raders saw no major news as good news for the US Dollar from the Fed today. The FOMC left interest rates unchanged and indicated that is sees Q1 softness in the US economy as transitory and expects higher growth to resume. This sparked a rebound in the US Dollar which had weakened since last Friday’s soft US GDP report. Weaker hard versus soft data continued today with an expected decline in ADP payrolls offset by a better than expected ISM non-manufacturing PMI report.
The USD had weakened on speculation that a slow economy could force the Fed to pass on a June rate hike but today’s statement quashed that bit of dovishness. With a big budget battle and potential government shutdown looming in September, it would appear that if the Fed is going to skip a quarterly hike this year, it’s more likely to be in the fall than in June.
The Dow and S&P finished the day flat with the NASDAQ down 0.3% after outperforming in recent days. Canada’s S&P/TSX underperformed late in the day falling to a 0.5% loss as mining stocks were hit by falling metal prices. Base metals were hit hard early with copper falling 4% on the day. Freeport in the US plus Teck and First Quantum in Canada all fall about fell 5.5%. Precious metals were hit later in the day as the post-Fed US Dollar rally sent gold tumbling back under $1,250. This action suggests that Australian mining stocks could be vulnerable today, with AUD (back under $0.7500) and NZD already under pressure.
Trade data for Australia, the US and Canada plus the remaining service PMI report dominates the economic news for the next 24 hours but unless there are significant surprises, traders focus may turn to Friday’s US nonfarm payrolls and Sunday’s French election.
Facebook $1.04 vs street $1.12, sales $8.03B above street $7.83B
Tesla Motors ($1.33) vs street ($0.82) sales $2.7B vs street $2.6B
Significant announcements released overnight include:
US FOMC interest rate 1.00% no change expected
US ADP payrolls 177K vs street 175K vs previous 263K
US Markit Service PMI 53.1 vs street 52.5
US ISM non-manufact PMI 57.5 vs street 55.8
US DOE crude oil inventories (0.9 mmbbls) vs street (3.2 mmbbls)
US DOE gasoline inventories 0.2 mmbbls vs street 1.0 mmbbls
US DOE distillate inventories (0.5 mmbbls) vs street 2.0 mmbbls
UK construction PMI 53.1 vs street 52.0
Eurozone GDP 1.7% as expected
Eurozone producer prices 3.9% vs street 4.2%
Germany unemployment chnge (15K) vs street (11K) vs previous (30K)
Germany unemployment rate 5.8% as expected
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)
10:30 am AEDT Singapore Nikkei
PMI previous 52.2
11:00 am AEDT NZ ANZ commodity prices previous 0.4%
11:30 am AEDT Australia trade balance street $3.2B
11:45 am AEDT China Caixin service PMI previous 52.2
8:00 am BST Spain unemployment change (79K) vs previous (49K)
9:00 am BST Norway interest rate 0.50% no change expected
9:30 am BST UK service PMI street 54.5
8:55 am BST Germany service PMI street 54.7
8:50 am BST France service PMI street 57.7
8:15 am BST Spain service PMI street 57.7
8:45 am BST Italy service PMI street 53.6
10:00 am BST Eurozone retail sales street 2.1% vs previous 1.8%
8:30 am EDT Canada trade balance street ($1.0B)
8:30 am EDT US trade balance street ($44.5B)
8:30 am EDT US jobless claims street 248K
10:00 am EDT US factory orders street 0.4% vs previous 1.0%
11:30 am EDT ECB Draghi speaking
4:25 pm EDT Bank of Canada Poloz speaking
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