13 September, 2017
US equities closed at record levels on Wednesday, as improved risk-on sentiment returned to the markets and news that the US economy will benefit if the US tax reform is passed. US Treasury Secretary Mnuchin stated on Tuesday that “tax reform could be backdated to January 1st, 2017 as it would be a “big boon for the economy.” He also commented that the Trump administration was “super focused” on ensuring tax reform would be completed by the end of the year. Such comments helped the supported rise in US Treasury Yields.
On Wednesday, Asian equity markets reached a 10-year high, although the markets remain cautious that geo-political tensions between North Korea and the US could escalate following President Trump’s comments that the recent UN sanctions against North Korea were a “very small step” and “nothing compared to what ultimately will have to happen” to deal with North Koreas’ nuclear program. Following the recent sanctions, North Korea has vowed to redouble its efforts to fight of the threat of a US invasion. With continued rhetoric, markets will remain on edge and will ultimately look to safe havens.
UK Consumer Price Index was released on Tuesday, showing increasing UK inflation rising to 2.9% (YoY) in August.ВВ GBPUSDВВ reached a 1 year high on the news. Inflation above the Bank of England’s target of 2% has been complicating why policy makers are not raising UK interest rates. With a Bank of England Policy meeting being held on Thursday, the markets are looking for clues as to the likely timing of rate hikes.
EURUSDВВ edged higher overnight to currently trade around 1.1980.
USDJPYВВ moved higher with improved risk-on sentiment. Currently,ВВ USDJPYВВ is trading around 110.15.
GBPUSDВВ benefitted from, higher than expected, UK inflation data. Currently, GBPUSD is trading around 1.3300.
Gold lost ground against USD and currently trades around $1,330.
WTI was trading in a narrow range ahead of today’s EIA report. Currently, WTI is trading around $48.70.
The major economic data releases for today will be:
At 13:30 BST, the Bureau of Labor statistics, Department of Labor will release Producer Price Index (MoM) for August. As a clear indicator of commodity inflation, this release could potentially help the Federal Reserve in its plans for a further rate hike this year if the release comes in strongly. The previous release, of -0.1% is expected to be bettered with the consensus calling for an increase to 0.3%. If the release is wildly different from the consensus we can expect USD volatility.
At 15:30, the Energy Information Administration will release Crude Oil Stocks change for September 4th. The impact of Hurricane Harvey is still being felt in the US, so markets will be eager to see if the consensus comes in at 2.285M (from the previous 4.580M). Expect Oil to see volatility if the released number is significantly different than the consensus.
NZDUSD bucked the trend overnight, as most other currencies managed to retrace some of their declines against the USD. The pair hit fresh...
US Fed Boston President Rosengren is due to deliver the keynote speech on the economic outlook, at the Greater Boston Chamber’s Economic Outlook Breakfast...
With US Producer Prices data on the way this afternoon, and predicted to be largely as expected, the morning session will be dominated by central bankers...
Friday's session is expected to be volatile, with Non-Farm Payrolls (13:30 UK Time) ahead and President Trump’s proposal for an additional $100B...
The US and South Korea have reached agreement on a Trade deal that comes with the added bonus for South Korea of a permanent exemption from...
Over the weekend, the EU published a list of tariffs on US products in response to the US tariffs on Steel and Aluminium. The total value of EU tariffs...
Eurozone Consumer Price Index – Core (YoY) (Feb) will be released. The consensus points to an unchanged value of 1%. Consumer Price Index...
Yesterday, the US announced Tariffs on Steel and Aluminium, which prompted an outcry from various global leaders and an acceleration in the...
US Gross Domestic Product Annualized (Q4) was as expected at 2.5%, from 2.6% previously. Gross Domestic Product Price Index (Q4) was 2.3%...
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