Stocks and USD rebound despite soft US retail and manufacturing reports
After an indecisive start, US stocks have been gaining strength through the day as weaker than expected retail sales, industrial production and Empire manufacturing data out of the US added to the case for the Fed holding off from raising interest rates a little bit longer. Dusting off the “bad news is good news” liquidity trade carries more risks these days though. With the Fed apparently on track to raising rates as the US economy strengthens, signs of weakness could impact the outlook for corporate profits and put a cap on recent gains.
USD also gained, however, suggesting that currency traders have viewed these figures as middle tier data and unlikely to knock the Fed off course for very long. Overall, sentiment remains mixed with traders unwilling to really commit to a side ahead of Thursday’s announcement, projections and press conference in fear of getting caught off side.
Crude oil also has bounced back a bit today, cutting Monday’s losses. In the last hour API oil inventories had a bigger than expected drop giving crude another push higher which along with stocks, sends positive momentum toward the start of today’s Asia Pacific trading day. JPY could be active on national economic reports, while the new day finds traders wondering what China’s government may do next after it reportedly seized unspent development funds from municipalities yesterday in order to deploy and get stimulus projects moving.
Tomorrow brings more the last US inflation report before the FOMC meeting and the UK employment report, which could keep trading active in US and UK stocks plus USD and GBP. DOE energy inventories could keep the pot boiling for crude oil and gasoline as well.
There have been no major corporate announcements after the US close today.
Significant announcements released overnight include:
US API crude oil inventories (3.1 mmbbls) vs street (0.3 mmbbls)
US retail sales 0.2% vs street 0.3%
US retail ex auto and fuel 0.3% vs street 0.4%
US Empire manufacturing (14.6) vs street (0.5)
US industrial production (0.4%) vs street (0.2%)
Canada existing home sales 0.3% vs previous (0.4%)
Germany ZEW current 67.5 vs street 64.0
Germany ZEW expectations 12.1 vs street 18.3
UK consumer prices 0.0% as expected
UK core CPI 1.0% as expected
UK retail prices 1.1% vs street 0.9%
UK producer input prices (13.8%) vs street (13.6%)
UK producer output prices (1.8%) vs street (1.7%)
UK ONS house prices 5.2% vs previous 5.7%
Upcoming significant announcements include:
10:30 am AEST Australia leading index previous 0.0%
TBA Japan monthly Cabinet and BoJ economic reports
8:30 am BST Sweden Riksbank minutes
9:30 am BST UK jobless claims change street (5K)
9:30 am BST UK rolling 3M employment change 18K vs previous (63K)
9:30 am BST UK unemployment rate street 5.6%
9:30 am BST UK average weekly earnings street 2.5%
10:00 am BST OECD global economic assessment
10:00 am BST Eurozone consumer prices street 0.2%
10:00 am BST Eurozone core CPI street 1.0%
1:00 pm BST Poland core CPI street 0.4%
1:00 pm BST Poland average gross wages street 3.5%
1:00 pm BST Poland employment street 0.9%
8:30 am EDT US consumer prices street 0.2%
8:30 am EDT US CPI ex food and energy street 1.9%
8:30 am EDT US real average weekly earnings previous 2.0%
8:30 am EDT Canada manufactuiring sales street 1.1%
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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