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US inflation stays weak. Oil continues to fall

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Today’s Economic Events

  • Australia Westpac Consumer Sentiment -3.50% vs. -0.80% previously
  • China foreign direct investment ytd/y 6.40% vs. 7.90% previously
  • Germany PPI m/m -0.50% vs. -0.30%
  • UK Average earnings index 3m/y 2.0% vs. 2.10%
  • UK Employment change -4.3k vs. 4.1k
  • UK Unemployment rate 5.10% vs. 5.20%
  • Switzerland ZEW economic expectations -3.0 vs. 16.6 previously
  • US Core CPI m/m 0.10% vs. 0.20%; y/y 2.10% vs. 2.10%
  • US CPI m/m -0.10% vs. 0.0%; y/y 0.70% vs. 0.80%
  • US building permits m/m -3.90% vs. -6.40%
  • US housing starts m/m -2.50% vs. 2.30%
  • Canada Manufacturing sales m/m 1.0% vs. 0.50%
  • Canada wholesale trade m/m 1.80% vs. 0.40%

Coming Up

  • Bank of Canada Interest rate decision
  • BoC Press conference
  • US Crude Oil inventories report

A day after disappointing China GDP data, the markets gave back the gains to enter back to a risk aversion mode this morning following some losses in the US equity markets yesterday. Today’s Asian trading session saw the Nikkei 225 closing lower with -3.71% losses while the Shanghai Composite was down -1.04%. The risk aversion mode led to another leg of a strong rally in the Yen while the commodity risk assets continued to suffer.

AUDUSD is currently down -0.60% after the currency posted strong declines hitting a session high above 0.6948 yesterday. AUDUSD posted a session low below 0.683 in today’s trading but managed to pull back off the lows. NZDUSD is down -0.51% after yesterday’s quarterly inflation data from New Zealand showed a -0.50% decline against the expected -0.20% CPI. The Kiwi is currently trading at 0.637.

The Yen is back on the front seat with USDJPY down -0.86% for the day. Prices initially touched a low at 116.11 before easing back higher to trade near 116.62 currently.

The European trading session got underway with the markets tuned into the UK’s monthly jobs report. UK unemployment fell to 5.10% surprisingly against 5.20% expectations but average wage earnings were weak, rising 2.0% against expectations of 2.10%. The GBPUSD is up a modest 0.13% for the day trading near 1.417 after testing yesterday’s lows near 1.4135.

The Euro is flat today as the currency failed to keep its gains as EURUSD rallied to 1.0975 in today’s early trading session. EURUSD posted sharp declines intraday to fall to 1.08995 briefly before pulling back modestly higher. The Euro is likely to remain under pressure into tomorrow’s ECB meeting. On the equities front, the German DAX is down -2.22% while the London FTSE100 is down -2.73% for the day.

The NY Session opened with US CPI data being eyed. Inflation was weak on lower energy prices, down 0.10% in December while the core CPI managed to rise 0.10% in December. Other US data included housing starts which fell -2.50% while building permits declined -3.90%.

On the commodities front, Oil prices are down -2.01% for the day, trading at $28.32 a barrel ahead of the weekly US Crude oil inventories report. Oil futures initially jumped higher testing session highs of $30 before giving back the gains. The risk-off mood in the markets saw Gold prices trading strongly today, up 1.22%. Gold prices are currently trading at $1100 an ounce.

The remainder of the evening will see the Bank of Canada interest rate decision followed by a press conference. Market expectations are finely divided by the consensus is inclined to expect a BoC rate cut of 25bps at today’s meeting.

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