MORNING ROLL CALL
Fed keeps rates unchanged, stating no concerns over USA economy, U.S. dollar rises, gold slumps to monthly lows
In a highly anticipated and forecast decision, the FOMC announced on Wednesday evening that interest rates would remain at 1.00%. In their accompanying statement, the various Fed bank members indicated their satisfaction with current economic performance, citing their inflation target is on track, they also consider current employment conditions in the USA, as close to full capacity. The DJIA and SPX closed the day close to flat; up 0.04% and down 0.13% respectively. Equities had fallen in the USA earlier in the New York session, Apple’s results disappointing the market, however, the encouraging ADP private payroll numbers, often regarded as a prescient forecast for the NFP data published on the proceeding Friday of each month, came in ahead of expectations at 177k, thereby aiding investor sentiment.
In other (mainly bullish) economic calendar news relating to the USA economy published on Wednesday; mortgage applications fell by -0.1% over the preceding week, the services PMI rose to 53.1 and the non manufacturing PMI came in at 57.5, beating expectations of 55.8. Crude oil inventories missed the forecast by some distance; a reading of – 0.930m, versus the prediction of -2.333m. Vehicle sales in the USA missed the forecast, the reading of 16.81m suggested that sales have peaked, supported by reports that USA manufacturers are considering closing certain factories over the summer.
European equity markets experienced mixed fortunes during a day of mainly medium impact economic calendar news; STOXX 50 closing up 0.22%, UK’s FTSE down 0.21%, DAX up 0.16%, CAC down 0.06%. German unemployment is unchanged at 5.8%, construction PMI for the UK rose to 53.1, Eurozone Q1 GDP came in at 0.5% (1.7% annually), Eurozone PPI came in below expectations at -0.3% in April, suggesting a cooling in producer price inflation for goods and services, over the near to medium term.
In a correlated move with the main Australian equity index the ASX200, the Aussie dollar (AUD) sold off sharply versus the majority of its peers throughout Wednesday’s trading sessions. As a commodity currency the Aussie is also highly sensitive to commodity price movements and moreover demand from its chief trading partner, China. Nickel fell by circa 3%, copper by close on 3.5% and gold by circa 1.5% to $1236 per ounce during Wednesday’s sessions, gold is now trading close to a monthly low and crashed through the 200 SMA, drawn on a weekly chart. AUD/USD crashed through S3 to close the day out at circa 0.7423, breaking through S3 was a pattern repeated throughout the day by the Aussie versus: GBP, CHF, JPY etc.
Cable (GBP/USD) closed out at 1.286, down circa 0.3% on Wednesday. USD/JPY ended the day at circa 112.62, up 0.7% on the day, EUR/USD fell by circa 0.4%, to end the day at approx. 1.088. The dollar index rose by circa 0.4% on the day. WTI oil temporarily breached the 200 SMA drawn on a daily chart, ending the day at close to the handle of $47, posting a session low of $47.04.
Economic calendar news for May 4th, all times quoted are London GMT time
07:55, currency impacted EUR. Markit/BME Germany Composite PMI (APR F). The reading is expected to remain unchanged at 56.3.
08:00, currency impacted EUR. Markit Eurozone Composite PMI (APR F). The reading is expected to remain unchanged at 56.7.
08:30, currency impacted GBP. Markit/CIPS UK Services PMI (APR). Services represents the key driver of the UK’s economy, the prediction is for a slight fall to 54.5, from 55 previously.
08:30, currency impacted GBP. Markit/CIPS UK Composite PMI (APR), the prediction is for a fall to 54.5, from 54.9.
08:30, currency impacted GBP. Net Consumer Credit (MAR). The prediction is for a fall to 1.2b, from 1.4b previously.
09:00, currency impacted EUR. Euro-Zone Retail Sales (YoY) (MAR). Retail sales are predicted to have risen by 2.1%, from the 1.8% rise registered in Feb.
12:30, currency impacted USD. Trade Balance (MAR). The USA deficit is predicted to have deteriorated to -$44.5b, from -$43.6b in Feb.
12:30, currency impacted USD. Initial Jobless Claims (APR 29). Job losses are forecast in at 248k for the previous week, versus an above average rise of 257k previously.
14:00, currency impacted USD. Factory Orders (MAR). Orders are forecast to have risen by 0.4%, from the 1.0% reading recorded in Feb.
14:00, currency impacted USD. Durable Goods Orders (MAR F). The latest reading is forecast to be unchanged, at 0.7% for the month.
