fter starting the day off lower, indices in Europe and North America were able to turn things around as the day progressed, building some positive momentum for the start of today’s Asia Pacific trading.
There wasn’t much in the way of new economic news and even the intense spotlight on Greece faded a bit. Nothing new happed with Greece today but some of the heat came off of Thursday’s EU meeting with rumours of a special EU summit on Sunday, the day after Greek PM Tsipras goes to visit Russia PM Putin. This means that we could see markets remain volatile right through the weekend as these types of last ditch efforts have yielded mixed results in the past, sometimes they work and sometimes they don’t.
For the next 24 hours, the focus appears to be turning toward the US FOMC meeting with traders looking for an indication of when the central bank could start raising interest rates. At the start of the year, many had thought this could be the liftoff meeting but a soft Q1 pushed the timetable back and no increase is expected this time.
With the US economy rebounding in the spring, it appears likely that the FOMC may leave the door open to raising rates at any meeting going forward depending on data. As was the case in March, however, the member projections may be more important.
Back in March, cuts to FOMC member projections for GDP and the fed funds rate took a June liftoff off the table. Another round of cuts this time would mean liftoff being pushed back past September. Raising forecasts would suggest a July liftoff while no change would leave the door open to a September first hike. Forecasts for the Fed funds rate also could be significant as they would suggest how many increases members expect to see this year. A main cluster around 0.75% suggests 2 hikes which would suggest a September or October start.
The more increases members expect, the earlier they would need to start and vice versa. A hawkish Fed (sooner and more rate hikes) could boost USD and sink stocks while a dovish Fed could boost stocks and put pressure on USD.
There have been no major announcements following the US market close today.
Significant announcements released overnight include:
US housing starts 1,036 vs street 1,090K
US building permits 1,275 vs street 1,100K
UK consumer prices 0.1% as expected%
UK core CPI 0.9% vs street 1.0%
UK retail prices 1.0% vs street 1.1%
UK producer input prices (12.0%) vs street (11.3%)
UK producer output prices (1.6%) as expected
UK ONS house prices 5.5% vs previous 9.6%
Germany consumer prices 0.7% as expected
Germany ZEW current 62.9 vs street 63.0
Germany ZEW expectations 31.5 vs street 37.3
Eurozone ZEW expectations 53.7 vs previous 61.2
Norway trade balance NOK 21.8B vs previous NOK 1.2B
Upcoming significant announcements include:
9:50 am AEST japan trade balance street (¥258B)
10:30 am AEST Australia leading index previous 0.1%
10:30 am AEST Singapore electronic exports street (2.6%)
8:00 am BST Sweden consumer confidence street 99.4
10:00 am BST Eurozone construction output previous (2.7%)
10:00 am BST Eurozone consumer prices street 0.3%
10:00 am BST Eurozone core CPI street 0.9%
9:30 am BST UK jobless claims street (14K)
9:30 am BST UK 3M employment change street 190K
9:30 am BST UK average weekly earnings street 2.1%
9:30 am BST UK unemployment rate street 5.5%
9:30 am BST UK Bank of England minutes
10:30 am EDT US crude oil inventories street (1.1 mbbls)
2:00 pm EDT US FOMC interest rate 0.25% no change expected
2:00 pm EDT US FOMC member projections
2:30 pm EDT US FOMC Chair Yellen press conference
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