MORNING ROLL CALL
Sterling slips after election announcement surge, WTI oil collapses close to $50 a barrel, DJIA falls to a two month low
In a relatively quiet day for economic calendar, high impact news relating to the USA, both the DJIA and the SPX indices sold off on Wednesday. There were no dramatic data misses published and geopolitical tensions between the USA, Russia, China and North Korea were downplayed by the Trump admin. and the mainstream media hawks. Therefore it was difficult to point the ‘blame’ on the reason for the DJIA closing at a two month low, down 0.58%, the SPX also closed down, by 0.17%.
Similarly WTI oil slumped by circa 3.5%, at one point threatening to breach the $50 a barrel handle, to eventually close the day out at circa $50.23. The increased gas inventory and the crude oil inventory data missing the forecast, did not appear to justify such a dramatic sell off, particularly as the Fed’s beige book (although anecdotal), painted a fairly optimistic picture of the current economic conditions, when published on Wednesday evening, overall the publication was supportive of the USA economy’s current performance.
The only blot, on an otherwise encouraging economic data day for the USA, came in the form of USA mortgage applications, which surprised the market by coming in down -1.8%, versus the 1.5% increase witnessed in the previous week. However, with housing starts and building permits falling, according to the previous month’s data, the lack of mortgage applications should have been anticipated by the economists polled for their consensus view.
On Wednesday morning the Eurozone reported encouraging data; car registrations rose by 11.2%, the positive trade balance for Feb. beat expectations, whilst CPI (inflation) came in as forecast, at 1.5% annually. Euro STOXX closed up 0.33%, DAX up 0.13% and the CAC came in up 0.27%. The UK’s FTSE closed down 0.46%, the index has now lost circa 3% since prime minister May announced the general election for June 8th.
Gold slipped by circa 1% on Wednesday, to close the day out at circa $1280 per ounce, whilst silver also fell by a similar amount, to circa $18.14 per ounce. The dollar index ended the day up circa 0.4%, representing the largest one day rise witnessed since March 2nd. USD/JPY closed the day up circa 0.4%, at approx. 109.9. EUR/USD ended the day off, by approx. 0.2% at 1.0711.
Cable (GBP/USD) fell by circa 0.5% to 1.278, sterling gave back some of Tuesday’s gains versus: CHF, JPY and NZD. Analysts and economists at both Deutsche bank and Societe Generale, both announced they were ending their bearish views and positions on sterling, on the basis of the decisive election called by the UK’s Tory party. However, a wider view of any institutional sentiment reversal, will be published in the COT report published on Friday. This will reveal the forex net positions currently held by many of the: major banks, investors and hedge funds in the Western Hemisphere banking system.
Economic calendar events for April 20th, all times quoted are London (GMT) time
09:00, currency impacted EUR. Euro-Zone Construction Output w.d.a. (YoY) (FEB). Although listed as a low impact news event, the previous month’s YoY reading slumped to -6.2%, therefore investors and analysts will be looking to see a significant bounce back from this seasonally effected reading.
10:30, currency impacted GBP. BOE’s Carney Speaks at IIF in Washington. Mark Carney gives two speeches in Washington on Thursday, both are eagerly anticipated; his views on both the global macro outlook and the UK’s current predicament, in terms of Brexit and the forthcoming election, will be sought.
12:30, currency impacted USD. Initial Jobless Claims (APR 15). The weekly jobless claims in the USA are anticipated to rise moderately to 240k, from the 234k claims recorded last week.
12:30, currency impacted USD. Philadelphia Fed Business Outlook. (APR). This ‘soft data’ sentiment index, is highly respected as a barometer of economic health for the Philadelphia area. The anticipation is for a fall to 25.8, from the previous month’s reading of 32.8.
14:00, currency impacted EUR. Euro-Zone Consumer Confidence (APR). The forecast is for a reading of -4.8, a slight improvement on the -5 reading published in March.
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