S indices were mixed while the US Dollar Index continued its retreat after failing to retake the 100.00 level through a flurry of US news. Earnings remain a big focus particularly the positive response to Apple’s results. Stellar ADP payrolls and stronger than expected manufacturing PMI indicated a robust US economy and job market.
The Fed decision, however, was seen as dovish. The central bank maintained its benchmark interest rate with no dissenters as expected. The statement, however, took a dovish turn with the Fed indicating several times that inflation remains below its 2% objective (despite rising oil prices and growing inflation pressures elsewhere). FOMC members also took time to indicate that no changes are planned for its balance sheet it plans to keep reinvesting principal payments until rate normalization is well underway. The US Dollar turned downward on this news, which suggests that the Fed may not be as aggressively hawkish this year as the street had been thinking.
The US Dollar retreat lit a fire under other currencies. The resource dollars, AUD, NZD and CAD continued to climb while gold and crude oil also posted gains on the day. AUD could attract attention today around Australian trade and building data while mining and energy stocks may be active again.
After the close there was another flurry of earnings reports that saw Facebook beat the street by a wide margin and Symantec post a positive surprise as well. A deluge of reports from the insurance sector have been all over the map featuring a number of stellar numbers and big misses.
Earnings reports continue Thursday but the spotlight is likely to cross the pond to the UK with Brexit and the Bank of England scheduled to be in the news. Today, the Brexit bill passed its first stage in the House of Commons while Scottish amendments that could have slowed the process were rejected. GBP rallied on this news. Thursday, the government is expected to release a white paper on its Brexit strategy. Meanwhile, the Bank of England is meeting and issuing its inflation report. Although the central bank lost a lot of credibility through its actions before and after the Brexit vote, comments on the economy and monetary policy
outlook could attract some attention.
Facebook $1.41 vs street $1.31
Symantec $0.32 vs street $0.28
Allstate $2.17 vs street $1.63
Significant announcements released overnight include:
US FOMC interest rate 0.75% no change as expected
US ADP Payrolls 246K (wow!) vs street 168K
US construction spending (0.2%) vs street 0.2% vs previous 0.9%
UK Nationwide house prices 4.3% as expected
Manufacturing PMI reports:
Canada 53.5 vs previous 51.8
US Markit 55.0 vs street 55.1
US ISM PMI 56.0 vs street 55.0
US ISM prices paid 69.0 vs street 65.5
US ISM new orders 60.3 vs previous 60.2
UK 55.9 as expected
Germany 56.4 vs street 56.5
France 53.6 vs street 53.4
Italy 53.0 vs street 53.3
Spain 55.6 vs street 55.0
Norway 51.4 vs street 51.2
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)
11:30 am AEDT Australia trade balance street $2.0B
11:30 am AEDT Australia building approvals street (10.8%)
8:00 am GMT Spain unemployment change street 60K vs previous (86K)
9:30 am GMT UK construction PMI street 53.8
12:00 pm GMT Bank of England decision no change to interest rates or QE expected
12:00 pm GMT Bank of England inflation report
12:15 pm GMT ECB Draghi speaking
8:30 am EST US jobless claims street 250K
10:30 am EST US natural gas street (83 BCF)
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