The US indices once again reached record highs on Thursday, on the back of encouraging retail sales data and upbeat earnings from Morgan Stanley added to optimism from the signing of the Phase 1 of the US/China trade deal. The data that showed that the US retail sales rose by 0.3% in December, in-line with economists’ estimates although the ex-auto sales rose 0.7% mm, beating expectations of 0.5% mm.
In other markets, the US$ has been choppy and without too much direction although the Jpy remain under pressure as the need for a safe haven diminishes following the signing of the trade deal. The Aud$ and the Nzd saw some early strength too but they have since reversed that move and are closing towards session lows, pretty much where they started the day.
Elsewhere, the metals moved sideways while WTI put on around 0.5% buoyed by the enthusiasm for the signing of the trade deal.
In other data, the US Initial jobless claims dropped -10k to 204k in the week ending January 11, better than expectation of 220k while the continuing claims dropped -37k to 1.767m in the week ending January 4. Business Inventories dropped by 0.2% in December while the US Jan Philly Fed Business Indx came in much higher than expectations, at 17.0, (expected was 3.8).
Earlier in the session, the minutes of the December 12th ECB monetary policy meeting suggested that incoming data since October pointed to “continued weakness” in the Eurozone, but there were also “some initial signs of stabilisation”. Economic activity remained “subdued overall” but the minutes added that there were “some indications of a slight increase in measures of underlying inflation, in line with previous expectations.” The Euro showed little interest over all although after making a new 10 day high against the dollar, it then reversed lower, but the pair was confined to a 50 point range on the day.
Philadelphia Fed Manufacturing Business Outlook jumped to 17.0 in January, up from revised 2.4 in December, beat expectation of 3.7. The percentage of the firms reporting increases (39 percent) was greater than the percentage reporting decreases (22 percent).
Friday will begin with a busy Asian session that will feature the NZ Business PMI (Dec; exp 50.6), Australian New Home Sales (Nov – exp 5.6%mm), China Q4 GDP (exp 6.0%yy), Fixed Asset Investment (exp 5.2%yy), Industrial Production (exp 5.9%yy), Retail Sales (exp 7.8%yy). Europe will be busy too with the UK Retail Sales (exp 0.7%mm, 2.6%yy) and the EU CPI ( Dec – exp 0.3%mm, 1.3%yy), Current Account (Nov -exp €25.6 bio) and Construction Output (exp 1.9%yy), while the US will see the Housing Starts (exp -3.8%mm), Building Permits (exp -1.9%mm), Industrial Production (exp -0.2%mm), Capacity Utilisation (exp 77.1%) and Michigan Consumer Sentiment Index (Jan ; Preliminary; exp 99.3).
Monday is a US holiday long weekend so liquidity will become thin later today. Have a good weekend.
Economic data highlights will include:
Fri: NZ Business PMI, Australian New Home Sales, China Q4 GDP, Fixed Asset Investment, Industrial Production, Retail Sales, German Wage Price Index, EU Current Account, UK Retail Sales, EU CPI, US Building Permits, Housing Starts, Industrial Production, Capacity Utilisation, Michigan Consumer Sentiment Index
Market moves, in brief:
FX: DXY 97.32 (+0.12%)
Bonds: US10Y; 1.809% (+1.37%), German 10Y; -0.217% (-8.38%), UK 10Y; +0.674% (-1.23%), Australian 10Y; 1.195% (-2.19%), NZ 10Y; 1.524% (+0.42 %), China 10Y; 3.125% (-0.19%)
Stock Indices: DJI; +0.62%, S+P; +0.70%, NASDAQ; +0.66%, EUStoxx50; +0.14%, FTSE100; -0.43%, Shanghai Composite; -0.52%,
Metals: Gold $1551 oz (-0.28%), Silver $17.95 oz (-0.34%), Copper $2.8475 lb (-0.65%), Iron Ore $94.55 per tonne (NYMEX) (-0.04%),
Oil: WTI $58.36 pb (+0.52%)
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