he pullback that started yesterday has worked its way through overseas markets overnight and back around to North America once again, although so far, today’s US declines are more moderate than yesterday’s. Markets don’t go straight up at the best of times and between recent turmoil and being near the seasonally weakest time of the year it wasn’t hard to see that the big gains to start the week probably weren’t sustainable.
While stock markets around the world have been moving downward, currency markets have been very mixed. NZD has been totally crushed after the RBNZ cut interest rates as expected, but more importantly, went very dovish in its commentary indicating more rate cuts could be on the way that potentially could go beyond unwinding last year’s four hikes (3 are done now). On the other hand, AUD rallied on better than expected Australian employment figures. JPY has bounced back a bit despite weak Japanese economic data in a trading bounce along with other defensive plays like gold.
GBP is picking up a bit after today’s Bank of England decision was as expected with no change to voting. As with comments from Fed Vice-Chair Fischer at the recent Jackson Hole conference, the Bank of England indicated that the UK economy remains strong and that recent stock market and economic turmoil hasn’t changed its plans to start raising interest rates in the first half of next year.
It’s interesting to me that the latest round of weakness started mid-morning yesterday after strong data on job openings out of the US. This suggests that traders remain focused on whether the Fed could start raising interest rates next week and any data could be assessed through that prizm.
Crude oil has been stabilizing this morning after a big drop yesterday, but could be active again later this morning with inventories due (delayed a day due to the Monday holiday). This news could also spark movement in oil-sensitive currencies like CAD and NOK.
Dollarama $0.74 vs street $0.62 same store sales 7.9% above street 6.0%
Significant announcements released overnight include:
NZ interest rate 0.25% cut to 2.75% as expected
UK interest rate and QE 0.50% and £375B no change as expected
UK MPC voting 8-1 in interest rate, 9-0 on QE same as last month
US jobless claims 275K as expected
Canada new house prices 1.3% as expected
France industrial production (0.8%) vs street 0.7%
UK Halifax house prices 9.0% vs street 7.9%
Spain industrial output 5.2% vs street 4.3%
Sweden consumer prices (0.2%) vs street (0.1%)
Sweden unemployment rate 4.3% as expected
Norway consumer prices 2.0% vs street 1.8%
Greece unemployment rate 25.2% vs street 24.8%
China consumer prices 2.0% vs street 1.8%
China producer prices (5.9%) vs street (5.6%)
China foreign direct investment 22.0% vs previous 5.2%
Australia employment change 17K vs street 5K vs previous 38K
Australia full-time jobs 11K vs previous 12K
Australia part-time jobs 12K vs previous 26K
Australia unemployment rate 6.2% as expected
Australia inflation expectation 3.2% vs previous 3.7%
Japan machine orders 2.8% vs street 10.3%
Japan producer prices (3.6%) vs street (3.3%)
NZ house sales 41.7% vs previous 37.8%
Upcoming significant announcements include:
10:30 am EDT US natural gas street 76 BCF
11:00 am EDT US DOE crude oil inventories street 0.9 mmbbls
11:00 am EDT US DOE gasoline inventories street (0.15 mmbbls)
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