There is a ton of news out around the world this morning, but the figure that appears to be having the biggest impact on US trading is one that many would have thought would be totally overshadowed by everything else, the trade balance. The US posted a smaller than expected trade deficit in April, a sign of an improving economy. This news had a bigger impact on trading than the ADP payrolls report which bounced back up above 200K barely and was essentially as expected, so its impact on Fed expectations was negligible.
Stock markets in Europe and the US are climbing today with the DAX
and CAC both up over 1.0%. Sentiment toward the Eurozone has improved a bit today as service PMI and retail sales for the bloc came in above expectations and it was the only major region where the OECD’s GDP growth outlook improved. Greece remains up in the air with progress depending on who is speaking at any given time. EUR is running in the middle of the pack.
Crude oil is dropping back today with both Brent and WTI down 1.5-2.0%, more than say wheat or gold which are down 0.2% so it’s more than just USD impact. Even though US inventories are due later this morning (which could spark more trading action and possibly a course reversal) at the moment, traders appear to be focusing more on overnight reports that suggest OPEC is unlikely to cut production at this week’s meeting since it has been winning the supply war and demand appears to be improving.
CAD has fallen off sharply this morning on a combination of falling WTI and a worse than expected Canadian trade balance.
Later today we could more Fed speculation trading with US service PMI reports due later this morning and the Beige Book regional economic report coming this afternoon.
There have been no major corporate announcements so far this morning.
Economic reports released overnight and this morning include:
ECB decision no change to QE or interest rate expected
OECD economic outlook (GDP forecasts)
World cut to 3.1% from 3.6%
US cut to 2.0% from 3.1%
Eurozone raised to 1.4% from 1.1%
China cut to 6.8% from 7.1%
Japan cut to 0.7% from 0.8%
ECB 2015 forecasts
GDP unchanged at 1.5%
Inflation raised to 0.3% from 0.0%
US ADP Payrolls 201K vs street 200K
US ADP Payrolls previous revised down to 165K from 169K
US trade balance ($40.9B) vs street ($44.0B)
Canada trade balance ($2.9B) vs street ($2.1B)
Brazil unemployment 8.0% vs street 8.2%
UK BRC shop prices (1.9%) vs street (1.8%)
UK Nationwide house prices 4.6% vs street 4.9%
Italy unemployment rate 12.4% vs street 12.9%
Eurozone unemployment rate 11.1% vs street 11.2%
Eurozone retail sales 2.2% vs street 2.0%
Australia GDP 2.3% vs street 2.1% & previous 2.5%
NZ ANZ commodity prices (4.7%) vs previous (7.4%)
Service/non-manufacturing PMI reports:
Australia 49.6 vs previous 49.7
Japan 51.5 vs previous 51.3
China HSBC 53.5 vs previous 52.9
India 49.6 vs previous 52.4
UK 56.5 vs street 59.2
Germany 53.0 vs street 52.9
France 52.8 vs street 51.6
Sweden 58.2 vs street 56.0
Spain 58.4 vs street 59.4
Italy 52.5 vs street 52.8
Eurozone 53.8 vs street 53.3
Upcoming significant announcements include:
10:30 am EDT US crude oil inventories street (2.2 mmbbls)
2:00 pm EDT US Beige Book
Upcoming Service/non-manufacturing PMI reports:
9:00 am EDT Brazil previous 44.6
9:45 am EDT US Markit street 56.4
10:00 am EDT US ISM street 57.0 vs previous 57.8
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