Apr 27 • Morning Roll Call • 2414 Views • 1 Comment on MORNING ROLL CALL

Sterling rises, Aussie sells off, USA equities slip, as Trump’s intended tax cut program lacks detail.between-the-lines1

The USA equity markets appear to have already priced in the intended tax cuts which were finally revealed on Wednesday. As a consequence both the DJIA and SPX were near flat at the close on Wednesday, despite the SPX printing a record high during the New York session. Investors also appeared both disappointed and confused with regards to the lack of detail from Trump’s administration regarding the tax cuts.

The DJIA closed down 0.10% and the SPX down 0.05%. The NASDAQ closed flat at 6,025, after reaching a new record high on Tuesday. An interesting fact emerged regarding yesterday’s NASDAQ surge; 0.2% of the 2,500 constituent companies that make up the index are responsible for 45% of the stellar gains witnessed in 2017, they are the ‘big five’: Apple Inc., Inc., Facebook Inc., Microsoft Corp. and Alphabet Inc., (Google’s owner).

In terms of economic calendar news pertaining to the USA economy, mortgage applications were reported up; recovering from the -1.8% reported last week, to reach a 2.7% increase. Oil and gas inventories disappointed; crude oil stockpiles missed the forecast as did gas (by some distance) coming in at 3369k, versus expectations of 500k, suggesting that economic activity (across the country) isn’t quite as healthy as many forecasters are currently suggesting.

There was very little European, or British economic calendar news on Wednesday, sterling remained bullish versus the majority of its currency peers, presumably as a consequence of the recent political polls, suggesting there’ll be consistency in government, when the UK’s electorate vote on June 8th. Euro STOXX 50 closed down 0.12%, DAX up 0.05%, CAC up 0.19% and the UK’s FTSE up 0.18%.

Earlier in the trading day on Wednesday, during the Sydney and Asian session, the Aussie sold off versus the majority of its peers; AUD/USD ending the day down circa 1% at 0.7472, AUD/JPY followed a similar pattern closing the day at approx. 83.04. Economic data missing forecasts partly caused the sell off; CPI inflation came in at 2.1% YoY, skilled vacancies also slipped to -0.6% for the month of March, whilst governor of the RBA Mr. Lowe indicated (through forward guidance in a speech he delivered on Wednesday morning) that there’d be no interest rate rise, in the short to medium term.

The euro fell on the day versus many of its peers after enjoying a significant surge on Monday, after the French election first round result. EUR/USD lost circa 0.2% on the day, ending at circa 1.0904. Versus CHF, GBP and JPY the single bloc currency also fell, EUR/GBP ending the day at circa 0.8488. USD/JPY ended the day close to flat, at 111.21. The Loonie sold off moderately due to disappointing retail sales which fell by -0.6% in the month of Feb. a significant fall from the 2.3% gains recorded in Jan.

WTI oil enjoyed a spike up to circa $49.80 a barrel on Wednesday, but receded to approx. $48.91 towards the end of Wednesday. Gold rose by approx. 0.15% to $1268 per ounce, it’s safe haven appeal rendered neutral.

Economic calendar events for April 27th, all times quoted are London GMT time.

11:45, currency impacted EUR. European Central Bank Rate Decision (27 APR). There is a general consensus from the economists polled, that the current rate of 0.00% will remain unchanged.

11:45, currency impacted EUR. ECB Asset Purchase Target (APR). The expectation is that the current level of QE will be reduced to EU60b, from its current rate of EU80b. This reduction (if announced) may have an immediate impact on the value of the euro, versus its major peers.

12:00, currency impacted EUR. German Consumer Price Index (YoY) (APR P). CPI is predicted to have risen to 1.9%, from the reading of 1.6% registered in March.

12:30, currency impacted USD. Advance Goods Trade Balance (MAR). This particular USA deficit, is predicted to have risen moderately to -$65.5b, from the -$64.8b reported in Feb.

12:30, currency impacted USD. Wholesale Inventories (MAR P). Inventories are predicted to have fallen to 0.3%, from 0.4% in Feb.

12:30, currency impacted USD. Durable Goods Orders (MAR P). Orders are forecast to have fallen to 1.3%, from the 1.8% reported in Feb.

12:30, currency impacted USD. Initial Jobless Claims (22 APR). Weekly claims are estimated to be 242k, from the 244k reported last week.

14:00, currency impacted USD. Pending Home Sales (MoM) (MAR). The expectation is for a negative reading of -1.0%, from the 5.5% level recorded in Feb.



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