May 26 • Morning Roll Call • 1574 Views • Comments Off on MORNING ROLL CALL

WTI oil falls 5%, SPX and NASDAQ close at record highs, U.S. Dollar ends day close on flat versus major peers

The economic calendar day began with official data from the UK’s government statistics body; GDP for the first quarter of 2017 in Britain has fallen to 0.2%, a desperately poor reading that if annualised would leave GDP at less than 1%. In an inflationary, economic environment, such a low reading translates as stagflation, a real fear for the lawmakers who drive economic policy in the UK. RPI inflation is running at 3.7%, wage rises at 2.1%, exports are up (but rising input costs at 17% YoY will curtail that blip), business investment is only up 0.8% YoY and GDP is collapsing, a dangerous cocktail (likely to deteriorate) once the UK finally exits Europe. The FTSE ended close to flat on the day, up only 0.04%. Sterling slipped versus many of its peers on Thursday; GBP/USD ended the day down circa 0.3% at 1.2942, EUR/GBP ended the day up 0.3% at 0.8658, reaching R1 and maintaining position above the 200 SMA, when observed on a daily time frame.

The USA generated some disappointing data on Thursday, in the form of a deteriorating advance goods trade balance for April, coming in at -$67.6b, versus the forecast of -$64.5b. Unemployment claims for the past week did beat forecasts, coming in at 234k. Wholesale inventories fell by -0.3%, versus predictions of a 0.2% reading. Irrespective of the lack of positive data, the SPX and NASDAQ reached record highs, the earnings of retailers boosting the SPX, which closed up 0.44%, NASDAQ closed the day up 0.69% and the DJIA closed up 0.34%.

USD/JPY ended the day close to 111.72, just above the daily pivot point line, the currency pair is maintaining its position above the 200 SMA, when plotted on a daily time frame. USD/CAD ended the day close to 1.3487, just short of R1 and up circa 0.3%, reversing its recent fall, as a consequence of the Canadian dollar’s correlation with the price of oil. The Canadian, Australian and New Zealand dollars all fell significantly during Thursday’s trading sessions, following the collapse in the oil price.

The OPEC countries’ meeting in Vienna disappointed investors, the message emerged that the various ministers representing their countries would commit to no more than an extended production cut to the cut previously agreed in December 2016, investors were hoping for deeper cuts to avoid more global gluts. WTI oil collapsed by circa 5% on Thursday, price collapsed through S3 to end the day at circa $48.34 per barrel, falling back through the 200 SMA, positioned at 49.45. Gold ended the day close to flat, at $1255 per ounce.

In a thin day for European calendar fundamental news, the euro enjoyed moderate gains versus many of its peers, the EUR/USD however, ended the day close on flat, at 1.1213. Euro STOXX ended the day down 0.06%, CAC down 0.08%, DAX down 0.17%.

Economic calendar news for May 26th, all times are London (GMT) time.

12:30, currency impacted USD. Gross Domestic Product (annualised) (1Q S). The forecast is for GDP to improve to 0.9%, from the 0.7% reading posted previously.

12:30, currency impacted USD. Durable Goods Orders (APR P). The expectation is for a significant fall to -1.5%, from the positive reading of 0.9% posted in March.

14:00, currency impacted USD. U. of Michigan Confidence (MAY F). The reading is expected to remain unchanged, at 97.7.

17:00, currency impacted USD. Baker Hughes U.S. Rig Count (26 MAY). With the current collapse in the price of WTI oil, this number count of 901 last week, will be closely monitored for any change.

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