USD rallies on US employment and inflation, stocks tumble off weak earnings and guidance
We’ve seen a significant change in currency trading following the release of another big basket of data from the US this morning.
US jobless claims continue to show a healthy employment market with continuing claims falling to their lowest level since November of 2000. Despite a soft headline figure, core inflation and wage growth are both still running near the Fed’s 2.0% inflation target. This suggests that as the oil crash gets lapped inflation could bounce back in the coming months.
The street appears to have recognized that Strong employment and the potential for rising inflation should keep the Fed on track toward raising interest rates, reigniting interest in USD and knocking some of the currencies that had benefitted from FOMC dovish news lately like gold and EUR back down.
Meanwhile, other markets around the world have been trading higher overnight following a flurry of announcements from Asia Pacific countries. Chinese stock markets have led a rebound boosted by better than expected Chinese loans and speculation more stimulus could help its struggling economy to rebound. Improved New Zealand PMI and consumer confidence boosted NZD while AUD shrugged off soft employment figures to going a resource currency rally that also pulled CAD higher.
US stocks, however, may continue to struggle today, particularly in the technology sector where Netflix and Garmin guided below expectations. A miss by Goldman Sachs combined with yesterday’s weak Wal-Mart results indicate the majors have not been immune either. This news combined with an Empire Manufacturing report that was not as bad as last month but still below expectations indicate that even if Wall Street is uncertain about when rates may rise, Main Street continues to act like rate hikes have already started.
Citigroup $1.31 vs street $1.27
Goldman Sachs $2.64 vs street $3.00, revenues $6.86B below street $7.07B
NetFlix earnings $0.07 as expected, sales $1.58B below street $1.75B, net adds domestic 0.88M below stret 1.19M
NetFlix guidance next Q EPS $0.02 below street $0.04, next Q sales $1.67B below street $1.86B
Garmin profit warning guides Q3 EPS to $0.51 below street $0.64 and sales forecast to $680M from $705M cuts full year EPS guidance to $2.25 from $2.65
Significant announcements released overnight include:
US initial jobless claims 255K vs street 270K tied for lowest level in years
US continuing claims 2,158K vs street 2,200K lowest level in 15 years
US Empire manufacturing (11.3) vs street (8.0) vs previous (14.6)
US consumer prices 0.0% vs street (0.1%)
US core CPI 1.9% vs street 1.8%
US real avg weekly earnings 2.2% vs previous 2.3%
Sweden unemployment rate 6.7% vs street 6.6%
Norway trade balance NOK 15.5B vs previous NOK 20.8B
Poland consumer prices (0.8%) unchanged as expected
China new Yuan loans 1,050B vs street 900.0B and previous 809B
NZ Business PMI 55.4 vs previous 55.0
NZ consumer confidence 114.9 vs previous 110.8
Australia consumer inflation est 3.5%previous 3.2%
Australia employment change (5K) vs street 9K
Australia full-time jobs (14K) previous 11K
Australia part-time jobs 9K vs previous 6K
Australia unemployment rate 6.2% as expected
Japan industrial production (0.4%) vs previous 0.2%
Singapore retail sales 5.0% vs street 1.6%
Singapore retail ex auto 6.1% vs previous 0.8%
Upcoming significant announcements include:
9:00 am EDT Canada existing home sales previous 0.3%
10:00 am EDT US Philadelphia Fed street (2.0) vs previous (6.0)
10:30 am EDT FOMC Bullard speaking
10:30 am EDT FOMC Dudley speaking
4:30 pm EDT FOMC Mester speaking
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