MORNING ROLL CALL

May 10 • Morning Roll Call • 141 Views • No Comments

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USA equities fall back from record intraday highs, U.S. dollar rises on speculation of an interest rate rise in June.between-the-lines1

Yen came under pressure throughout the trading day on Wednesday and fell versus its major peers, disappointing economic news in the form of poor labour earnings data; cash earnings coming in at -0.4% YoY and real cash earnings falling by -0.8% YoY, caused the fall. Investors translated the poor data as evidence that the BOJ may continue its asset purchase schemes and keep interest rates locked into a ‘NIRP’ (negative interest rate policy) programme. USD/JPY ended the day at circa 113.93, having breached the 114 handle at one stage during the New York session. GBP/JPY continued its winning streak, which began on April 16th, the currency pair has risen from 136 to end the day at approx. 147.15, having at one stage reached 147.89 during the trading day.

The Australian economy posted disappointing data in the form of retail sales, which have fallen by -0.1% month on month. The damage to the Aussie currency was limited; AUS/USD ended the day down by circa 1% at 0.7338 and the ASX sold off.

In positive European economic news, we learned that Swiss unemployment has fallen to 3.2%, beating expectations of 3.3%m arguably the Swiss economy is now close to full employment, in terms of capacity. Germany’s industrial production fell by -0.4% MoM, which beat expectations of a -0.7% fall. Germany’s March trade balance came in ahead of forecasts at €25.4b, whilst the current account came in ahead of expectations at €30.3b. Exports rose by 0.4% during March, as imports rose by 2.4% in the same month, suggesting that German manufacturing will continue to post positive figures over the coming months.

Despite the positive European data, the euro fell versus several of its peers; EUR/USD ended the day down circa 0.4% at 1.0873, EUR/GBP ended the day at approx. 0.8406, down circa 0.6%. European equity markets enjoyed solid gains on Wednesday; STOXX 50 up 0.19%, UK’s FTSE up 0.57%, DAX up 0.43%, CAC up 0.28%.

In another relatively quiet day for USA fundamental, economic, calendar news, the main USA equity markets (the SPX and DJIA), reversed earlier intraday record highs, to end the day down moderately at the close; DJIA down -0.17% and the SPX down -0.10%, with the VIX (volatility index), often termed the “fear index”, remaining close to a 23-24 year low. The NASDAQ did however close at a new record high, as tech stocks reached records encouraged by improved earnings. Apple finally breached the $800b market capitalisation valuation, having risen by 33% in 2017, certain analysts are on record as predicting a $1 trillion valuation for Apple this year.

The dollar spot index closed the day down circa 0.5%, gold slumped to a low during the day of $1214 per ounce, ending the day at circa $1220 per ounce, down approx. 0.6%. WTI oil slumped by approx. 1.2% on the day, to close out at circa $45.97, Libyan output has risen to its highest level in two years, whilst USA output is predicted to reach record highs in 2018.

Economic calendar news for May 10th, all times quoted are London GMT times.

11:00, currency impacted USD. MBA Mortgage Applications (MAY 05). Investors will be looking for an improvement on the -0.1% fall recorded last week.

11:00, currency impacted EUR. ECB’s Draghi Speaks in Dutch Parliament. With Brexit on and Frexit off, Mr. Draghi may have the opportunity to deliver a bold and interesting speech, concerning the ECB’s future direction and the performance of the E.U. economy.

12:30, currency impacted USD. Import Price Index (YoY) (APR). Import prices are predicted to have fallen to 3.6%, from the 4.2% reading previously recorded in March.

12:30, currency impacted USD. Export Price Index (MoM) (APR). Export prices in the USA are predicted to remain unchanged, at 0.2%.

14:30, currency impacted USD. DOE U.S. Crude Oil Inventories (MAY 05). With oil currently in what appears to be a bear market, the current level for the USA at -930k recorded last week, will be carefully monitored.

18:00, currency impacted USD. Monthly Budget Statement (APR). There is little expectation that the latest figure of -$176.2b will be improved on.

21:00, currency impacted NZD. Reserve Bank of New Zealand Rate Decision (MAY 11). There is a general consensus, amongst the analysts polled by Bloomberg and Reuters, that the central bank will maintain the current 1.75% rate.

22:00, NZD RBNZ’s Wheeler news conference on policy statement. Investors and analysts will analyse Mr. Wheeler’s statement accompanying the interest rate decision for any forward guidance, in relation to a rate rise decision, that may occur over the short to medium term.

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