June 21, 2018

Time (GMT) Currency Event Previous Forecast
05:30 CHF SNB Financial Stability Report
08:30 CHF SNB Monetary Policy Assessment
09:30 CHF SNB Press Conference
09:30 GBP Public Sector Net Borrowing 6.2B 5.1B
Tentative ALL OPEC-JMMC Meetings
10:45 EUR German Buba President Weidmann Speaks
12:00 GBP MPC Official Bank Rate Votes 2-0-7 2-0-7
12:00 GBP Monetary Policy Summary
12:00 GBP Official Bank Rate 0.50% 0.50%
13:30 USD Philly Fed Manufacturing Index 34.4 28.3
13:30 USD Unemployment Claims 218K 220K
21:15 GBP BOE Gov Carney Speaks
Tentative USD Bank Stress Test Results

 

Global Commentary

Asian markets got off to a weak start once again on Wednesday, but by the afternoon most had turned higher, and by the close all were in positive territory as investors overcame their trade worries. Mainland China’s Shanghai Composite, which was down nearly 1% in early trade, finished the session with a 0.31% gain, and in Hong Kong the Hang Seng climbed 0.77% higher. Japan’s Nikkei rebounded from its worst daily session in three months by posting a 1.24% gain, helped by persistent weakness from the Yen. In Australia, the S&P/ASX 200 moved to a ten-year high as it tacked on 1.16%, and South Korea’s Kospi advanced 1.02% as technology names recovered from trade worries.

European markets bounced off a three week low on Wednesday, heading broadly higher as investors came to terms with the current trade relations between the U.S. and China. The pan-European Stoxx Europe 600 finished the day with a gain of 0.28%, while Germany’s DAX climbed 0.14% higher, but the CAC 40 in France fell 0.34%. The move higher was seen by some as a bit of a relief rally as trade news leaves the headlines, while others feel that investors have simply become exhausted over the constant trade woes, and are now ignoring the news to some extent. In London, the FTSE gained 0.31%, recovering most of the slide from the previous session as investors began to see some signs of relief in the U.S.-China trade concerns.

U.S. markets were mixed on Wednesday, with the Nasdaq reaching a new record high, but the Dow Industrials notching a seventh consecutive losing session. At the close the Nasdaq was 0.72% higher as technology rebounded, but the Dow edged lower by 0.17% in its longest losing streak since March 2017. The S&P 500 gained 0.17%, while the small cap Russell 2000 outperformed as it rose 0.80%. This was also a record close for the Russell 2000, which has been the strongest performing index of late; as most of its components have a domestic focus and shouldn’t be severely impacted by the current international trade concerns.

 

Cryptocurrencies

Cryptocurrency markets fell early Wednesday as traders learned of a roughly $31 million hack at South Korean exchange Bithumb. The news understandable dented confidence in the emerging asset class. However, the market rebounded and recouped most of the losses later in the day when Goldman Sachs released a statement saying client demand may have them opening up trading in more than just Bitcoin futures. At the close Bitcoin was nearly unchanged with a gain of 0.17%, while major altcoins were all lower in the range of 0.1% to 1.3%.

 

FOREX

EUR/USD – The pair continued to linger under the 1.1600 level on Wednesday, while also finding support from the 1.1550 level. It’s the fourth session in a row that the pair has remained tightly range bound like this, as traders are still digesting the huge move lower that came in the wake of last Thursday’s ECB monetary policy decision. It’s difficult to say which way the pair will head, since the strength of the U.S. dollar and continued dovish rhetoric from the ECB should be sending the pair lower, and yet it can’t seem to get below the support that extends from the 1.1550 level to the 1.1500 level.

USD/CAD – The pair continued climbing for the fifth session in a row Wednesday as traders continue to price in the likelihood of OPEC raising their production when they meet on Thursday. The move Wednesday took the pair above the 1.3300 level by the close, which is the first time the pair has traded above that level in a year. Thursday could see extreme volatility for the pair, depending on the news coming from the OPEC meeting.

 

Commodities

Metals – A mostly stronger U.S. dollar caused precious metals to fall again on Wednesday, with gold reaching a six-month low, while silver logged a fourth consecutive losing session. August gold retreated by $4.10, or 0.3%, to settle at $1,274.50 an ounce, while July silver shed less than 0.1% to $16.309 an ounce, for its lowest settlement since mid-May. In other metals trade, July copper settled at $3.041 a pound, down 0.2%. July platinum tacked on 1.1% to $874.0 an ounce, and September palladium lost 0.3% to $957.20 an ounce.

Oil – Crude jumped higher on Wednesday after the U.S. Energy Information Agency reported the largest weekly drop in crude inventory levels in nearly six months. July West Texas Intermediate crude added $1.15, or 1.8%, to settle at $66.22 a barrel, while August Brent crude lost $0.34, or nearly 0.5%, to finish at $74.74 a barrel. For the week ending June 15, U.S. crude inventories were down 5.9 million barrels, versus expectations of a 3.7 million barrel drop.

 

Indices

S&P500 – The S&P 500 gained 0.17% on Wednesday, with seven of the eleven subsectors ending the day in positive territory, and the defensive utilities finishing flat. The declining sectors were a mixed bag, with the telecom sector losing 0.97%, while the materials sector fell 0.39% and the financial sector capped potential gains as it lost 0.31%. The consumer discretionary sector had one of the better performances as it gained 0.48% and the technology sector helped lift the broader market as it gained 0.33%.

FTSE 100 – London’s benchmark equity index climbed 0.31% on Wednesday, nearly erasing the 0.4% slide from the previous session, as investors began to see some potential relief in the trade concerns between the U.S. and China. The move higher took the FTSE off the six-week low that was reached as trade tensions between the U.S. and China escalated. The Pound has also been softening against the U.S. dollar during this time, so we could be getting set for a strong rebound from equities if trade issues finally disappear.

S&P/ASX 200 – Australia’s benchmark equity index advanced 1.16% on Wednesday, posting one of the best daily results across the Asia-Pacific region, and finishing the day at a ten-year high as Australian equities have been outperforming recently. The moves higher come even as markets across much of the globe have been struggling with the potential for a global trade war, but somehow Australian investors have been able to shrug off such fears. The big four banks are rebounding from months of weakness, and rising commodity prices continue to help miners and oil companies, although the gold miners could see increased pressure going forward as gold price has been struggling.


Stocks

Starbucks – Shares of the coffee purveyor fell 9.07% on Wednesday, reaching a new 52-week low on concerns over U.S. and global growth. The worries came about after Starbucks announced that they would be closing 150 U.S. stores in 2019, triple the average number closed in recent years. The company also said it would slow the number of licensed outlets being opened in airports, grocery stores and other retail outlets. The moves supported criticisms that the company had been expanding too aggressively. Investors are worried that slowing growth, combined with the slimmer margins at the licensed outlets that have become so popular in the past few years, will cause a prolonged slump in profits. The drop to a new 52-week low is also a break below long-term support, which could mean a substantial move lower from here for Starbucks shares.

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