18 Apr: Stocks higher, currencies mixed. EU/UK CPI both due. Band of Canada IR decision ahead.

By | April 18, 2018


It has been a busy day with plenty of action going on across the markets. Equities led the way, in rallying by close to 1% for a second successive day amid better-than-expected earnings from tech stocks (Netflix, Alphabet and Amazon) and other industry heavyweights, adding to evidence that the strengthening economy is lifting corporate profits. In the currency markets, much of the interest involved Sterling, which made a new post-Brexit high but then headed into reverse after traders were disappointed by the UK jobs data. The unemployment rate fell to 4.2% in February, down from 4.3%, beating expectation of 4.3% to make the lowest reading since 1975, while employment also rose to a record high between December and February, adding 55k jobs. However, average weekly earnings grew only 2.8% for the 3 months/on year, unchanged from January’s reading and disappointing traders who had expected a reading of 3.0%. The Euro also reversed early gains after the German/EU ZEW Economic Sentiment Survey disappointed. The German ZEW economic sentiment dropped to 87.9 in April, down from prior 90.7 and consensus of 88.0. The ZEW expectation gauge dropped to -8.2, down from 5.1, below consensus of -1. ZEW noted in the statement that “the reasons for this downturn in expectations can mainly be found in the international trade conflict with the United States and the current situation in the Syrian war. The EU ZEW economic sentiment dropped 1.9, down from 13.4, below expectation of 7.3. The deterioration were similar to those dragged the Germany readings.

Elsewhere the currency markets were fairly rangebound, as were the metals, while WTI struggled for direction for much of the day but eventually settled higher as focus shifted to today’s upcoming EIA US crude inventory data, which is expected to show a draw in domestic oil supplies of 1.9 mio barrels.

In terms of the secondary US data on Tuesday, which had little impact on markets;

U.S. Mar Housing Starts, 1,319 mio, v.1.262 mio expected, 1.236 mio prev (1.295 mio revised)

U.S. Mar Building Permits, 1.354 mio, v. 1.323 mio expected, 1.321 mio prev

U.S. Mar Industrial Production m/m, 0.5%, 0.4% v. expected, 0.9% prev (1.0% revised)

U.S. Mar Capacity Utilization m/m, 78.0%, 77.9% expected, 77.7% prev

U.S. Mar Manufacturing Output m/m, 0.1%, 0.1% Neutral expected, 1.3% prev (1.5% revised)

Fed’s Williams sees U.S. inflation at or above goal for years

Fed’s Evans sees little pressure pushing inflation beyond 2%

Wednesday will start with a pretty much empty calendar in Asia (Japan Trade Balance – March, China  House Price Index – March) but will heat up in Europe with the release of the March UK CPI (exp 0.3%mm, 2.6%yy; Core 2.4%yy), PPI, RPI and the EU CPI (exp 0.9%mm, 1.5%yy (Core 1.4%yy); PPI). The Bank of Canada will have its monthly meeting (No change to policy expected) while the US 16 Apr will be dominated by Fed speakers; Dudley (twice!) and Quarle. Oil traders will note the EIA Crude Oil Stocks Weekly Change release

EURUSD: 1.2372
Res  1.2395  1.2420  1.2445
Sup  1.2350  1.2325  1.2300
USDJPY: 107.01
Res  107.40  107.20  107.75
Sup  106.90  106.60  106.30
GBPUSD: 1.4291
Res  1.4320  1.4350  1.4375
Sup  1.4280  1.4245  1.4220
USDCHF: 0.9667
Res  0.9680  0.9695  0.9710
Sup  0.9645  0.9620  0.9600
AUDUSD: 0.7772
Res  0.7790  0.7800  0.7810
Sup  0.7760  0.7750  0.7735
NZDUSD: 0.7342
Res  0.7370  0.7395  0.7410
Sup  0.7325  0.7305  0.7275
S&P: 2706
Res  2715  2730  2745
Sup  2695  2680  2665
DJI: 24719
Res  24820  24990  25185
Sup  24590  24415  24250
ASX SPI: 5839
Res  5850  5865  5885
Sup  5825  5810  5790
XAUUSD: 1347
Res  1350  1355  1365
Sup  1340  1335  1325
XAGUSD: 16.77
Res  16.85  17.00  17.15
Sup  16.65  16.50  16.35
WTI: 66.60
Res  67.75  69.65  71.70
Sup  66.05  65.15  64.20