Axi | Mar 09, 2018 09:20
Originally published by AxiTrader h2 Market Summary/h2
President Trump walked back a little from his unilateral tariff announcement an hour or so ago with Canada and Mexico exempted from the steel and aluminium tariffs, while other nations have been invited to "negotiate exclusions" with the US. Markets have cheered up a little but exclusions are likely to come with caveats demanding reciprocity - that's the kind of guy the President is.
For the moment fears have been eased in the immediate term. But it's clear that China and to a lesser extent the EU, is about to come in for greater scrutiny. Something that has the potential to really rattle markets if, as Foreign Minister Wang Yi said yesterday, "China would have to make a justified and necessary response".
That's for later though.
At present stocks are better bid after another very solid day in Europe and after a positive day in Asia and here in Australia yesterday. As I write the S&P 500 is up a little less than 0.45%, the Dow is 0.4% higher as well and the Nasdaq 100 is up 0.53%.
Locally, after filling the "Cohn Gap" yesterday, but not going on with it, SPI traders have cheered the tariff announcement and swung from -8 a couple of hours ago to adding around 14 points to yesterday's close presently. That means prices are now through the gap and potentially targetting 5,988 in SPI terms.
On forex markets, the ECB meeting hit the euro hard after the bank dropped the language around easing because of the strength of growth but then downgraded the inflation outlook for 2019 to 1.4% in line with expectations of 2018. as a result, the EUR/USD is off 0.84% to 1.2307. Sterling went along for the ride lower as well with Brexit concerns finally reaching traders consciousness - GBP/USD is at 1.3806 down 0.68%. The swissie is also lower and the yen is around flat. So on balance, the US dollar is stronger against the European majors and the US Dollar Index is higher, up 0.6% to 90.16.
Of the commodity bloc the Aussie is the weakest with the downdraft of copper and iron ore taking its toll. That said though the fall of 0.4% to 0.7791 could have been, may become, much worse. The kiwi is at 0.7256 and the Canadian dollar is at 1.2950 in USD/CAD terms.
Looking at commodities and as noted copper is lower by 1.85% to $3.0565. Iron ore on the Dalian exchange has dipped as well with the July contract down 3%. And that is the story for the vast majority of commodities. Oil is also down sharply as supply concerns outweigh positive demand outlooks. WTI has lost 1.3% while Brent is lower by 1%. Gold is also lower as the US dollar makes headway falling 0.35% to $1320.
On the day today, there are two massive highlights. The BoJ meets and we'll be looking for governor Kuroda's vision after his recent reappointment for another 5 years. No one expects any changes of course, but what Kuroda intimates about policy will be important. The other highlight, of course, is the release of US non-farms for February tonight. The market is expecting another solid print of 200,000 jobs. But after the Beige Book, yesterday and last months jump in the jobs report its average earnings which will likely be the focus.
Chinese inflation data will also garner more than a passing interest as will German trade which, after last night's factory orders might disappoint. UK trade, inflation expectations, and industrial output will also hit the headlines.
h2 Here's What I Picked Up (with a little more detail and a few charts)/h2 h2 International/h2Business Insider had a neat chart showing over/under valued currencies via the ANZ's forex team yesterday. It's a long-term look which includes measures such as purchasing power parity (PPP) and behavioural equilibrium exchange rate (BEER). But it's still helps as a guide for other traders on where the big institutional money, and central banks, might be seeing exchange rates over the medium term and thus where policy and money may flow. To that end, the SNB and RBNZ would probably agree that the swissie and kiwi are the most overvalued. Here's the chart.
h2 Commodities/h2
Have a great day's trading.
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