Commodity markets have been stabilizing this morning after two really volatile days, but action suggests that overall, oil and gold have started to attract more support after a big washout. Gold continues to trade above $1,200/oz while Brent crude is holding $70.00/oz. Wheat continues to backslide, slipping back under $6.00 while copper drifts back toward $2.90 again.
Stock markets are mixed today. The hang Seng and FTSE
have been in retreat, while GBP is the top performing currency following overnight Service PMI results. Chinese numbers were not that bad, cooling speculation of more big stimulus moves out of the PBOC that had spiked Chinese indices earlier this week. Meanwhile, a strong reading for the UK maintains speculation that the Bank of England could raise interest rates next summer around the same time that the Fed does.
Interest rate speculation also appear to be behind the strength in CAD relative to its resource currency peers (NOK and AUD in particular). No changes are expected to interest rates but traders appear to be looking to this morning’s statement for a response to the recent forecast from the OECD that Canada could raise interest rates as early as May 2015, a lot earlier than conventional wisdom had previously thought.
US indices have stalled their advance today, while the US Dollar index has broken through its 2010 peak to its highest level since 2009. ADP payrolls were a bit soft but still above 200K keeping the case for a more hawkish Fed intact heading into its meeting later this month. EUR and the pegged CHF and DKK, meanwhile, are underperforming with traders hoping that the ECB may get more serious about stimulus at its meeting tomorrow.
Royal Bank of Canada $1.57 vs street $1.58, revenues $8.38B vs street $8.78B, Canadian banking strong, shortfall due to capital markets
Economic reports released overnight and this morning include:
US ADP payrolls street 222K
Australia GDP 2.7% vs street 3.1%
Eurozone retail sales 1.4% vs street 1.6%
Service PMI reports:
Spain 52.7 vs street 55.2
Italy 51.8 vs street 50.2
France 47.9 vs street 48.8
Germany 52.1 as expected
Eurozone 51.1 vs street 51.3
UK 58.6 vs street 56.5
Australia 43.8 vs previous 43.6
China official 53.9 vs previous 53.8
Japan 50.6 vs previous 48.7
China HSBC 53.0 vs previous 52.9
India 52.6 vs previous 50.0
Economic reports due later today include:
10:00 am EDT Canada interest rate 1.00% no change expected
10:30 am EDT US crude oil inventories street 1.75 mmbbls
2:00 pm EDT US Beige Book
9:45 am EST US Markit service PMI street 56.5
10:00 am EST US ISM non-manufacturing PMI street 57.5
FOMC members Plosser and Brainard speaking.