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August 17, 2017

Time (GMT) Currency Event Previous Forecast
01:30 AUD Employment Change 14.0K 19.8K
01:30 AUD Unemployment Rate 5.6% 5.6%
08:30 GBP Retail Sales m/m 0.6% 0.2%
09:00 EUR Final CPI y/y 1.3% 1.3%
11:30 EUR ECB Monetary Policy Meeting Accounts
12:30 CAD Manufacturing Sales m/m 1.1% -1.0%
12:30 USD Unemployment Claims 244K 240K
12:30 USD Philly Fed Manufacturing Index 19.5 18.3
13:15 USD Capacity Utilization Rate 76.6% 76.7%
13:15 USD Industrial Production m/m 0.4% 0.3%
16:30 USD FOMC Member Kaplan Speaks

 

Global Commentary

Asian markets were mixed, but mostly higher on Wednesday as short traders unwound their positions, and bargain hunters stepped up to buy high growth companies in several Asian markets.  South Korea and Hong Kong, two of this years’ best performing global markets, both rebounded, adding 0.60% and 0.86% respectively.  In Australia the S&P/ASX 200 was 0.48% higher, with gains led by the big four banks and the energy sector.  On the flip side, both China’s Shanghai Composite and the Nikkei in Japan slipped lower, posting modest losses of 0.14% and 0.12% respectively.

European markets continued their rebound for a third consecutive session, with the broad-based Stoxx Europe 600 ending the day 0.69% higher.  Miners led the gains as copper and zinc prices both rallied, with zinc hitting its highest level in 10 years.  Markets also benefitted from a weaker Euro, with Germany’s DAX and the CAC 40 in France both ending the session 0.71% higher.  London’s FTSE also gained on renewed risk appetite and the strength from the mining sector, ending the day 0.67% higher.  Gains for the British market came despite a rally in the Pound, which rose following data showing wage growth in the June in the U.K. was greater than expected.  Italian markets were closed for public holidays.

Markets in the U.S. had a strong start Wednesday morning, but investors remained cautious ahead of the afternoon release of the latest Federal Reserve meeting minutes.  It was prescient of them, as the meeting minutes struck a dovish tone from the Fed, who are struggling to keep inflation near the 2% target, and could have to delay plans to raise interest rates later this year.  The news caused markets to turn choppy, as did news of increased turmoil in the White House, where President Trump could face more resistance to his agenda’s after criticisms regarding his reaction and response to weekend racial violence in Charlottesville.  Markets remained in positive territory and at the close the Nasdaq was 0.19% higher, the Dow gained 0.12%, and the S&P 500 advanced 0.14%.

 

FOREX

USD/JPY – The pair faltered and fell off its daily high following the release of dovish Federal Reserve monetary policy meeting minutes late Wednesday afternoon.  There was support found at the 110.00 level however, so the pair could potentially continue its rally once Asian markets open for trading later.  If the pair breaks below the 110.00 level it will almost certainly test support at the 109.50 level soon after, and a break of that support could see the pair retesting the 109.00 level from last week, although we don’t believe that scenario is likely.

Bitcoin – The digital currency quickly recovered from the “flash crash” on Tuesday that took its value nearly to the $3,800 level briefly.  Now Bitcoin is trading back near record levels as it has gained an additional 3.8% in Wednesday’s trading, even as the USD declined against rivals.  A recent series of tweets from Chris Burniske, a bitcoin expert who was previously a blockchain analyst at ARK Invest speculate that Bitcoin price rises as interest in Bitcoin rises, and that increasing price causes increased interest.  This virtuous cycle could mean that Bitcoin will continue rising rapidly, at least until it gains mainstream acceptance.

 

Commodities

Metals – Precious metals turned higher after it was learned that President Trump had disbanded two White House advisory groups.  The move sparked haven demand for the metals as it was seen as more turmoil for the President’s administration.  December gold rose $3.20, or 0.3%, to settle at $1,282.90 an ounce.  Silver for September delivery performed even better, tacking on $0.226, or 1.4%, to end at $16.94 an ounce.  In other metals action, September copper rose $0.071, or 2.5%, to finish at $2.954 a pound.

Oil – Crude fell for the third session in a row Wednesday after the U.S. released data showing crude production in the U.S. rising to its highest level in two years.  September West Texas Intermediate crude lost $0.77, or 1.6%, to settle at $46.78 a barrel.  October Brent crude fell $0.53, or 1%, to $50.27 a barrel.

 

Indices

S&P500 – The S&P began the day on a strong note, rising ahead of the release of the latest Federal Reserve meeting minutes.  The release of those minutes in the afternoon, and the dovish tone of the meeting minutes, caused the S&P to retreat from its daily highs in a choppy trading pattern.  By the close the S&P was still holding to a 0.14% gain, with nine of the eleven sectors still in the black.  Only the financial and energy sectors ended the day lower, by 0.24% and 1.13% respectively.

FTSE100 – London’s main benchmark index rose for a third consecutive session on Wednesday, gaining 0.67% even as the Pound regained some traction following a stronger than expected reading on wage growth in the U.K.  Investors seem to have regained their risk appetite as the tensions between North Korea and the U.S. have receded.  Mining shares were the strongest for the day as copper and zinc rallied strongly.  Glencore PLC whose portfolio of metals include zinc and copper, zoomed up 4.2%, and Anglo American PLC advanced 3.6%.

S&P/ASX 200 – Australia’s benchmark index reversed early weakness to finish the day with a 0.48% gain as the banking and energy sectors provided a boost higher.  Westpac Bank rallied 1.71% higher, ANZ jumped by 2.05% and National Australia Bank rose 1.39%, while Commonwealth Bank of Australia fell 1.74% as the shares went ex-dividend.  In the energy space Woodside Petroleum advanced 2.61%, Santos added 1.52% and Oil Search gained 0.63%.


Stocks

Alibaba – The giant Chinese ecommerce company will report earnings before the bell on Thursday, and a strong result could push the stock back into record territory, as right now it sits less than 1% from its all-time high, even after the recent pullback in markets.  Expectations are for a strong quarter as Chinese online retail growth has already been reported as 41% in June by the Chinese National Bureau of Statistics.  One obvious beneficiary of this growth will be Alibaba, and in fact the company itself has already provided strong forward guidance.  Additionally, Alibaba seems to be something of a darling among fund managers, and the power of all the fund buying on a strong earnings number could propel shares of Alibaba significantly higher.  This is definitely a stock to keep your eye on heading into the earnings release.

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