Stock markets have started to turn back upward again. Rejecting a weak Asia Pacific session, European indices are climbing today with the FTSE up 0.6% and the Dax up 0.4%. US index futures are up 0.3% this morning. Commodities are soft with WTI crude oil and copper both down 0.5%.
The big story in trading today is an upturn in USD which has posted 0.5% to 1.0 gains against all the other majors following Fed comments. Overnight Philadelphia Fed President Harker, a voter this year, indicated that a March rate hike remains possible if the US economy continues to perform well.
Speculation on a March rate hike could generate significant trading swings
in the US Dollar and currency markets over the next month. A March increase would put the Fed on course for 4 hikes this year which is what the street has been expecting. A pass in March would suggest three hikes (the Fed party line) or fewer this year.
Philadelphia has historically been one of the more hawkish regional banks. Thursday, the doves get a chance at rebuttal with Chicago's Evans and St. Louis's Bullard scheduled to speak. Fed speculation could keep currencies active through the week.
Today in North America, the focus is back on trade with trade balances for the US and Canada. The Trump Administration could use the data to make more points about policy and perhaps air more grievances or threats.
This morning S&P put out a report saying that Germany hasn't deliberately devalued the Euro. This looks like a smoke screen to me as it completely misses the point. Just being in the Euro is a de facto competitive devaluation for Germany. A standalone Deutschmark would likely valued be a lot higher. The struggles of Greece, Italy, Spain and others to compete against Germany on currency has been widely known for years.
Canada building permits are also out this morning along with more Canadian PMI data and a number of earnings reports. WestJet is out already this morning, beating the street by a wide margin.
General Motors $1.28 vs street $1.17, guides 2017 year EPS to $6.00-$6.50 above street $5.86
WestJet $0.47 vs street $0.41
Australia RBA interest rate 1.50% no change as expected
Germany industrial production (0.7%) vs street 2.5%
UK Halifax house prices 5.7% vs street 6.0%
Australia construction PMI 47.7 vs previous 47.0
Upcoming significant economic announcements include:
8:30 am EST US trade balance street ($45.0B)
8:30 am EST Canada trade balance street $0.2B
8:30 am EST Canada building permits street (3.5%)
10:00 am EST Canada Ivey PMI previous 60.8