20 January, 2016
FX News Today
U.S. oil in Asian trade fell to its lowest since September 2003, below $28 a barrel. Crude Oil prices continue to drop as oversupply is seen as a driver for the recent low prices. Asian stock markets fell sharply overnight, led by hefty 3.71% declines in the Nikkei 225 and a 3.82% drop in the Hang Seng Index. This followed a new selling phase in oil markets.
The JPY has continued to gain strength and has been a currency over performer in recent trade as the fight to safety trade resumes in the wake of the troubled equity markets. At the time of writing, the JPY is trading higher against the USD by 1.14%.
Today, the economic calendar has some key data from the U.S. and Canada, US CPI, and the BoC rates decision are due later today. For the US, the CPI is expected to improve to 0.8% and for Canada, a rate cut is now partially priced in and the potential for the CAD to strengthen if BoC fails to deliver a rate cut remains an upside risk.
European markets are waiting for tomorrow’s ECB meeting; however, the European central bank is widely expected to keep policy unchanged. Traders will look to hear if Draghi delivers a dovish press conference that will keep the door open to further easing.
Main Macro Events Today
EUR German PPI inflation: Rose to -2.3% y/y in December, from -2.5% y/y in the previous month. This was in line with analyst forecast. The headline rate remains firmly in negative territory and even the ex-energy rate is negative at -0.6% y/y although slightly higher than the -0.7% y/y rate in November. All in all though no sign of a turnaround, especially as oil prices slumped since the end of last year and the data will only add to the arguments of the doves at the ECB for additional easing measures, even if Draghi is likely to take a wait and see stance for now.
USD U.S. CPI: December CPI data is out today and analyst expect the headline to remain unchanged (median unchanged) with the core measure up 0.2% (median 0.2%). This follows respective November figures of unchanged for the headline and 0.2% for the core. The continuation of declines in oil prices has weighed on recent price measures and will likely continue to do so in the CPI release.
CAD Canada Wholesale: Analyst expect wholesale shipments, due today, to rise 0.5% in November, breaking the string of monthly declines from July to October. Moreover, as gain for wholesale shipments and manufacturing shipments would be supportive of a bounce in November GDP following the flat reading in October and the 0.5% plunge in September.
Canada Manufacturing: Analyst expect shipments, due today, to rise 0.7% in November after the 1.1% drop in October. A 0.4% gain in export values provides a compelling reason to forecast a move higher in November manufacturing shipments. Notably, the gain in exports followed three straight declines (Sep, Oct, Nov) that correspond with the downtrend in manufacturing shipments.
U.S. trade tariffs tightened market conditions. Coeure said that “while the effects of any tariffs on output and inflation may take time to materialise, falls...
China and Hong Kong alongside other markets were closed for Lunar New Year holidays, which muted trading, but the Nikkei gained 1.19%...
The U.S. currency has been correlating inversely with global stock market direction of late on the causation that risk-on phases have seen investors...
U.S. personal income rose 0.3% in November with spending up 0.6%. The 0.4% increase in October income was not revised. The 0.3% spending increase..
The FOMC meeting is front and center this week following the solid November jobs report on Friday, which provided the final bit of cover for...
Asian stock markets headed south again, as declines and energy and mining stocks led shares lower amid a further drop in metal prices. Concern China’s regulators may limit the flow...
The rout on Chinese bond and stock markets that dominated Thursday’s session faded and the Nikkei managed a 0.12% gain as the yen...
After a couple of panicky moments in global equities over the past week, the markets will keep a wary eye on political developments. In Washington...
A round of positive earnings from U.S. companies reports and progress on the U.S. tax reform plan underpinning risk appetite. The Hang Seng...