Stock markets in Europe and the US are on the rebound today shrugging off a rough day for trading in Asia Pacific markets. Indices in China and Australia fell over 2% after Chinese manufacturing PMI came in below expectations highlighting weakness in the economy as it moves through a transition phase. News out of Europe, however, has been more encouraging. Flash PMI reports were mixed with Germany missing moderately, but the street appears to have decided to focus on the big improvement in France with manufacturing leaping back above 50 and back into expansion territory. Today’s comments from Draghi have also been seen as encouraging and not as dovish has had been expected. While indicating that the Eurozone faced challenges over the summer (a big understatement) he also noted its unclear if the weakness will last and noted that while near zero for now, he expects inflation to start rising again by the end of the year. He also indicated that the current QE program has flexibility and that the size, composition and duration can be changed as needed. While this keeps his options open, perhaps most importantly, he did not announce any immediate new stimulus as had been widely speculated. EUR has picked up a bit through the speech as some of the ultra-dovish speculation fades and traders scramble to get back on side. The divergence in stock trading between Asia Pacific markets and elsewhere also indicates traders continue to view news of a strong economy ( or anything hawkish) more favourably than news of a weak economy(or anything monetary dovish). GBP on the other hand, remains near the bottom of the standings as some capital shifts back across the Channel to the continent. CAD has been weakening this morning as Canadian retail sales came in well below expectations indicating the transition in the Canadian economy following the twin oil and loonie crashes remains bumpy and another rate cut remains a possibility. The loonie could be active through the day along with crude oil, which has been flat so far but that could change depending on this morning’s US inventories. US markets are trading flat to slightly higher this morning as traders await the US flash PMI report, the first indication of how the economy has been acting since Labour Day brought the summer holidays to an end. Corporate News There have been no major corporate announcements this morning. Economic News Significant announcements released overnight include: Canada retail sales 0.5% vs street 0.7% Canada retail ex auto 0.0% vs street 0.5% China flash manufacturing PMI 47.0 vs street 47.5 France GDP update 1.1% vs street 1.0% France flash manufacturing PMI 50.4 vs street 48.6 France flash service PMI 51.2 vs street 51.0 Germany flash manuf PMI 52.5 vs street 52.6 Germany flash service PMI 54.3 vs street 54.5 Norway unemployment rate 4.3% vs street 4.5% Poland unemployment rate 10.0% as expected Australia leading index 0.3% vs previous (0.2%) Singapore consumer prices (0.8%) vs street (0.6%) Singapore core CPI 0.2% vs street 0.3% Upcoming significant announcements include: 9:00 am EDT ECB President Draghi speaking 9:45 am EDT US flash manufacturing PMI street 52.8 vs previous 53.0 10:30 am EDT US DOE crude oil inventories street (1.25 mmbbls) 10:30 am EDT US DOE gasoline inventories street (0.85 mmbbls) 12:45 am EDT US FOMC Lockhart speaking CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
EUR rallies on less dovish Draghi than expected, soft retail sales sink CAD
16:30, 23 september 2015