There has been plenty going on, on Wednesday with the upshot being a slightly firmer US$ and stock market, while the metals and oils have both had a choppy session but have ended the day pretty much where they started. WTI saw a brief spike, after the EIA reported that inventories of US crude fell by 10.03 million barrels for the week ended Aug. 23, much more than expectations for a draw of 2.11 million barrels, although most of those gains have since been given up, with WTI up 0.25% on the day.
First up was the UK PM Boris Johnson suspending Parliament to push through Brexit, which gives little time ahead of the 31 Oct divorce date to those MPs who want to block a no-deal exit from the EU. Cable fell sharply, although it has since recovered from its lows to trade at mid-session levels. Not far behind the UK news was the report that Italy’s warring political parties had struck a deal to form a new government that sidelines Matteo Salvini, the hard-right leader who dominated the country’s politics for more than a year and threatened to drastically reorient Italy’s place in Europe. The Italian Prime Minister Giuseppe Conte will now have an opportunity to form a new government and this will come as a relief to the EU lawmakers, although the markets appear to see it rather differently and the Euro remains under some pressure at the end of the session albeit in a tight range.
The US$ remains firm after Donald Trump continued to keep up his criticism on the Fed, while bond yields remained inverted, increasing the worries about a potential recession. The dollar was helped by comments from US Treasury Secretary Mnuchin, who said that he does not intend to intervene on the US$ for now.
Looking ahead, Thursday will begin with the NZ Activity Outlook and Business Confidence and the Australian Q2 Private Capital Expenditure figures (CAPEX; exp +0.5% q/q, up from the Q1 reading of -1.7%). The CAPEX figure comes ahead of next week’s RBA Meeting and Q2 GDP, so will be closely watched. Later on, from Europe we get the Preliminary German CPI (CPI, exp -0.1%mm, 1.5%yy; HICP, exp 1.2%yy), Unemployment (exp +4K, 5.0%) and the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Business Climate data, while from the US comes the Preliminary Q2 GDP (exp 2.0% annualised), US Personal Consumption Prices/Expenditure (exp 2.3%qq/1.8%qq), Wholesale Inventories, Pending Home Sales and Goods Trade Balance. Have a good day.
Economic data highlights will include:
Thur: NZ Activity Outlook, Business Confidence, Australian Private Capital Expenditure, Japan Consumer Confidence, German Unemployment, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German CPI, US Q2 GDP, Personal Consumption/Expenditure, Wholesale Inventories, Goods Trade Balance, Pending Home Sales,
Market moves, in brief:
FX: DXY 98.24 (+0.24%)
Bonds: US2Y; 1.504% (-1.73%), US10Y; 1.466% (-0.71%), US30Y; 1.939% (-0.66%), German 10Y; -0.717% (-0.305%), UK 10Y; 0.368% (-13.78%), Australian 10Y; 0.897% (-2.29%), NZ 10Y; 1.0085% (-0.91 %), China 10Y; 3.071% (-0.08%)
Stock Indices: DJI; +1.00%, S+P; +0.65%, NASDAQ; +0.38%, EUStoxx50; -0.15%, FTSE100; +0.35%, Shanghai Composite; -0.29%,
Metals: Gold $1540 oz (-0.17%), Silver $18.36 oz (+0.92%), Copper $2.5575 lb (+0.39%), Iron Ore $81.4 per tonne (NYMEX) (-10%),
Oil: WTI $55.86 pb (+0.29%)
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