It’s been another mixed day for trading in North America and Europe. Continental markets continued their correction with the Dax
falling 1.3%. The FTSE, however, fell only 0.5% while GBP rebounded on the back of stronger than expected UK job growth in the month following the Brexit referendum. Fed minutes noted the impact of Brexit on financial markets was subsiding, with little impact on the US expected and today’s news indicated that the howls of Brexit doom were unfounded.
Fed speakers and minutes continue to influence trading in the US. FOMC minutes showed a divided Fed with some members wanting to wait for inflation to pick up before raising interest rates again and two members calling for an immediate rate increase. Overall the street took the minutes as slightly dovish sending USD a bit lower and US stocks a bit higher in afternoon trading.
Thursday brings duelling Fed speakers with both SF President Williams who has gone from neutral to dovish this week, and NY Fed President Dudley, who has gone from dovish to hawkish this week, both scheduled to speak. Fed speculation may continue to drive US trading through next week’s big annual Jackson Hole Conference. While the Fed has left the door open to a September rate hike, I still think December after the election is more likely and that FOMC members could use their September forecasts and the dot plot as a signalling tool.
Crude oil started the day lower in a normal trading correction then rebounded on a surprise drawdown that was even larger than the API decrease reported yesterday. Gasoline soared on another big drawdown indicating strong driving season demand.
Two themes could dominate Asia Pacific trading today:
is testing the big 100.00 round number, it will be interesting to see if support there holds and if that level is breached if it could draw more attention through talk or intervention from central bankers (Dudley’s hawkish comments Tuesday came out with the pair below 100.00 defending that level).
Australian markets could attract attention particularly AUD around today’s Australian employment report which could indicate whether recent rate cuts have been helping the economy and how much pressure the RBA is under to act again.
Tomorrow, UK retail sales and ECB minutes could spark trading activity and capital flows across the English channel as traders get a better sense of where economies and monetary policy on both sides may be heading.
Cisco Systems $0.63 vs street $0.60
Net App $0.46 vs street $0.36
Significant announcements released overnight include:
US DOE crude oil inventories (2.5 mmbbls) vs street 0.95 mmbbls
US DOE gasoline inventories (2.7 mmbbls) vs street (1.7 mmbbls)
UK jobless claims (8.6K) vs street 9K
UK 3 month employment change 172K vs street 150K
UK unemployment rate 4.9% as expected
UK average weekly earnings 2.4% as expected
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:50 am AEST Japan trade balance street ¥273.2B
11:00 am AEST NZ ANZ consumer confidence previous 118.2
11:30 am AEST Australia employment change street 10K vs previous 8K
11:30 am AEST Australia full-time jobs previous 38K
11:30 am AEST Australia part-time jobs previous (31K)
11:30 am AEST Australia unemployment rate street 5.8%
9:30 am BST UK retail sales street 4.2%
9:30 am BST UK retail ex auto street 3.9%
10:00 am BST Eurozone consumer prices street 0.2%
10:00 am BST Eurozone core CPI street 0.9%
12:30 pm BST ECB meeting minutes
8:30 am EDT US jobless claims street 265K
8:30 am EDT US Philadelphia Fed street 2.0 vs previous (2.9)
10:00 am EDT FOMC Dudley press conference
4:00 pm EDT FOMC Williams speaking
10:00 am EDT US leading index street 0.3%
10:30 am EDT US natural gas street 25 BCF
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