It's been a mixed evening and morning for traders. US indices have stabilised at lower levels following Monday's takedown but European indices have rebounded on the back of surging Eurozone inflation and falling unemployment. US index futures are down 0.1% while the Dax is up 0.2% and the FTSE
is up 0.4%.
Currency markets have been steady overnight with the US Dollar losing ground to most majors as growing US political and economic uncertainty finds its way into currency trading as well and the Trump trade unravels. CAD is climbing on stronger than expected Canadian GDP and raw material price increases. Commodities are also mixed with copper up 1.5% and WTI crude oil down 0.5%. The Bank of Japan stayed the course and raised its GDP forecast.
Gold is outperforming other currencies today and on the upswing having regained $1,200. These gains reflect continuing activity and uncertainty in the political arena. President Trump remains focused on immigration at the moment and is expected to announce his Supreme Court Nominee tonight. On top of the potential that trade talks could cause economic disruption and the recent events remind the street that business is not the President's only priority.
Sterling could be active today with the government expected to table a brief bill enabling it to start Brexit negotiations. Press reports suggest the target date for triggering Article 50 could be moved up to March 9. A white paper on Brexit is apparently due on Thursday. The Euro is rallying as increasing inflation pressures on the continent increase pressure on the ECB to start cutting back on stimulus more aggressively than the one and done taper it has planned for this year.
The Fed starts a two day meeting today with the decision due tomorrow. No change is expected but the statement could attract keen interest from traders looking for hints of whether a March increase is still on the table. For the Fed to raise rates in and orderly fashion, it would need to hike in March if it intends to reach four increases in 2017. To pass on March would mean a more dovish Fed than the street is currently expecting.
There's a lot of data for the Fed and the market to consider before the decision including Chicago PMI later this morning, plus manufacturing PMI and ADP payrolls tomorrow morning. Earnings season picks up again today too with Apple reporting after the close this afternoon. Results so far today have been all over the map.
Imperial Oil $0.54 vs street $0.37
UPS $0.63 vs street $0.69
Aetna $1.63 vs street $1.44
MasterCard $0.86 vs street $0.85
Eli Lilly $0.95 vs street $0.98
Pfizer $0.47 vs street $0.50
Coach $0.75 vs street $0.74
Harley-Davidson $0.27 vs street $0.31
Bank of Japan decision no change to interest rates or QQE as expected, raised
Japan unemployment rate 3.1% as expected
Japan industrial production 3.0% as expected
Japan vehicle production 4.2% vs previous 6.6%
Japan housing starts 3.9% vs street 8.3%
Japan construction orders 7.1% vs previous (6.0%)
Australia NAB business conditions 11 vs previous 5
France GDP 1.1% as expected
France consumer prices 1.4% vs street 1.1% vs previous 0.6%
Spain consumer prices 3.0% (wow) vs street 2.3% vs previous 1.6%
Germany retail sales (1.1%) vs street 0.5% vs previous 3.2%
Germany unemployment change (26K) vs street (5K)
Germany unemployment rate 5.9% vs street 6.0%
Eurozone GDP 1.8% vs street 1.7%
Eurozone consumer prices 1.8% vs street 1.5% vs previous 1.1%
Eurozone core CPI 0.9% as expected
Eurozone unemployment rate 9.6% vs street 9.8%
Upcoming significant economic announcements include:
8:30 am EST Canada Nov GDP street 1.4%
8:30 am EST Canada industrial prices street 0.5%
8:30 am EST Canada raw material prices street 2.87% vs previous (2.0%)
9:45 am EST US Chicago PMI street 55.0
10:00 am EST US consumer confidence street 112.8