S and Europe declined steadily through the day with bears dominating after yesterday’s surprise 6% drop in Chinese stocks spooked the bulls. Better than expected US housing starts propelled homebuilders to a positive day but weren’t enough to help the broader market. The materials sector led the way lower as the copper price fall to lowest levels since 2009 on a weaker outlook for Chinese demand. Silver also was under pressure falling 3%.
Once again news flow is relatively light, particularly on the corporate side with earning season pretty much over. There are a number of second tier reports due for Japan that could influence trading in JPY but that’s about all until the US returns. Because of this, Asia Pacific traders may remain focused primarily on China wondering if indices can stabilize or if we could see more follow-through selling pressure.
AUD may also be active today, having underperformed overnight in the wake of yesterday’s RBA minutes where the central bank confirmed the benefits of a lower dollar for shoring up the economy. This indicated that even if the RBA stops trying to drive the dollar down, it likely isn’t going to do anything to help it bounce back either.
Crude oil bounced back today, particularly WTI which helped to support CAD. There wasn’t any news so this appears to have been technical buying (short covering and bargain hunting). We may get a better idea on how long this bounce could last around tomorrow’s US inventory report.
GBP has been the top performing currency on the day boosted by stronger than expected core CPI inflation which has increased the pressure on the Bank of England to raise interest rates sooner. Wednesday brings the US inflation report and minutes of the last FOMC meeting which could kick off another round of speculation on whether or not the Fed may start raising interest rates in September.
Canadian Solar $0.31 vs street $0.13, sales $636M vs street $592M, guides next Q sales to $570-$620M below street $670M
Analog Devices $0.77 vs street $0.74, guides next Q EPS to $0.79-$0.87 above street $0.79
Significant announcements released overnight include:
US housing starts 1,206K vs street 1,180K
US building permits 1,119K vs street 1,225K
UK consumer prices 0.1% vs street 0.0%
UK core CPI 1.2% vs street 0.9%
UK retail prices 1.0% s expected
UK producer input prices (12.4%) vs street (12.7%)
UK producer output prices (1.6%) vs street (1.5%)
UK ONS house prices 5.7% unchanged
Upcoming significant announcements include:
9:50 am AEST Japan trade balance street (¥53B)
9:50 am AEST Japan exports street 5.2%
9:50 am AEST Japan imports street (8.2%)
3:00 pm AEST Japan leading index previous 107.2
3:30 pm AEST Japan dept store sales previous 0.4%
4:00 pm AEST Japan machine tool orders previous 1.6%
1:00 pm BST Poland industrial output street 4.6%
1:00 pm BST Poland construction output street 0 0%
8:00 am BST Poland producer prices street (1.6%)
8:00 am BST Poland retail sales street 2.9%
8:30 am EDT US consumer prices street 0.2%
8:30 am EDT US core CPI street 1.8%
8:30 am EDT US avg real weekly earnings previous 1.8%
10:30 am EDT US crude oil inventories street (0.75 mmbbls)
2:00 pm EDT US FOMC minutes
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