February 23, 2018

Time (GMT) Currency Event Previous Forecast
10:00 EUR Final CPI y/y 1.3% 1.3%
12:00 GBP MPC Member Ramsden Speaks
13:30 CAD CPI m/m -0.4% 0.4%
13:30 CAD Common CPI y/y 1.6%
13:30 CAD Median CPI y/y 1.9%
13:30 CAD Trimmed CPI y/y 1.9%
Tentative USD Fed Monetary Policy Report
15:15 USD FOMC Member Dudley Speaks
18:30 USD FOMC Member Mester Speaks
20:40 USD FOMC Member Williams Speaks

Global Commentary

Asian markets were mostly lower on Thursday, taking their lead from the late day selloff on Wall Street following the release of the latest Federal Reserve monetary policy meeting minutes. Investor sentiment was dented when those meeting minutes showed an increased likelihood of more interest rate hikes in the U.S. during 2018. Hong Kong’s Hang Seng was the worst hit, falling 1.48%, but over on mainland China the Shanghai Composite bucked the falling trend as investors returned from the week-long Lunar New Year holiday to send the benchmark Chinese index 2.17% higher. Australia’s S&P/ASX 200 also managed a small 0.12% advance as mining shares recovered. In Japan, the Yen strengthened against the U.S. dollar for the first time in four sessions, leading to a loss of 1.07% on the Nikkei as export oriented shares sold-off. South Korea’s Kospi fell 0.63% as well.

European markets opened deep in negative territory on Thursday, tracking the overnight losses on Wall Street from the previous session, with investors worried about the implications of the latest Federal Reserve monetary policy meeting minutes. However, Wall Street opened higher Thursday, allowing European markets to pare their losses, ending the day mixed. The pan-European Stoxx Europe 600 was 0.20% lower at the close, with the DAX in Germany losing 0.07%, while France’s CAC 40 continues to outperform, rising 0.13%. The Euro also firmed modestly against the U.S. dollar, which put additional pressure on equities. London’s FTSE underperformed the broader European indices, falling 0.40% after a measure of U.K. growth came in weaker than expected, and reports on the earnings front were less than stellar.

U.S. markets ended mixed on Thursday, with losses from the health care sector giving the Nasdaq a fourth consecutive loss, its longest such losing streak since November 2016. At the close the S&P 500 was higher by 0.10%, and the Dow gained 0.66%, however the Nasdaq dropped 0.11%. Gains came early in the day after labor data came in better than expected, damping investor concerns over potentially rising inflation in the U.S. The gains evaporated later in the day however, with weakness from the health care and financial sectors weighing on the broader market.

 

FOREX

USD/JPY – Broad based weakness for the U.S. dollar, and continuing uncertainty from investors following the latest Federal Reserve meeting minutes, sent this pair solidly lower on Thursday. The drop began at the open of Asian markets and continued throughout the day, with the pair falling down through the 107.00 level and losing roughly 100 pips for the day. Further downside is expected when markets reopen in Asia on Friday, and we could see the pair soon testing the recent lows around the 106.00 level.


Cryptocurrencies 

The cryptocurrencies continued trending lower for a second consecutive session, with Bitcoin testing the $10,000 level for support as it fell 5% on Thursday after an 11% drop in the previous session. Other major coins were lower as well, with many posting drops in the range of 7%. Ethereum was one of the better coins of the day, but still fell 3.2%. Litecoin was the worst of the top 10 coins as it lost 7.7% following the solid gains seen leading up to this past Sunday’s hard fork. Overall, 88 of the top 100 coins were lower on the day.

Commodities

Metals – Precious metals ended mixed on Thursday as traders continued to digest the latest Federal Reserve meeting minutes, and a softer U.S. dollar and falling bond yields helped boost gold slightly. April gold rose $0.60, or less than 0.1%, to $1,332.70 an ounce, and March silver lost $0.03, or 0.2%, to $16.587 an ounce. In other metals, March copper added $0.0255, or 0.8%, to settle at $3.2415 a pound, April platinum meanwhile, picked up $2.80, or 0.3%, to end at $999.40 an ounce and March palladium rose $11.00, or 1.1%, to settle at $1,033.50 an ounce.

Oil – Crude gained on Thursday after the U.S. Energy Information Agency reported a surprise drop in U.S. crude inventory levels, which analysts said was caused by larger than expected exports. The drop comes just as maintenance season is beginning for the oil industry, which could cause inventory levels to drop further in the coming weeks. West Texas Intermediate crude oil for April delivery erased an early loss, jumping higher after the data and ending the day with a gain of $1.09, or 1.8%, at $62.77 a barrel. Brent crude rose $0.97, or 1.5%, to settle at $66.39 a barrel.


Indices

Nasdaq – The technology and health care heavy index fell on Thursday as losses from health care weighed on the index. At the close the Nasdaq was 0.11% lower, posting its fourth consecutive losing session, and the longest losing run since November 2016. Some investors are worried about market strength as the Nasdaq is often seen as a proxy for risk appetite in the equity markets. Even so, the Nasdaq is still outperforming as it is up 4.4% so far this year versus a 1% gain for the Dow and a 1.1% gain for the S&P 500.

FTSE 100 – London’s benchmark equity index dropped 0.40% on Thursday after the U.K. Office for National Statistics revised down their GDP estimates for the fourth quarter in the U.K. There was also disappointing news on the earnings front and the Pound firmed modestly against the U.S. dollar. The index had been down far more early in the session, but the strength on Wall Street helped lift the FTSE off its daily low.

Shanghai Composite – Chinese investors returned to markets for the first time in a week as the Chinese Lunar New Year holiday came to an end, ushering in the Year of the Dog. It certainly wasn’t a dog day for the Shanghai Composite, which jumped 2.17% higher even as markets across Asia were falling. The gains were mostly a reaction to events over the past week while Chinese markets remained closed. The Shanghai Composite remains off its January high and is still 1.1% lower since the beginning of the year, but the strong return of investors to the market after the Lunar New Year holiday is promising for the coming weeks.


Stocks

Amazon – Shares of the online retailer rose above the $1,500 level for the first time ever on Thursday, but was unable to hold onto the gain and slipped back to close at $1,485.34 for a 0.16% gain. The stock has been an outperformer already this year, gaining 27% since the beginning of the year versus the 1.1% gain for the S&P 500, the 1% gain for the Dow and the 4.4% gain for the Nasdaq. Amazon continues to go from strength to strength, and further gains should be expected as the company’s cloud computing business has continued to grow in size and profitability. Amazon is also looking to enter the prescription drug business, and this could significantly improve profitability.

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