Monday’s trading through the European and North America sessions has seen markets digesting last week’s big developments and weekend news.
The big USD rally on the strong employment numbers that appeared so unstoppable Friday stopped and reversed pretty quickly to start the new week. Over the weekend rumours suggested US President Obama was complaining about the higher greenback at the G7 meeting but this was denied. Still the market action suggests there may have been a kernel of truth somewhere, as there was no news to change Fed speculation.
The reaction to the US Dollar retrenchment varied between markets. AUD and NZD took the most advantage, kicking down the door left open to them and outperforming other majors on the back of yesterday’s strong Chinese trade report. Behind them was a group that included EUR and JPY while GBP, gold and CAD lagged behind.
Commodity markets were also mixed, grains soared led by wheat, while natural gas posted a 3% rebound. Crude oil, on the other hand sold off hard despite the falling USD. This suggests that the recent rally from the low $40s to the low $60s for WTI may have run its course. In addition to Friday’s OPEC decision confirming that the supply war continues, the Baker Hughes rig count fell by only 4 last week. In many parts of the US and especially in Canada, drilling activity drops off in the spring because the ground is too wet to move heavy equipment. We could be at the seasonal low for 2015 drilling and we could see US exploration and production start to pick up again from here.
Canadian markets had a particularly rough start to the week. Along with the loonie retrenching, the S&P/TSX fell by 1.5% way moved than the 0.5% decline in the Dow and the 1.1% drop in the Dax
, and more in line with the 1.5% fall in WTI crude oil. The selloff in Canadian stocks was broad based although the energy group led the way lower. The index broke its 200-day moving average broke its 200-dya moving average and completed a descending triangle, so there may have been some automated or technical pressure on the market as well.
Today’s Asia Pacific session may remain focused on China with inflation numbers due. In addition to AUD and NZD, Chinese stocks and indices plus copper may be impacted. European markets like the Dax continue to be impacted by a combination of seasonal weakness and growing uncertainty in the EU currently surrounding the status of Greece and the UK.
Newmont Mining has agreed to purchase the Cripple Creek & Victor gold mine in Colorado from Anglogold Ashanti for $820M plus a 2.5% royalty
FedEx announces 25% dividend increase
Significant announcements released overnight include:
Bank of England decision no changes to interest rate or QE as expected
Upcoming significant announcements include:
10:00 am AEST NZ QV house prices previous 8.3%
11:30 am AEST Australia home loans street (2.0%)
11:30 am AEST China consumer prices street 1.3%
11:30 am China producer prices street (4.5%)
12:00 am BST UK same store sales street 1.2%
9:30 am BST UK trade balance street (£2.6B)
10:00 am BST Eurozone GDP street 1.0%
10:00 am BST Greece industrial production previous 5.0%