February 16, 2018

Time (GMT) Currency Event Previous Forecast
All Day CNY Bank Holiday
09:30 GBP Retail Sales m/m -1.5% 0.5%
13:30 CAD Manufacturing Sales m/m 3.4% 0.2%
13:30 USD Building Permits 1.30M 1.29M
13:30 USD Housing Starts 1.19M 1.23M
13:30 USD Import Prices m/m 0.1% 0.6%
15:00 USD Prelim UoM Consumer Sentiment 95.7 95.4

 

Global Commentary

Asian markets jumped higher on Thursday as China and South Korea joined Taiwan in closing for the Lunar New Year holiday. In addition, Hong Kong and Singapore both had half day sessions leading into their Lunar New Year closures. The Hang Seng in Hong Kong still outperformed, gaining 1.97% on the day and finishing its best week since April 2015 as it added 5.4% for the week. Japan’s Nikkei advanced 1.47% despite a stronger Yen, snapping a three session skid. In Australia the S&P/ASX 200 finished up by 1.16% as energy and natural resource shares rallied in response to overnight gains from crude and metals.

European markets ended broadly higher on Thursday as the weaker USD helped lift shares of natural resource and basic materials stocks, and the stronger Euro was no barrier to gains in equities. The pan-European Stoxx Europe 600 ended the day with a 0.53% gain after rising 1.1% in the previous session. In Germany the DAX underperformed as it advanced 0.06%, while the CAC 40 in France shot higher by 1.11%. European investors have been encouraged the past two days by inflation data from the U.S., which shows economic growth, but not so much that inflation is likely to get out of hand. In London, the FTSE ended the day with a 0.29% gain, supported by advances from the energy and mining sectors, but with the stronger Pound keeping a lid on further gains.

U.S. markets opened higher, but then dipped mid-morning before recovering as economic data supported the markets with data showing a growing economy with little chance of inflation overheating. At the close the S&P 500 was up by 1.21%, with the Dow Industrials adding 1.03%, and the Nasdaq posting a 1.58% gain. After losing roughly 5% last week, the Dow and the S&P are both up more than 4% and on track for their biggest weekly percentage rise since November 2016. The Nasdaq is up over 5%, which represents its best week since October 2014. Major indices remain roughly 5% off their January highs, but are back in positive territory on a year-to-date basis.

 

FOREX

Cryptocurrencies – The cryptocurrency markets continued climbing on Thursday, with Bitcoin spending the day bumping against the $10,000 level, but unable to break through this psychologically important milestone. Other major coins were mostly higher as well, although Ripple declined a modest 2%. Litecoin, which is scheduled for a hardfork that will create a new Litecoin Cash coin on Sunday, slowed its gains and was up just 3% on the day. Bitcoin was definitely the best performer of the day, gaining 8% and leading the markets in a return to dominance, if only for a day.

EUR/USD – The pair climbed for the fourth consecutive session on Thursday, reaching back to the 1.2500 level last seen at the beginning of January. The pair was able to close above the 1.2500 level, and with the U.S. inflation data out of the way the pair very well could continue climbing as traders are expecting the ECB to begin tightening later this year. We see the 1.2600 level as being strong resistance for the pair, and if it gets through that resistance it could trade up to the 1.2850 level in the coming weeks.

 

Commodities

Metals – Precious metals pulled back slightly on Thursday after their strong Wednesday performance and in reaction to U.S. inflation data. April gold fell $2.70, or 0.2%, to $1,355.30 an ounce, while March silver fell $0.082, or 0.5%, to $16.796 an ounce. In other metals trading, March copper fell less than a penny, or 0.3%, to settle at $3.2455 a pound, April platinum added $2.00, or 0.2%, to $1,001.10 an ounce and March palladium rose $9.35, or 0.9%, to end at $1,006.65 an ounce.

Oil – Crude gave up some of the gains made in the previous session on the lower than expected build in U.S. crude inventories as worries over rising U.S. crude production returned to plague trader’s thoughts. West Texas Intermediate futures fell $0.64, or 1.1%, to $59.96 a barrel. On Wednesday, the contract finished up $1.41, or 2.4%, to end at $60.60 a barrel. Brent crude fell $1.08, or 1.7%, to $63.28 a barrel.

 

Indices

S&P500 – The S&P gained 1.21% on Thursday, extending its winning streak to a fifth consecutive session as investors were impressed by data showing inflation remains tame, while economic growth in the U.S. is strong. After a mid-morning dip the index took off higher, and with the Thursday gain it is now on track for its best weekly performance since November 2016. This comes after the selloff in the previous week that took the S&P into correction territory. Some caution from investors is still evident however, as the defensive utilities sector was the best performer of the day, followed by the technology sector.

CAC 40 – The French benchmark equity index soared 1.11% higher on Thursday, leading gains across the European Union following employment data which showed unemployment in France fell below 9% in the fourth quarter for the first time since 2009. This shows that labor reforms are working, but there are questions whether unemployment can continue falling without additional reforms being made. The CAC 40 fell sharply with other European markets in the past two weeks, but the 5,000 level held as support, and the index has been making a nice recovery as it looks to march back to the 5,500 level.

Nikkei – Japan’s benchmark equity index surprised on Thursday as it advanced 1.47% despite a stronger Yen. Japanese equities often move counter to the Japanese currency as a stronger Yen makes Japanese export companies less competitive and profitable. The gain snapped a three session losing streak in which the Nikkei lost 3.4%. Financial companies did especially well, with rising global bond yields expected to increase profitability for Japan’s insurers and banks. The Nikkei will be one of the few markets open in the coming few days as Japan does not celebrate the Lunar New Year holiday like most of Asia.


Stocks

McDonalds – Shares of the leading fast food company edged up by 0.5% on Monday after the company announced it would be focused on making children’s Happy Meals more healthy, including taking away the cheeseburger as an option. Shares marched steadily higher throughout 2017, but plunged in the past two weeks, along with most of the market. Coming off this lower base it appears that shares could be a solid buy, as they are ready to resume the steady march higher that has resulted from McDonalds increased focus on what their customers want, and the actual execution to deliver on these wants. This should allow shares to trade back above the $175 level in coming weeks.

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