MORNING ROLL CALL

May 11 • Morning Roll Call • 59 Views • No Comments

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U.S. dollar inches higher, USA equities end the day close to flat, oil rises as stockpiles reduce, gold continues its sell off.

between-the-lines1Wednesday was a relatively quiet day for high impact news events, the day began with the publication of Chinese data, mainly concerning money supply and new loans data. Annual CPI data for China was also published, coming in at 1.2%, whilst the producer price index came in at 6.4%, the corresponding effect on Asian markets was moderate.

From the USA we learned that mortgage approvals have made a significant recovery over the past week; up 2.4%, rising from the 0.1% registered previously up to May 5th. Import prices have risen by 4.1% YoY, whilst export prices have risen by 3% YoY. The most significant high impact news of the day from the USA, concerned domestic oil inventories, which have fallen by -5247k, versus the -930k reported last week and the forecast of a drop of -2000k.

The effect on the price of WTI was dramatic; oil rose to a high of $47.62 on the day, to end the day at circa $47.17, up approx. 3% and finally breaking up through the 200 SMA, plotted on a daily time frame. Gold fell to $1219 per ounce, still contained in a range below the 200 SMA, when drawn on a daily time frame. The DJIA closed the day down 0.16%, the SPX closed up 0.11%, and tech stocks drove the NASDAQ up to a close of 6,129, up 0.14%.

In Europe there was positive data reported regarding both French industrial production and the balance of trade, both beating expectations, exports also improved compared to last month’s figure. Italian industrial production also improved month on month, as did the annual figure; up 2.8%. Greece’s YoY industrial production has also risen, by 8.7% YoY.

EUR/USD ended the day at approx. 1.0866, down circa 0.2% on the day, with GBP/USD closing out at circa 1.2936, just above the daily pivot point, stuck in a range, without threatening the 1.30 handle throughout the day, but hitting a three week high versus the euro, EUR/GPB ending the day at approx. 0.8397. USD/JPY rose by approx. 0.5% to an eight day high, to end the trading day close to 114.27, yen fell versus the majority of its peers by similar 0.5% amounts, throughout the day’s trading sessions.

As a commodity currency, the Canadian Loonie enjoyed a positive correlation day, corresponding with the rise of WTI oil. USD/CAD falling through S1 and closing the trading day out at approx. 1.354, down circa 0.5%. The New Zealand kiwi also fell versus its major peers, during late trading as a consequence of the RBNZ keeping the interest rate at 1.75%, but the accompanying policy and rate statements from the central bank, failed to offer up speculators that rates will rise anytime soon.

Economic calendar events for May 11th, all times quoted are London GMT time.

07:15, currency impacted CHF. Consumer Price Index (YoY) (APR). The prediction is for a fall in CPI to 0.5%, from 0.6% in March.

08:00, currency impacted EUR. ECB Publishes Economic Bulletin. The bulletin sets out the short to medium term management objectives of the ECB.

08:30, currency impacted GBP Industrial Production (YoY) (MAR). The UK’s industry is predicted to reveal a fall in production to 1.9%, from 2.8%

08:30, currency impacted GBP. Manufacturing Production (YoY) (MAR). Manufacturers are forecast to show a 3.0% reading for production, from 3.3% previously.

08:30, currency impacted GBP. Construction Output SA (YoY) (MAR). Construction in the UK is predicted to rise to 2.9%, from a 0.5% reading registered in Feb.

11:00, currency impacted GBP. Bank of England Rate Decision (MAY 11). There is little consensus (from the economists polled), for a rise in the UK’s base interest rate, from its current level of 0.25%.

11:00, currency impacted GBP. BOE Asset Purchase Target (MAY). There is no expectation for a rise, from the current 435b QE level.

11:00, currency impacted GBP. Bank of England Inflation Report. The report will be published shortly after the base rate decision is published and will highlight the BoE’s thinking, regarding the monetary management of the UK’s economy.

12:00, currency impacted GBP. NIESR Gross Domestic Product Estimate (APR). The respected research body the NIESR is forecast to publish that the UK’s GDP has fallen to 0.4%, from 0.5%.

12:30, currency impacted CAD. New Housing Price Index (YoY) (MAR). There is little expectation that the index will rise above the current 3.3% reading.

12:30, currency impacted USD. Initial Jobless Claims (MAY 06). The forecast is for a rise in weekly claims to 245k, from the 238k registered last week.

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