MORNING ROLL CALL
USA equity markets end the day close to flat, oil price spikes, gold and silver maintain recent gains, whilst sterling falls, as UK construction data misses forecast
As widely expected and broadcast, via the RBA’s forward guidance, Australia’s central bank kept their interest rate level unchanged at 1.5%. Earlier, the Australian trade balance had come in ahead of forecasts, at A$3574m for the month of Feb. The Aussie fell as a consequence of the data and decision, investors translated the information as the RBA not being willing to raise the bank’s interest rates, over the short to medium term.
In a relatively calm day politically throughout the USA, Europe and the UK, the main equity markets in the USA closed up marginally on Tuesday, whilst European markets advanced. In terms of the economic calendar data published, the majority of high impact news came in ahead of economists’ forecasts, with the main exception being the UK’s construction PMI data, which came in at 52.2, falling slightly from 52.5.
This reading followed a moderate slip in the UK’s manufacturing PMI reported on Monday, which could indicate that the UK’s post referendum defiant boost could be ending, as stagnating wages and rising inflation bite into not only consumer choice, but critically commercial activity also. Despite the marginal miss, sterling still fell versus its major peers, GBP/USD ending the day down by circa 0.4% at 1.2443, GBP/JPY ended the day down circa 0.5% at 137.7, GBP/CHF also falling by circa 0.5% at 1.246. EUR/GBP advanced up to circa 0.8577.
The yen momentum continues, versus all of its major and many minor peers the Japanese currency has made significant gains since approx. March 13th. When questioned regards the rise of yen on Tuesday, Bank of Japan Governor Gov. Kuroda deflected the question, instead suggesting it was a matter for the finance ministry to deal with. Kuroda, speaking in the lower house of parliament, stated the BOJ’s purchases of exchange-traded funds are intended to meet its two percent inflation target, and that this strategy does not distort the price of equities. USD/JPY fell through S2 midway through the New York session on Tuesday, to then recover ending the day hovering above S1, at approx. 110.69.
In the USA the most significant calendar events were positive for the economy, the USA trade balance for Feb improved, whilst still running substantial monthly deficits, coming in at -$43.6b was a significant reduction from January’s -$48.2b figure. Factory orders rose by 1% in the month of Feb. as did durable goods orders, by 1.8% in the month.
The NASDAQ closed up 0.07%, DJIA closed up 0.19%, SPX up 0.06%. In Europe STOXX 50 ended the day up 0.25%, UK’s FTSE up 0.54%, CAC up 0.30% and DAX up 0.21%. Gold and silver maintained and extended their recent gains; gold closing the day out at $1256 per ounce, having reached $1260 at one point during Tuesday’s sessions. Silver closed up at $18.296, having reached $18.40. Oil rose by circa 1.5% on the day to $50.85, a significant rise from the recent lows of $46.50, experienced on March 21st.
Economic calendar events for April 5th, all times quoted are London (GMT) time
07:55, currency impacted EUR. Markit/BME Germany Composite PMI (MAR), the prediction is for no change, from the previous reading of 57.
08:00, currency impacted EUR. Markit Eurozone Services PMI (MAR). The expectation is for no change, from the previous reading of 56.5.
08:00, currency impacted EUR. Markit Eurozone Composite PMI (MAR F). The forecast is for no change from the previous reading of 56.7.
08:00, currency impacted GBP. Markit/CIPS UK Services PMI (MAR). There is an expectation of a rise, from the previous reading of 53.2, to 53.5 for March. Should this figure miss, then sterling could come under pressure, as investors could determine that the UK’s most dominant sector, services, is beginning to fade.
08:30, currency impacted GBP. Markit/CIPS UK Composite PMI (MAR). There is no expectation of change, from the previous reading of 53.8.
12:15, currency impacted USD. ADP Employment Change (MAR). The forecast is for a significant fall to 189k, from the 298k jobs created in Feb. This figure will be closely followed, given that it is often regarded as a portent for the NFP data published this Friday.
14:00, currency impacted USD. ISM Services/Non-Manufacturing Composite (MAR). This reading is more respected in the USA than the Markit PMI data. The prediction is for a fall to 57, from the previous month’s 57.6 reading.
18:00, currency impacted USD. FOMC Meeting Minutes (MAR 15). Focus will return to the Fed as the minutes regarding the March interest rate will be published and explained by the members. Investors and analysts will be closely monitoring the narrative for further forward guidance, in relation to further interest rate rises in 2017.
