Daily Market Update 3rd October 2016
ECONOMIC DATA OF THE DAY
| Time | CY | Indicator | Forecast | Actual | Previous |
|---|---|---|---|---|---|
| 08:30 | JN | Nikker Japan PMI Mfg | -- | -- | 50.3 |
| 11:30 | TH | CPI YoY | 0.40% | -- | 0.29% |
| 11:30 | TH | CPI Core YoY | 0.80% | -- | 0.79% |
| 11:30 | TH | CPI NSA MoM | 0.10% | -- | -0.04% |
| 15:50 | FR | Markit France Manufacturing PMI | 49.5 | -- | 49.5 |
| 15:55 | GE | Markit/BME Germany Manufacturing PMI | 54.3 | -- | 54.3 |
| 16:00 | EC | Markit Eurozone Manufacturing PMI | 52.6 | -- | 52.6 |
| 16:00 | GR | Markit Greece Manufacturing PMI | 50.8 | -- | 50.4 |
| 16:30 | UK | Markit UK PMI Manufacturing SA | 52.1 | -- | 53.3 |
| 21:45 | US | Markit US Manufacturing PMI | 51.4 | -- | 51.4 |
| 22:00 | US | ISM Manufacturing | 50.3 | -- | 49.4 |
SPEECHES
- 16:00 – EUR – Portugal governor, finance minister speak in Lisbon
OVERNIGHT NEWS
BREXIT:- Theresa May said she'll trigger the process of the U.K,'s withdrawal from the EU by the end of March, pledging to control immigration while retaining market access to the continent. The prime minister also announced plans for legislation to incorporate bloc regulations into British law as soon as the divorce is complete.
- Brexit Secretary David Davis said the U.K. government will bring down its migrant numbers after withdrawing from the EU, and will seek to preserve the "freest possible trade" with the region.
- The manufacturing PMI was stable above 50 and came in at 50.4 (Exp. 50.5) in September and Non-Manufacturing PMI at 53.7 from 53.5. That suggests growth momentum may have continued to stabilize in the last month of 3Q.
- In the details, new orders fell to 50.9 in September from 51.3 in August, while output rose to 52.8 from 52.6. New export orders improved to 50.1 from 49.7, marking the first reading above 50 since May. Employment, up to 48.6 from 48.4, continued to contract, though at a slower pace than in August. On balance, the sub-indexes point to stable domestic demand while external demand may continue to improve
- PCE Deflator rose slightly from 0.0% to 0.1% MoM (Exp. 0.2%) and to 1.0% form 0.8% YoY. PCE Core rose to 0.2% and 1.7% as expected MoM and YoY. Personal Spending which represents a big part of the GDP reading was flat at 0.0% from 0.4% (Exp. +0.1%) and Personal Income came in as expected at 0.2% from 0.4%. The latest data show that GDP should be strong enough for Q3 but the trend is more blurry to know if it will be sustainable for 2017.
- The composition of spending showed a sharp decline in spending on durable goods (-1.3% vs. 2.1% prior) and a lesser pullback in consumption of non-durable goods (-0.2% vs. -0.6% prior). Service spending grew at a slower pace than the previous few months (0.3% vs. 0.4% prior); it averaged 0.6% per month in 2Q.
- The University of Michigan reading was stronger than expected at 91.2 (Exp. 90.)
FOREIGN EXCHANGE (INDICATIVE RATES)
| Currency | Last | % Change | Overnight Range |
|---|---|---|---|
| DXY | 95.557 | -0.08 | 95.34 - 95.96 |
| EURUSD | 1.1231 | 0.12 | 1.1153 - 1.1251 |
| USDJPY | 101.47 | 0.32 | 100.75 - 101.78 |
| AUDUSD | 0.7652 | 0.37 | 0.7590 - 0.7672 |
| GBPUSD | 1.2935 | 0.03 | 1.2937 - 1.3023 |
COMMODITIES (INDICATIVE RATES)
| Currency | Price USD | % Change | Overnight Range |
|---|---|---|---|
| Gold | 1315.87 | -0.34 | 1313.31 - 1328.19 |
| Silver | 19.17 | 0.37 | 19.07 - 19.70 |
| Oil (BRENT) | 50.19 | 0.76 | 48.90 - 50.27 |
| Oil (WTI) | 48.24 | 0.86 | 47.04 - 48.30 |
COMMODITIES
Precious Metals: Gold prices continued its consolidation, with support firm around $1,300 and resisted by downward trendline since July's peak. The net-long in gold jumped by 20% in response to an unchanged FOMC and softer US data for the week ending 27 September.
Palladium, being one of the best performer this year among precious metals, may struggle to test important resistance around $726, which has been hit three times over last 12 months.Oil:Oil prices hit 5-week high after OPEC surprised markets with a production cap. Strength in oil may fade as traders digest the news and price heads to test resistance around $49.11 followed by $51.67.
Oil: Oil rally came to a halt three days after OPEC deal as Baker Hughes Inc. rig counts rose a 5th consecutive week, up 7 to 425, and Iran wants to increase exports to 2.35m b/d in the coming months, while Russia’s production last month reaches post-Soviet record.
FOREX NEWS
- U.S. stocks closed higher Friday, boosted by two-digit rally in Deutsche Bank AG shares, as investors lean to believe that the bank may be able to negotiate a less destructive settlement. S&P 500 index rallied 0.8% to 2,168.27, with the financials and energy sectors led the gainers. With that, the S&P 500 gained 3.3% for the quarter, the best quarter in the year.
- Costco Wholesale Corp. shares rose by 3.4% after the wholesale club reported a surprise jump in earnings, as lower credit card fees turned lower after its new deal to accept Visa cards.
- Cognizant Technology Solutions Corp. tumbled 13% after an internal investigation was disclosed that the consulting company is researching on whether certain payments it made to facilities in India violated the U.S. Foreign Corrupt Practices Act.
- European stock markets erased earlier sharp losses and managed to closed slightly higher, as concerns over Deutsche Bank’s financial health subsided. The Stoxx Europe 600 index rose by 0.1% to 342.92. The FTSE 100 fell 0.3% to close at 6,899.33,l. However it ended with a 6.1% jump for the third quarter, its biggest quarterly jump since 2013.
- Deutsche Bank started to drop 8% to a all-time low of Eur 9.898 before rebounding to to Eur 11.57 after the AFP News agency said that the bank was near to a $5.4 Bn Settlement with the US DOJ, much better than the $14 Bn initially thought.
- Airbus Group SE rose 1%, with the aerospace heavyweight set to cut an unspecified number of management jobs as part of a restructuring plan.
- Royal Bank of Scotland PLC continued to rise by 1%, after it agreed this week to pay $1.1 billion to the National Credit Union Administration Board in the U.S.to resolve two civil lawsuits over the way it sold mortgage-backed securities.
Pound Slides After May Says U.K. Will Trigger Brexit in March
The pound fell against all but one of its 31 major peers after British Prime Minister Theresa May said she’ll begin the U.K.’s process of withdrawal from the European Union in the first quarter of 2017.
Sterling was about 1 percent from the 31-year low set in the days following the nation’s shock decision in a June 23 referendum to leave the EU. A gauge of the dollar advanced as traders sought the safest assets after May hinted she’s leaning toward a so-called hard Brexit, and before U.S. payrolls data due later this week that will help determine the Federal Reserve’s next policy move.
Read the full article at bloomberg.com
