11 May, 2016
FX News Today
European Outlook: The global uptick in stock markets continued overnight in Asia although gains in Japan, China and Australia are more muted and the Hang Seng is down, as are U.S. and U.K. stock futures. Oil prices are also slightly lower with the front end WTI future trading in a narrow range below USD 45 per barrel. Investors in Japan will have to weigh the stronger yen, against the wealth of earnings reports this week. In Europe, Vivendi, E.ON and Deutsche Post report results, the UK releases industrial production data and there is ECB speak from Nowotny as well as a German Schatz sale.
Mixed Japanese data: Japan’s leading index decreased less-than-expected in March but to the lowest level in forty months, preliminary data from the Cabinet Office showed earlier. The leading index that reflects the future economic activity, fell to 98.4 in March from 98.9 in February. Expectations were for the index to drop to 96.4. The latest reading was the weakest since November 2012, when it marked 97.6. At the same time, the coincident index that indicates the current economic activity rose to 111.2 in March from 110.7 in the preceding month.
The U.S. wholesale report: Revealed the first rise in both sales and inventories in six months, and with a larger sales than inventory rise that allowed modest downward pressure on the inventory-to-sales (I/S) ratio after the steep spike to a 1.37 expansion-high in January. Sales rose 0.7% in March while inventories rose 0.1%, and the I/S ratio sustained the February downtick to 1.36. We still expect a boost in Q1 GDP growth to 0.9% from 0.5%, but with a $2 bln boost in wholesale inventories that accompanies a $6 bln boost in factory inventories, alongside a $1 bln hike in equipment spending and $3 bln boosts in both construction and consumption. We still expect 2.0% GDP growth in Q2 with a $13 bln inventory subtraction that leaves a $56 inventory accumulation rate, after a $9.5 (was $17.5) bln subtraction in Q1, as the rate of inventory accumulation slowly drops back to a sustainable rate in the $40 bln area. For monthly forecasts, we expect a 0.3% March business inventory rise after a 0.1% February drop. Today’s 0.1% March rise for wholesale inventories accompanies a 0.2% bounce for factories and an assumed 0.6% retail inventory rise.
Canadian oil-sands fires: The oil production facilities are 90% unscathed and expected to restart within days, possibly weeks. A report by Bloomberg quotes Steve Williams, chief executive officer of Canada’s largest energy company, Suncor Energy: “Mines and drilling projects north of Fort McMurray are already bringing back some of the roughly 1 million barrels a day of supply that was curbed, Facilities south of the energy hub may take longer”.
Main Macro Events Today
UK Manufacturing Production: (08:30 GMT) A year on year decrease to -1.9% from -1.85% is expected, following a weak q1. The month on month figure is expected to rise to 0.4% from -1.1% last time.
US Crude Oil Inventories: (15:30 GMT) Following last week’s surge to 2.8 million barrels, inventories are expected to show a big drawdown following the Canadian wildfires with only 0.1 million barrels.
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...