again and stocks falling back. Durable goods orders for April came in positive overall with the ex-transportation figure breaking a losing streak and beating the street while March figures were revised sharply upward. This indicates that the US economy has been doing better than thought providing data confirmation to recent comments from Fed Chair Yellen and Vice-Chair Fischer that interest rate increases look likely to start in 2015. European trading today finds EUR continuing to weaken on the increasing potential for political instability across the continent following weekend elections in Spain and Poland where establishment parties were shown the door regardless of how good or bad their economic record has been. A growing desire for change increases uncertainty which has weighed on markets. Bourses that were open and sold off yesterday like the IBEX, CAC and MIB have stabilized while indices that were closed yesterday like the FTSE and particularly the Dax have been falling in a catch up selloff. The USD rally has sent precious metals tumbling today with gold dropping down through both $1,200 and $1,190 while silver has fallen over 2.5%. Crude oil is also getting knocked back again with both WTI and Brent posting 1% plus losses as the recent rebound falters, USD rises and the supply war continues unabated heading into next month’s OPEC meeting. In currency trading, JPY has been hit the hardest as it broke out over 122.00 against USD, while AUD and EUR also remain under pressure. SEK and CHF have held up the best against a rallying greenback, while GBP’s losses have been stemmed by a very strong CBI retail sales report. CAD and NOK are falling in line with the group and at a slower pace than oil prices. With the US back at work, we essentially get two days’ worth of data in one today. Trading in US markets may remain active through the morning with a number of housing and regional reports on the way. In particular, the Dallas Fed report may attract attention as it can indicate how much damage has been done to the oil patch by the oil price crash. Corporate News Charter Communications has agreed to purchase Time Warner Cable for $195.71 per share in a combination of cash and shares, or $55B, a 14% premium to Friday’s close Economic News Economic reports released overnight and this morning include: US durable goods orders (0.5%) as expected, previous revised up to 5.1% from 4.0% US durables ex transport 0.5% vs street 0.3% previous revised up to 0.6% from (0.2%) New Zealand trade balance $123M vs street $98M Singapore GDP 2.6% vs street 2.2% Singapore industrial production (8.7%) vs street (3.6%) Sweden producer prices 2.4% vs previous 2.3% UK CBI sales 51 vs street 20 vs previous 12 Economic reports due later today include: 9:00 am EDT US house price index street 0.7% 9:45 am EDT US flash service PMI street 56.5 10:00 am EDT US new home sales street 505K 10:00 am EDT US consumer confidence street 95.0 10:30 am EDT US Dallas Fed (11.5) vs street (16.0) 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.
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