9 March, 2016
FX News Today
Stock markets continued to decline during the Asian session. Global growth concerns are once again hitting equity markets. In Europe, the Brexit debate is hanging over the UK and in the Eurozone investors remain cautious ahead of tomorrow’s ECB meeting, after the disappointment from December. Draghi is fighting a difficult balancing act while a deposit rate cut and a tweaking of the QE program seem almost certain, the question is if he can pull a rabbit out of the hat against resistance from the conservatives at the council. US equities ended yesterday in the red as the energy sector ended down by 4.2% and the financials dropped by 1.62%. News wasn’t particularly stock market friendly with Citi down 2.4% after the CFO forecasted a 15% drop in markets revenues in Q1 and 25% dive in investment banking revenues, along with a $400 mln charge for restructuring.
Energy Action: The EIA lowered its Brent oil price forecasts, now seeing a 2016 average of $34/bbl from its prior $37 estimate, and $40/bbl in 2017, down from $50. Brent futures are currently trading at $39.88/bbl.
China bad banks need a lifeline said a NPC delegate according to an article in the WSJ (subscription), in the form of fresh funds to help the resolve rising financial risks and absorb bad assets. The so-called “bad banks” were designated in 1999 to help shoulder $200 bln in bad debts from state lenders and buy bad assets at a discount before restructuring the companies and then selling the assets at a profit. The proposal is aimed at allowing them to go public and expand their asset purchases to help mop up “zombie companies.”
Canada housing permit values fell 9.8% in January after a revised 7.7% m/m gain (was +11.3%) in December. According to Statistics Canada, the pull-back in total permit values was due to lower construction intentions for multi-family dwellings in B.C. and Ontario, along with a smaller drag from institutional buildings in Quebec and Alberta. Permit volumes slowed to a 188.4k rate in January from the 217.2k clip in December.
Main Macro Events Today
UK Industrial Production: Industrial production numbers for January are out today and expected to improve to 0.1% from -0.4% in December. Industrial Production in the UK declined 0.40 percent YoY in December, following a 0.7 percent increase in November. December decline was the first contraction in 28 months and was mainly due to a decrease in manufacturing output.
US Wholesale Trade: U.S. Wholesale Trade Preview: January wholesale trade data is out Wednesday and should reveal a 0.8% decline for sales with inventories down 0.2% (median -0.2%) for the month. This follows respective December figures of -0.3% for sales and -0.1% for inventories. Data in line with our forecast would allow the I/S ratio to tick up to 1.33 from 1.32 where it held in both December and November.
BoC Rate Decision: No change is expected to the 0.50% Bank of Canada policy rate in Wednesday’s announcement. A better than expected Q4 GDP gain relative to bank expectations (+0.8% vs flat) along with three months of export gains through January are supportive of a repeat of the cautiously constructive growth outlook. We could see a bit more optimism creeping in, given the good news on GDP and exports, along with firmer oil and commodity prices relative to January and financial markets that have stabilized/improved after a poor start to the year.
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...