Oil crashes by 5%, USA equities rise, UK FTSE slumps late in session as UK election looms, whilst sterling rises
WTI Oil crashed on Wednesday by circa 5%, to end the day at circa $45.6 per barrel, resting just above the S3 pivot point level, the unexpected surge in USA stockpiles led to beliefs that another global glut is building up. Gold slipped by circa 0.7% on the day to close out at circa $1286 per ounce. USA equities closed up marginally, DJIA up 0.18% and SPX up 0.16%.
Once again USA economic calendar news was divergent; not withstanding the domestic oil glut news, consumer credit collapsed to $8.187b in April, from the $19.5b in March and missing the expectations of $15b. However, mortgage applications rose by 7.1% during the week up to June 2nd, a significant improvement on the -3.4% decrease, experienced the week previously. The U.S. Dollar index rose by approx. 0.2% on the day, whilst EUR/USD shed approx 0.4% to 1.1258, after at one point during the London session crashing through S3. GPB/USD ended the day up approx. 0.5%, close to 1.30, after reaching a high of 1.2974 during the New York session. USD/JPY ended the day at circa 109.78, up circa 0.2% on the day.
European news was still dominated by the impending U.K. general election taking place on Thursday, various polls and political speeches by the two main parties, appeared to cause the UK’s main FTSE index to whipsaw dramatically; a high of 7555 at circa 9am London time, breaching R1 and threatening R2, quickly reverted to a final closing figure of 7478, down 0.62% on the day. Sterling made solid gains averaging circa 0.5% versus the Aussie, Loonie, kiwi, Swissie and euro. EUR/GBP closing out at circa 0.8686. Polling indicating a conservative win, appeared to settle sterling investor mood.
Germany’s factory orders unexpectedly slumped in April, falling by -2.1% and missing the forecast of a modest -0.3% fall. Year on year the current figure is 3.5% growth. The OECD delivered its economic outlook for Europe and cited the UK’s Brexit as a hazard, whilst also reminding British lawmakers that their ambitions for a frictionless divorce from Europe, are completely unrealistic. They expect the UK’s economic performance to deteriorate significantly. The Euro STOXX index ended the day down 0.15%, DAX down 0.14% and CAC down 0.07%. The euro experienced a mixed day on Wednesday versus its peers, up versus yen, Loonie and Swissie, but down versus the Aussie and Kiwi dollars. AUD/USD closed up on the day at 0.7546, the Aussie made gains versus the majority of its main peers, as Australia’s GDP numbers came in favourably; posting a reading of 1.7% annual growth, for the first quarter of 2017.
Economic calendar events for June 8th, all times quoted are London time.
00:00, currency impacted GBP. UK Parliamentary Elections (All Day). The UK election takes place on Thursday, however, it’s the exit polls at circa 10pm that traders should be mindful of.
06:00, currency impacted EUR. German Industrial Production n.s.a. and w.d.a. (YoY) (APR). The forecast is for 2.1% growth, versus the figure of 1.9% in March.
11:45, currency impacted EUR. European Central Bank Rate Decision (JUN 08). There is no expectation for a change from the zero rate.
11:45, currency impacted EUR. ECB Asset Purchase Target (JUN). There is no expectation for a change to the current asset purchase rate of EU60b per month.
12:15, currency impacted CAD. Housing Starts (MAY). Housing starts are forecast to have slipped to 203.5k, from the previous reading of 214.1k.
12:30, currency impacted EUR. ECB President Mario Draghi Holds Press Conference. Mr. Draghi will explain the ECB’s rationale behind their interest rate decision and asset purchase scheme programme released earlier in the day.
12:30, currency impacted USD. Initial Jobless Claims (JUN 03). The prediction is for a fall to 240k, from the previous week’s reading of 248k.