Dollar rises, euro and sterling fall, USA equities trade mainly sideways, gold slips, WTI rises

Sep 14 • Morning Roll Call • 1472 Views • Comments Off on Dollar rises, euro and sterling fall, USA equities trade mainly sideways, gold slips, WTI rises

In a relatively quiet day, for medium to high economic calendar events published in the USA, Wednesday saw the USA monthly budget statement come in beating the forecast at -$107b for August, still significantly ahead of the -$42.9 recorded for July, but the result was not as bad as many analysts had feared, who had penciled in a -$130.5b deficit. However, as we’ve come to learn over recent years, certainly since the economic crises after 2007, any form of increased debt (or deficits) regarding the USA, however massive in actual or percentage terms, never appears to concern investors, or the USA government apparatus.

Other economic news from the USA involved various PPI data, the most significant of which was the YoY final demand figure, coming in at 2.4% for August. Gasoline inventories fell significantly, whilst oil inventories rose, missing the forecast. Mortgage applications in the USA increased by 9.9% week on week, versus the 3.3% previously. The DJIA closed up 0.18% with the SPX up 0.08%. GPB/USD ended the day at circa 1.3207 breaching S1, and down 0.3%. The dollar index rose by 0.4% on the day, EUR/USD ended the day down circa 0.9%, breaching S3 at 1.1885. USD/JPY rose to approx. 110.46, up circa 0.3% and hitting R1. Gold sold off as its lack of safe haven appeal continued, falling through S1 and down 0.6% on the day, at $1233 per ounce. WTI oil rose by approx. 2.5% on Wednesday, to $49.66 per barrel.

Looking at European news the U.K. delivered encouraging unemployment stats. As the headline figure dropped to 4.3%, however, with CPI inflation currently running at 2.9% and wage rises at 2.1%, many in the analyst community consider the UK’s unemployment stats. To be curious and or misleading, as productivity is one of the lowest in the G20, wages are not keeping up with inflation and approx. 33% of the UK’s workforce currently receive in work social security benefits/welfare. Eurozone employment has grown by 1.6% in Q2, right on target, Germany’s CPI came in on forecast, at 1.8% growth annualized. Swiss producer and import prices have risen 0.6% YoY. European industrial production growth just missed the prediction, coming in at 3.2% annualized and up 0.1% month on month.

The UK’s FTSE 100 sold off for the second day in series, closing down by -0.28%, STOXX 50 closed up 0.30%, DAX up 0.23%, CAC up 0.16%. Having fallen by circa 1% versus the U.S. dollar the euro fell versus the majority of its peers, albeit by far less of a margin. Sterling also fell versus its main peers, giving back some of the gains made on Tuesday, as the disappointing wage data dampened expectations that the Bank of England’s MPC will announce a base rate increase, when they reveal their decision on Thursday at 11:00am GMT time.

Significant economic calendar events for September 14th, all times quoted are London (GMT) time

07:30, currency impacted CHF. SNB Sight Deposit Interest Rate (SEP 14). The forecast is that the SNB will keep the rate at -0.75%.

11:00, currency impacted GBP. Bank of England Rate Decision (SEP 14). The consensus is for the BoE’s MPC to keep the base interest rate at 0.25%.

11:00, currency impacted GBP. BOE Asset Purchase Target (SEP). There is little expectation for the level to be increased, beyond the current £435b.

12:30, currency impacted USD. Initial Jobless Claims (SEP 09). The prediction is that claims will have increased to 300k last week, from the 298k previously recorded.

12:30, currency impacted USD. Consumer Price Index (YoY) (AUG). The anticipation is that the USA key inflation rate will have risen marginally to 1.8%, from 1.7% in July.

12:30, currency impacted USD Real Avg Weekly Earnings (YoY) (AUG). Currently wage rises are running at 1.1% in the USA economy, there is no expectation that this growth will be improved upon significantly.

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