vernight declines in USD have accelerated following the release of US inflation numbers, the last major economic report before tomorrow’s FOMC interest rate announcement. The street appears to be taking a slight miss on core inflation due to falling gasoline prices as a reason to speculate think the Fed could hold off tomorrow.
Stocks are not confirming this sentiment, perhaps focusing more on the OECD’s upgrade to its US GDP growth forecast for this year, which along with rising wage pressures keeps the Fed heading toward a rate increase sometime this year.
GBP, on the other hand, appears to have picked up on potentially the more important economic data this week, rising wage pressures in both the UK and the US. Sterling is climbing today on speculation rising wage inflation could force the Bank of England to start hiking rates sooner rather than later, although Governor Carney remains likely to let the Fed go first and give him cover.
Crude oil was already rallying on the back of a bigger than expected drawdown in API inventories announced last night and is also benefitting today from the weakening greenback. CAD is on the move higher along with oil. Much with better than expected Canadian manufacturing sales have provided an additional boost indicating the positive impact of the lower loonie on other sectors and regions of the economy outside the oilpatch.
Oil may remain active through the morning with DOE inventories on the docket while broader markets may see another day of positioning for tomorrow’s big Fed news
FedEx $2.42 vs street $2.45, cuts full year guidance to $10.40-$10.90 from $10.60-$11.20 blaming weaker manufacturing and softening global trade
MicroSoft 16% dividend increase
Significant announcements released overnight include:
US API crude oil inventories (3.1 mmbbls) vs street (0.3 mmbbls)
US consumer prices 0.2% as expected
US CPI ex food and energy 1.8% vs street 1.9%
US real average weekly earnings 2.3% vs previous 2.0%
UK jobless claims change (1K) vs street (5K)
UK rolling 3M employment change 42K vs street 18K vs previous (63K)
UK unemployment rate 5.5% vs street 5.6%
UK average weekly earnings 2.9% vs street 2.5%
OECD 2015 global GDP forecasts
World cut to 3.0% from 3.1%
US raised to 2.4% from 2.0%
China cut to 6.7% from 6.8%
Japan cut to 0.6% from 0.7%
Eurozone raised to 1.6% from 1.5%
Canada manufacturing sales 1.7% vs street 1.1%
Eurozone consumer prices 0.1% vs street 0.2%
Eurozone core CPI 0.9% vs street 1.0%
Poland core CPI 0.4% as expected
Poland average gross wages 3.4% vs street 3.5%
Poland employment 1.0% vs street 0.9%
Australia leading index (0.3%) vs previous 0.0%
Upcoming significant announcements include:
10:00 am EDT US NAHB housing market index street 61
10:30 am EDT US DOE crude oil inventories street 1.75 mmbbls
10:30 am EDT US gasoline inventories street (0.5 mmbbls)
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