CFD Markets News and Forecasts — 04-08-2017

The Ivey Business School Purchasing Managers Index (PMI), measuring Canada's economic activity, fell to 60 in July from 61.6 in June. Economists had expected the gauge to hit 59.2. A figure above 50 shows an increase while below 50 shows a decrease.

Within sub-indexes, inventories gauge dropped to 55.8 last month (from 60.7 in June), and the deliveries indicator slip to 46.2 (from 46.9 in June). At the same time, prices measure surged to 69.2 (from 57.4 in June), and employment gauge rose to 52.6 (from 50.0 in June).

Statistics Canada announced that Canada's merchandise trade deficit widened to CAD3.60 billion in June, compared to a revised CAD1.36-billion gap in May (originally a CAD1.09-billion deficit). Economists had expected a deficit of CAD1.35 billion.

According to the report, the country's exports decreased 4.3 percent m-o-m to CAD46.51 billion in June, hurt mainly by lower exports of unwrought gold and energy products. Meanwhile, imports rose 0.3 percent m-o-m to CAD50.12 billion, helped by stronger imports of gold bullion.

In volume terms, exports were down 1.7 percent m-o-m and imports were up 0.8 m-o-m in June.

On a quarterly basis, Canada's exports rose 2.8 percent q-o-q to a record high DAD142.7 billion in the second quarter, led by an increase in exports of metal and non-metallic mineral products and motor vehicles and parts. Meanwhile, imports surged 5.6 percent q-o-q to a record high CAD148.7 billion, supported by increases in all commodity sections. As a result, Canada's merchandise trade deficit widened from CAD2.0 billion in the first quarter to CAD 5.9 billion in the second quarter.

The Department of Commerce reported the U.S. goods and services trade deficit narrowed by 2.3 percent m-o-m to $46.64 billion in June, while economists expected a gap of $45 billion. That was the smallest trade deficit since October 2016.

According to the report, the June decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.14 billion (or 3.2 percent) to $65.25 billion and an increase in the services surplus of $0.61 billion (or 2.9 percent) to $21.60 billion.

Overall, exports rose $2.35 billion (or 1.2 percent) to $194.374 billion in June, the highest level since December 2014, while imports edged down $0.40 billion (or 0.2 percent) to $238.01 billion.

Year-to-date, the goods and services deficit rose $26.74 billion (or 10.7 percent) to $276.60 billion from the same period in 2016. Exports grew $64.92 billion or 6.0 percent. Imports surged $91.66 billion or 6.9 percent.

EURUSD: 1.1600-05 (EUR 630m) 1.1825 (585m) 1.1850 (920m) 1.1875-80 (E470m)1.1950 (330m)

USDJPY: 109.50 (USD 950m) 110.00 (335m) 110.50 (550m) 111.00 (660m) 111.50(1.68bln) 112.50 (350m)

GBPUSD: 1.3220-25 (GBP 905m) 1.3300 (290m)

AUDUSD: 0.7700 (AUD 315m) 0.7800 (845m) 0.7830 (420m) 0.7850 (335m) 0.7880(415m) 0.7900 (380m) 0.7950 (525m)

USDCAD: 1.2500 (USD 1.16bln) 1.2550 (680m) 1.2600 (460m)

U.S. stock-index futures rose slightly on the back of strong jobs data for July.

Global Stocks:

Nikkei 19,952.33 -76.93 -0.38%

Hang Seng 27,562.68 +31.67 +0.12%

Shanghai 3,273.41 -11.65 -0.35%

S&P/ASX 3,261.32 -11.61 -0.35%

FTSE 7,503.06 +28.29 +0.38%

CAC 5,177.03 +46.54 +0.91%

DAX 12,228.74 +74.02 +0.61%

Crude $48.91 (-0.24%)

Gold $1,269.00 (-0.42%)

Statistics Canada reported that the number of employed people rose by 10,900 m-o-m (+0.1 m-o-m) in July, beating economists' forecast for a 10,000 increase and after an unrevised gain of 45,300 the previous month. Meanwhile, Canada's unemployment rate fell to 6.3 percent last month from 6.5 percent in June, while economists had expected the rate would remain unchanged. That was the lowest rate since October 2008.

According to the report, full-time employment boosted by 35,100 (+0.2 percent m-o-m) in July, while part-time jobs dropped 24,300 (-0.7 percent m-o-m). In July, the number of private sector employees decreased 3,200 m-o-m (flat m-o-m), while the number of public sector employees rose by 800 m-o-m (flat m-o-m). At the same time, the number of self-employed boosted 13,200 m-o-m (+0.5 percent) last month.

Most of all employment rose in Ontario (+0.4 percent m-o-m) and Manitoba (+0.7 percent m-o-m), while it declined in Alberta (-0.6 percent m-o-m), Newfoundland and Labrador (-2.4 percent m-o-m) as well as in Prince Edward Island (-1.3 percent m-o-m).

There were more people working in wholesale and retail trade (+0.8 percent m-o-m), information, culture and recreation (+2.4 percent m-o-m), manufacturing (+0.8 percent m-o-m), transportation and warehousing (+0.9 percent m-o-m) and natural resources (+2.4 percent m-o-m). At the same time, employment dropped in educational services (-2.5 percent m-o-m), public administration (-1.1 percent m-o-m) and agriculture (-3.5 percent m-o-m).

(company / ticker / price / change ($/%) / volume)

IBM (IBM) initiated with Neutral at Wedbush

Ford Motor (F) downgraded to Neutral from Buy at Nomura

The Labor Department announced that nonfarm payrolls increased by 209,000 jobs in July after an upwardly revised 231,000 increase in the prior month (originally 222,000). Meanwhile, the unemployment rate fell to 4.3 percent last month from 4.4 percent in June. Economists had forecast 183,000 new jobs and the jobless rate to slide to 4.3 percent.

According to the report, the labor force participation rate was at 62.9 percent in July, up from 62.8 percent in June. In the meantime, hourly earnings for private-sector workers rose 9 cents or 0.3 percent in July (compared to an unrevised 0.2 percent gain in June and economists' forecast of 0.3 percent advance), while the average workweek was unchanged at 34.5 hours in July (in-line with economists' forecast for 34.5 hours).

Ben Broadbent Bank of England (BoE) Deputy Governor told the BBC that he thnks the UK's economy is "a little bit" better placed for a small rate rise. However, he did not offer a timescale.

"I think there may be some possibility for interest rates to go up a little bit," he said. At the same time, he warned, "One shouldn't overdo this. If and when it happens there will be a lot of talk about the first rate rise since 'x'. But it's just a rate rise and we got perfectly used to rate rises of this size in the past."

Recall, Mr. Broadbent voted to keep interest rates on hold this month.

The official also said the BoE expected the wage growth to peak in the near future. "We think inflation peaks through the second half of this year, and will just begin to edge down through next year and we also think that wage growth will pick up a little later on," he stated. "Certainly over the next three years we expect faster wage growth," he added.

Referring to the weakening of the pound since the Brexit referendum last year, Broadbent says a weak currency should naturally boost the UK exporter-oriented companies. He noted, "That would usually lead to investment by those companies, but that is not happening - we think that is to do with the uncertainty about the Brexit process."

EURUSD: 1.1600-05 (EUR 630m) 1.1825 (585m) 1.1850 (920m) 1.1875-80 (E470m)1.1950 (330m)

USDJPY: 109.50 (USD 950m) 110.00 (335m) 110.50 (550m) 111.00 (660m) 111.50(1.68bln) 112.50 (350m)

GBPUSD: 1.3220-25 (GBP 905m) 1.3300 (290m)

AUDUSD: 0.7700 (AUD 315m) 0.7800 (845m) 0.7830 (420m) 0.7850 (335m) 0.7880(415m) 0.7900 (380m) 0.7950 (525m)

USDCAD: 1.2500 (USD 1.16bln) 1.2550 (680m) 1.2600 (460m)

The Reserve Bank of Australia (RBA) released its August statement on monetary policy on Friday. The document revealed the Bank slightly downgraded its growth forecasts for the Australian economy in the near-term. According to the statement, the economy is now expected to grow at an annual rate of between 2 and 3 percent in December 2017 compared to between 2.5 to 3.5 percent indicated in the May Statement. Growth in the economy is forecast to be 2.5 to 3.5 percent in June 2018 compared to between 2.75 and 3.75 percent in the previous forecast. Meanwhile, GDP growth forecast for 2019 was raised to between 3 to 4 percent from between 2.75 to 3.75 percent. The statement also showed the RBA expects higher inflation as the expected utilities prices were revised upwardly, notwithstanding the exchange rate appreciation that has occurred. Measures of underlying inflation are now expected to be between 1.75 and 2.75 percent in June 2018 compared to 1.5 to 2.5 percent in the prior report. Headline inflation is forecast to rise gradually and be between 2 and 3 percent in 2019.

The Federal Statistical Office's (Destatis) report revealed that German factory orders rose more than expected m-o-m in June.

According to the report, new orders in the manufacturing sector increased by 1 percent m-o-m in seasonally terms in June, following an upwardly revised 1.1 percent m-o-m increase in May (originally a 1 percent m-o-m gain) and beating economists' expectation of a 0.5 percent m-o-m advance.

The June growth was attributable to higher domestic orders, which boosted by 5.1 percent m-o-m in June. Meanwhile, foreign orders fell by 2 percent m-o-m as new orders from both the euro area (-2.4 percent m-o-m) and other countries (-1.5 percent m-o-m) decreased.

New orders for intermediate goods rose by 3.7 percent m-o-m in June, while orders for consumer goods grew by 2.3 m-o-m. At the same time, new orders for capital goods showed a decrease of 0.8 percent m-o-m.

Japan's Ministry of Health, Labor and Welfare reported its preliminary estimates showed that labor cash earnings fell for the first time in thirteen months in June.

According to the report, total cash earnings dropped 0.4 percent y-o-y in June, following a revised 0.6 percent y-o-y rise in May (originally a 0.7 percent y-o-y gain). That was the first decline in nominal cash earnings since May 2016. Economists had expected the cash earnings would increase by 0.6 percent y-o-y.

Contractual cash earnings increased 0.4 percent y-o-y in June, while special cash earnings dropped 1.5 percent y-o-y.

The biggest drops in earning in June were recorded in such industries as scientific research, professional and technical services (-5.5 percent y-o-y), real estate and goods rental and leasing (-5.2 percent y-o-y), education (-3.7 percent y-o-y), compound services (-3.7 percent y-o-y), accommodation, eating and drinking services (-2.3 percent y-o-y) and information and communication (-1.9 percent y-o-y). On the contrary, the biggest increases were seen in living-related and personal services (+4.5 percent y-o-y), utilities (+3.7 percent y-o-y) and construction (+2.3 percent y-o-y).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1963 (2518)

$1.1931 (2431)

$1.1901 (4830)

Price at time of writing this review: $1.1876

Support levels (open interest**, contracts):

$1.1833 (2179)

$1.1793 (2257)

$1.1747 (1723)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 4 is 105735 contracts (according to data from August, 3) with the maximum number of contracts with strike price $1,1800 (4830);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3253 (1735)

$1.3210 (2573)

$1.3179 (1351)

Price at time of writing this review: $1.3139

Support levels (open interest**, contracts):

$1.3091 (1213)

$1.3047 (1157)

$1.2999 (1036)

Comments:

- Overall open interest on the CALL options with the expiration date August, 4 is 35111 contracts, with the maximum number of contracts with strike price $1,3100 (2964);

- Overall open interest on the PUT options with the expiration date August, 4 is 34417 contracts, with the maximum number of contracts with strike price $1,2800 (3023);

- The ratio of PUT/CALL was 0.98 versus 1.00 from the previous trading day according to data from August, 3

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

The Australian Bureau of Statistics (ABS) reported that Australia's retail sales rose 0.3 percent m-o-m in June, following an unrevised 0.6 percent m-o-m growth in May. That was the weakest monthly increase since March. Economists had forecast retail sales would gain 0.2 percent m-o-m in June.

According to the ABS, retail turnover increased in such groups as household goods retailing (+0.9 percent m-o-m), cafes, restaurants and takeaway food services (+0.5 percent m-o-m), clothing footwear and personal accessory retailing (+0.8 percent m-o-m) and other retailing (+0.2 percent m-o-m). At the same time, department stores (-0.3 percent m-o-m) recorded fall in retail sales, while food retailing (0 percent m-o-m) was unchanged.

For the second quarter of 2017, retail sales surged 1.5 percent q-o-q.

European equities finished slightly higher Thursday, aided by earnings-driven jumps for retailer Next PLC, defense supplier Cobham PLC and lender UniCredit SpA. The Stoxx Europe 600 SXXP, +0.08% closed up 0.1% at 378.93 after a choppy session, putting the benchmark on track for a weekly gain of 0.2% with one trading session still to go. But some strategists are sounding downbeat, as the index stays well below its mid-May closing high around 396.

U.S. stocks closed mostly lower on Thursday, pressured by a sharp decline in energy shares, though the Dow bucked the trend to close slightly higher and put in its seventh straight record close. The Dow Jones Industrial Average DJIA, +0.04% rose less than 0.1% to 22,026. The blue-chip index has risen for eight straight sessions, its longest such streak since February.

Stocks continued to struggle for direction amid slow late-summer trading, as investors paused following strong gains this year and ahead of the U.S. employment report due later Friday. Asia-Pacific equities started with a modest downbeat tone, with country-specific issues weighing on Japanese and Australian stocks.