The rebound in USD which started with hawkish comments from NY Fed President Dudley continued to work its way through world markets overnight.
The threat of a potential FOMC rate hike as early as September (although December remains more likely) has rained on the liquidity party that sent the Dow, S&P and NASDAQ to record high closes earlier in the week.
This morning finds US index futures trading flat while the DAX is down 0.6%. The FTSE is down marginally, outperforming it's continental counterparts on the back of a better-than-expected UK employment report which included a surprise 9K drop in jobless claims.
The top performing market has been the Nikkei, which rose 0.9% benefitting from a pullback in JPY with USD/JPY trading back above 100.
The USD bounce has also impacted commodity trading. WTI crude oil is down 1.0% despite a 1.0 mmbbl drop in API inventories. With WTI still trading well above $45.00, this looks like a normal trading correction of the big gains made over the last few days. Crude and gasoline could be active around today's DOE inventory numbers.
Currency trading finds precious metals on their heels, with silver, which had outperformed gold to the upside in the recent rally, now falling back harder. Most majors have dropped back a bit but are holding above recent break points, like $1.1200 for EUR/USD and $1.3000 for USD/CAD.
GBP has stabilized relative to EUR and JPY, boosted by positive UK jobs showing the Brexit impact on the UK economy was not as bad as feared. GBP may remain active through tomorrow's UK retail sales report.
Fed speculation may continue to drive US trading today, with FOMC minutes and a speech from St. Louis Fed President Bullard, a swing voter, due this afternoon.
Lowe’s (NYSE:LOW) could come under pressure today after missing on earnings and underperforming competitor Home Depot (NYSE:HD).
Corporate News
Lowe's: $1.31 vs street $1.42; same store sales 2.1% below street 4.2%
Economic News
UK jobless claims: (8.6K) vs street 9K
UK 3 month employment change: 172K vs street 150K
UK unemployment rate: 4.9% as expected
UK average weekly earnings: 2.4% as expected
Australia Q2 wage price index: 2.1% vs street 2.0%
NZ Q2 employment change: 4.5% vs street 2.3%
NZ Q2 unemployment rate: 5.1% vs street 5.3% & previous 5.7%
NZ Q2 producer input prices: 0.9% vs previous (1.0%)
NZ Q2 producer output prices: 0.2% vs previous (0.2%)
Singapore electronic exports: (12.9%) vs street (4.3%)
Singapore non-oil domestic exports: (10.6%) vs street (2.5%)
Upcoming significant economic announcements include:
10:30 am EDT: US DOE crude oil inventories - street: 0.95 mmbbls
10:30 am EDT: US DOE gasoline inventories - street: (1.7 mmbbls)
1:00 pm EDT: FOMC Bullard speaking
2:00 pm EDT: FOMC July meeting minutes