US Open Preview – Dollar pressured ahead of Fed rate decision; European stocks rebound
January 31, 2018 1:26 pm
Here are the latest developments in global markets:
FOREX: Kiwi/dollar remained the biggest winner in early European trading, approaching fresh one-week highs at 0.7400 (+0.94%), while aussie/dollar reached an intra-day high at 0.8109. Dollar/yen inched up to 108.76 but was unable to recover earlier losses despite the BOJ increasing its medium-term Japanese government bonds. Trump’s State of Union speech also failed to feed dollar bulls, giving few details on US policies. The dollar index was moving sideways around three-year lows at 88.90 (-0.29%). Euro/dollar changed hands at 1.2450 (+0.40%), showing little reaction to Eurozone’s core CPI inflation which came in better than expected. Pound/dollar erased today’s gains, falling back to 1.4144. Yesterday, comments by the BOE Governor Mark Carney signaled that the BOE could raise rates faster than previously thought to mitigate inflation. Dollar/loonie retreated to a two-week low of 1.2271 (-0.38) ahead of the Canadian GDP growth figures.
STOCKS: European stocks recovered after holding onto losses the last two days as investors remained optimistic on European markets amid a strong start in the new year. The benchmark European STOXX 600 and the blue-chip Euro STOXX 50 were up by 0.06% at 1100 GMT. The German DAX 30 improved by 0.17%, the French CAC 40 gained 0.24% and the British FTSE 100 was steady.
COMMODITIES: Oil prices were on the backfoot for the third day but were on track to post gains for the fifth month in a row. The market weakened as recent stats showed that US rig counts increased amid rising oil prices, threatening to disturb the OPEC-led supply cuts. WTI crude oil retreated by 0.54% to $64.15 per barrel and Brent fell by 0.64% to $68.58 per barrel. Gold was last seen at $1343.30 per ounce, gaining 0.35% in the day.
Day ahead: Fed policy meeting concludes; Canadian GDP growth in focus
US and Canadian data will dominate the economic calendar in the remaining of the day, while the outcome of the Fed’s two-day policy meeting will be closely scrutinized by investors.
Fed policymakers are anticipated to announce their decision on interest rates and provide a monetary policy statement today at 1900 GMT, with markets widely expecting the central bank to keep its fund rates unchanged and probably hint that more stimulus reduction is on the way during the year. Note that this is the last meeting for Janet Yellen who was the head of the Fed for the last four years, as Jerome Powell has been officially appointed to take over in February.
In terms of data out of the US, the ADP Research Institute will give an early indication on national employment ahead of the government’s comprehensive nonfarm payrolls due on Friday. The report which tracks employment changes only in the private sector is expected to show that 185,000 workers joined the labor market in January compared to 250,000 seen in December, hinting that Friday’s nonfarm payrolls might also come lower. The report is expected to be released at 1315 GMT. Chicago PMIs for the month of January, and December’s pending home sales will be also available at 1445 GMT and 1500 GMT respectively.
Canada will see the release of GDP growth readings and producer prices at 1315 GMT. Analysts forecast that the Canadian economy will expand by 0.4% m/m in November after posting no growth in October. This would be the highest growth print recorded since May. On the other hand, producer prices might show some weakness in December, declining by 0.1% after posting the biggest rate of expansion since March 2015.
In energy markets, investors will be looking forward to the EIA weekly report on the US oil inventories for the week ending January 26 (1530 GMT). Crude oil inventories are said to rise by 0.126 million barrels following ten weeks of consecutive losses. Gasoline stocks are projected to increase by a smaller amount of 1.809 billion barrels and distillate stocks to decrease by 1.454 million barrels.
In equity markets, AT&T, Boeing, Facebook, and Microsoft will be among companies releasing quarterly earnings on Wednesday.
Here are the latest developments in global markets:
Day ahead: Fed policy meeting concludes; Canadian GDP growth in focus
US and Canadian data will dominate the economic calendar in the remaining of the day, while the outcome of the Fed’s two-day policy meeting will be closely scrutinized by investors.
Fed policymakers are anticipated to announce their decision on interest rates and provide a monetary policy statement today at 1900 GMT, with markets widely expecting the central bank to keep its fund rates unchanged and probably hint that more stimulus reduction is on the way during the year. Note that this is the last meeting for Janet Yellen who was the head of the Fed for the last four years, as Jerome Powell has been officially appointed to take over in February.
In terms of data out of the US, the ADP Research Institute will give an early indication on national employment ahead of the government’s comprehensive nonfarm payrolls due on Friday. The report which tracks employment changes only in the private sector is expected to show that 185,000 workers joined the labor market in January compared to 250,000 seen in December, hinting that Friday’s nonfarm payrolls might also come lower. The report is expected to be released at 1315 GMT. Chicago PMIs for the month of January, and December’s pending home sales will be also available at 1445 GMT and 1500 GMT respectively.
Canada will see the release of GDP growth readings and producer prices at 1315 GMT. Analysts forecast that the Canadian economy will expand by 0.4% m/m in November after posting no growth in October. This would be the highest growth print recorded since May. On the other hand, producer prices might show some weakness in December, declining by 0.1% after posting the biggest rate of expansion since March 2015.
In energy markets, investors will be looking forward to the EIA weekly report on the US oil inventories for the week ending January 26 (1530 GMT). Crude oil inventories are said to rise by 0.126 million barrels following ten weeks of consecutive losses. Gasoline stocks are projected to increase by a smaller amount of 1.809 billion barrels and distillate stocks to decrease by 1.454 million barrels.
In equity markets, AT&T, Boeing, Facebook, and Microsoft will be among companies releasing quarterly earnings on Wednesday.
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