Category Archives: Daily Outlook

9 Nov: Prospect of a Clinton victory underpinning risk assets and the US$.

While America votes, we wait; Nothing else matters! In the meantime both the dollar and stocks are firm in anticipation of a Hilary victory. An early indication of the result is anticipated by around midday in Asia, once the Florida result is finalised.
While the world will be transfixed by the US election today, we could see some volatility on other accounts, led by the China CPI for October (exp 0.0%mm, 2.1%yy) and the PPI (exp 0.8%yy). Elsewhere the main points of interest will come from the Australian WBC Consumer Confidence, the UK Goods Trade Balance and the US Wholesale Inventories. The EIA Crude Oil Stocks Weekly Change will also be released and could produce another move in the oil price if recent figures are anything to go by.

8 Nov: US$, stocks soar on FBI inspired relief rally, assisting the prospect of a Clinton victory

The intervention of the FBI into the final day of the US election campaign, announcing that there was no new evidence found against Hillary Clinton regarding her handling of emails as secretary of state, has again had a major impact on global financial markets. Risk sentiment surged on the increased prospect of a Clinton victory, while at the same time diminishing the chances of a Trump victory and the uncertainty that that would bring with it. Stocks and the dollar both gapped higher at the Asian open and continued to trade strongly through the session, while Gold reversed some of recent gains due to the dollar strength.

The coming session will be all about the US election but, elsewhere, some volatility could be created by the China October Trade Balance (exp $51.7 bio, Exp -6%, Imp -1%). That aside, the NAB Business Conditions/Confidence is due, while from Europe we get the German Industrial Production, the UK Manufacturing/Industrial Production figures for September and the NIESR GDP Estimate.

7 Nov: Markets unaffected by US employment data as traders focus on tomorrow’s election.

Financial markets were relatively steady on Friday while waiting on tomorrow’s US election, with the US employment numbers causing little lasting reaction. The Non-farm payroll grew by 161k job in October, while the prior month’s figure was revised up from 156k to 191k. The headline unemployment rate fell back to 4.9%, down from 5.0%, while the average hourly earnings climbed more than expected, by 0.4% mm. The US trade deficit narrowed to USD -36.4b in September versus expectation of USD -39.2b.

The coming week is fairly thin on the ground for major data, which is probably just as well as the whole world will be entirely focused on the US election which takes place of Tuesday. That aside, the main event is possibly the RBNZ Interest Rate Decision (Thursday), where a cut is widely expected despite the recently improved data coming from NZ. Monday kicks off with the BOJ Minutes and the ANZ Job Ads, followed by the German Retail Sales, EU Sentix Investor Confidence Survey and EU Retail Sales, but with little to come from the US.

4 Nov: Cable higher after High Court ruling over Brexit. NFP today, with all eyes on the US election.

Ongoing election jitters kept the US$ under pressure during that Asian session although that minor selloff has since largely been reversed and currency markets have been relatively stable since then, with the exception to the rule being Sterling which jumped sharply on a High Court ruling that Prime Minister Theresa May’s trigger of Article 50 for Brexit must get parliamentary approval. It was also underpinned by the BOE decision to leave rates unchanged, but more importantly, to drop its signal for further economic stimulus as well as upwardly revised revisions for the economy to grow 2.2% in 2016 and 1.4% in 2017. Elsewhere, US stocks were rangebound but heavy, the metals took a hit but have since recovered, while oil remains under pressure.
Today could be a session of sitting around as we wait on the US employment data due later in the session (exp 4.9%, +175K, AHE +0.3%), with many traders now sitting it out until the US election. Before then we do see some action, notably from the Australian Retail Sales (+0.4%, Sept) and the RBA Monetary Policy Statement. We also get the global October Composite/Services PMIs and the EU PPI. That is about it though, and it will be a day of watching for political headlines coming from the US while waiting on the NFP. Have a good weekend

3 Nov: Fed on hold, setting the stage for a December hike? BOE in focus today.

The dollar remains under pressure but relatively calm, while stocks are heavy following the FOMC decision to leave rates unchanged, with traders traders seemingly more concerned about next weeks election result. The FOMC statement gave little away as to whether we might yet see a hike in December, noting that while “ the labor market, economic activity and household spending have all grown moderately, business fixed investment has remained soft. Inflation has increased somewhat but is still below long term objectives”. All up it seems to leave the option of a rate hike completely open although the market is still pricing in an 80% chance of the Fed pulling the trigger.

Having got the FOMC Meeting out of the way, the market will now concentrate on tomorrow’s US Jobs data and then on next Tuesday’s election result. In the mean time today starts out with the Australian Trade Balance and the Caixin China Services PMI. Then, from the EU comes the Unemployment and Economic Bulletin while from the UK we get the BOE Meeting/Statement/Minutes/Vote Count/APP Facility, where no change is expected this month. Later on, from the US, the Factory Orders, Markit Services/Composite and ISM Non-Manufacturing PMIs are all due, although much of the session will be spent disseminating the FOMC decision while looking ahead to tomorrow’s, all important NFP result, which should provide an added hint as to whether, or not, we should expect a December rate hike from the Fed.

2 Nov: US$, Stocks hit by poll showing Trump in line with Clinton. FOMC coming up today

Both the US$ and stocks headed sharply lower on Tuesday , weighed down by the release of a poll showing that Trump now leads Clinton as we head towards next week’s election. Also not helping was the weak US construction spending data, which unexpectedly fell in September and could lead to a mild downward revision to the third-quarter economic growth estimate. The Yen, Chf and the metals have been beneficiaries, all making strong gains on the back of safe-haven demand as traders remain cautious ahead of the upcoming FOMC and US Jobs data.
Wednesday gets off with bang with the release of the NZ Building Permits and the RBNZ Inflation Expectations. The ECB Non-Monetary Policy Meeting, EU Markit Manufacturing PMIs will be released later in European trade, ahead of the US ADP Jobs data, the ISM NY Index and the main event of the day, the FOMC decision, at which no one expects any change ahead of Friday’s NFP result and then next Tuesday’s US election. More exciting possibly, given the current volatility in the oil price, could be the EIA Crude Oil Stocks Weekly Change, although the focus will lie elsewhere.

1 Nov: RBA, BOJ today. Focus on tomorrow’s FOMC, Friday’s NFP + the US election.

Although much volatility is anticipated in the week ahead it has been a relatively steady start, with the US$ putting in a mixed session, pretty much confined within Friday’s ranges. The main action was in the oil market, with WTI down sharply, falling by 4% to settle at around 46.75, the lowest level in a month. The decline is on the back of doubts about OPEC’s planned production cuts, with no agreement reached over the weekend although they will reconvene ahead of the next official OPEC Meeting (Nov 30). On the data front, the US person income rose 0.3% in September while spending rose 0.5%, better than expected. Headline PCE rose to 1.2% yy but core PCE was unchanged at 1.7% yy. The October US Dallas Fed manufacturing index was at -1.5 vs 2.0 expected. Earlier in the day the EU GDP rose 0.3% in Q3, in line with consensus while EU CPI rose to 0.5% yy and core CPI was unchanged at 0.8% yy. German retail sales dropped -1.4% mm in September.
Despite much of the focus being on the US data due later in the week (FOMC/NFP), and then next Tuesday’s US election, today could be busy if the RBA or the BOJ spring a surprise, although both are generally expected to keep policy on hold. The focus elsewhere will be on the China Manufacturing and Non Manufacturing PMIs, the UK Mfg PMI, the US ISM and Markit Manufacturing PMIs and the API Weekly Crude Oil Stock Inventory. It is a partial holiday in Europe so liquidity will be thinner than normal.

31 Oct: A big week ahead. RBA, BOJ, FOMC, BOE all due + US Jobs/NFP Friday.

Despite some robust data on Friday, the US dollar and stock markets both finished on a weak note after the FBI announced that it had uncovered and is reviewing new evidence in connection with its investigation of Hillary Clinton’s email server, adding further doubt to the upcoming election outcome. Ahead of the announcement, markets had been relatively buoyant on the back of the better than expected US GDP, which grew 2.9% annualised in Q3, above expectation of 2.5% and more than doubled Q2’s 1.4%. The GDP price index slowed to 1.5% but also beat expectation of 1.3%. Employment cost index rose 0.6%. The Rts/Michigan Consumer Sentiment Index came in slightly below expectations of 88.1, at 87.2.

Last week may have generally been fairly rangebound but that is about to change with a tsunami of data coming on board this week, headed by Central Bank Interest Rate Decisions from the BOJ and RBA (Tuesday), FOMC (Wednesday) and BOE (Thursday) although no change to policy is expected from any of them. In addition to this, the US Employment data/NFP is due on Friday, making for a big week. There is plenty else besides, including the monthly PMIs which will be released through the week, and on Thursday look out for a possible statement from BOE Governor Mark Carney who may be in the process of preparing for his own personal Brexit. The UK Press are reporting that he could announce that he intends to step down as governor of the BOE in 2018, amid a barrage of criticism from Euro-sceptic MPs over his approach to the UK Brexit.

Today kicks off with the NZ Building Permits and the Australian TD Inflation and Private Sector Credit, but with little else due in Asian time. From the EU we get the German Retail Sales and the EU Provisional Q3 GDP, while from the US we will have the the September Personal Income/Spending Index, the Dallas Fed Mfg Business Climate and the Chicago Purchasing Managers Index. Elsewhere, watch out for further political statements from the US, with any negative news for Hillary likely to keep the pressure on the dollar and on stocks.

28 Oct: US$ remains firm despite mixed data. Provisional Q3 US GDP in focus today.

The US dollar is generally a bit firmer on Thursday without doing too much against its major counterparts, with the exception of the Yen, which has seen the dollar head to new 3 month highs. The US data was mixed, with the Initial jobless claims falling 3k to 258k, while continuing claims dropped -15k to 2.04m. Durable goods orders dropped by -0.1% in September, below expectation of +0.1%, although the Ex-transport orders rose 0.2%, in line with consensus. September Pending Home Sales beat expectations, coming in at 1.5% (exp 1.2%).
Friday will get under way with the release of the NZ Business Confidence for October, the Australian New Home Sales and the Q3 PPI, while from Japan comes the CPI (Oct)and Unemployment data (Sept). Later on, from the EU we get the German CPI (exp 0.1% mm, 0.7% yy; HICP: exp 0.1% mm, 0.6 %yy), Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate. Finally, from the US we get the Provisional Q3 GDP (exp 0.1%mmp), the Personal Consumption/Expenditure figures and the Rts/Michigan Consumer Sentiment Index (exp 88.1). With the FOMC and the US election around the corner, expect it to be fairly rangebound for much of the day, and with month end approaching liquidity will be thinner than normal. Have a good w/e.