CFD Markets News and Forecasts — 06-09-2017

Economic activity in the non-manufacturing sector grew in August for the 92nd consecutive month, say the nation's purchasing and supply executives in the latest NonManufacturing ISM Report On Business. The NMI registered 55.3 percent. This represents continued growth in the non-manufacturing sector at a faster rate.

The NonManufacturing Business Activity Index increased to 57.5 percent, 1.6 percentage points higher than the July reading of 55.9 percent, reflecting growth for the 97th consecutive month, at a faster rate in August. The New Orders Index registered 57.1 percent, 2 percentage points higher than the reading of 55.1 percent in July. The Employment Index increased 2.6 percentage points in August to 56.2 percent from the July reading of 53.6 percent.

The Bank of Canada is raising its target for the overnight rate to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Recent economic data have been stronger than expected, supporting the Bank's view that growth in Canada is becoming more broadly-based and self-sustaining. Consumer spending remains robust, underpinned by continued solid employment and income growth. There has also been more widespread strength in business investment and in exports. Meanwhile, the housing sector appears to be cooling in some markets in response to recent changes in tax and housing finance policies. The Bank continues to expect a moderation in the pace of economic growth in the second half of 2017, for the reasons described in the July Monetary Policy Report (MPR), but the level of GDP is now higher than the Bank had expected.

The global economic expansion is becoming more synchronous, as anticipated in July, with stronger-than-expected indicators of growth, including higher industrial commodity prices. However, significant geopolitical risks and uncertainties around international trade and fiscal policies remain, leading to a weaker US dollar against many major currencies. In this context, the Canadian dollar has appreciated, also reflecting the relative strength of Canada's economy.

U.S. stock-index futures rose slightly on Wednesday as investors' sentiment remained weighed down by simmering tensions on the Korean peninsula and concerns that the category 5 hurricane Irma could hit the United States.

Global Stocks:

Nikkei 19,357.97 -27.84 -0.14%

Hang Seng 27,613.76 -127.59 -0.46%

Shanghai 3,385.88 +1.56 +0.05%

S&P/ASX 5,689.73 -16.50 -0.29%

FTSE 7,340.37 -32.55 -0.44%

CAC 5,095.11 +8.55 +0.17%

DAX 12,199.58 +75.87 +0.63%

Crude $49.16 (+1.03%)

Gold $1,344.40 (-0.01%)

EURUSD: 1.1775-80 (EUR 650m) 1.1800 ( 865m) 1.1900-05 (950m) 1.2000 (895m)

USDJPY: 109.00 (USD 420m) 109.35 (300m) 109.50-55 (530m) 110.00 (315m)

AUDUSD: 0.7800 (AUD 300m) 0.8100 (675m)

Labour productivity of Canadian businesses edged down 0.1% in the second quarter following three consecutive quarters of growth. This decline followed a significant 1.3% increase in the first quarter.

The slight decrease in productivity in the second quarter reflects a recovery in hours worked after a quarter of decline, while growth in business output continued at a faster pace.

Real gross domestic product (GDP) of businesses rose 1.3% in the second quarter, up from 1.1% in the first quarter. This marked the third time in four quarters that GDP growth of businesses has been greater than 1.0%. As in the first quarter, growth was widespread in goods-producing and service-producing business industries. Only the agriculture and forestry sector posted a decline in production in the second quarter, falling for a third consecutive quarter.

GDP growth of businesses in the second quarter was accompanied by the largest increase in hours worked (+1.4%) since the fourth quarter of 2003 (+1.9%). Hours worked rose at a comparable pace in both goods-producing (+1.2%) and service-producing (+1.4%) businesses. They were up in every major industrial sector except agriculture and forestry (-1.3%), information and cultural industries (-0.8%) and utilities (-0.3%).

Imports fell 6.0% and exports decreased 4.9%, both due mainly to the effect of widespread price decreases, while the Canadian dollar appreciated sharply relative to the American dollar in July.

Total imports fell 6.0% in July to $47.2 billion, following seven consecutive monthly increases, with declines observed in all commodity sections. Prices were largely responsible for this decrease, falling 3.8%. This occurred as the Canadian dollar gained 3.6 cents US relative to the American dollar from June to July.

The decrease in import values was partially attributable to aircraft and other transportation equipment and parts, as well as motor vehicles and parts. Year over year, imports rose 4.0%.

Following a record observed in June, imports of aircraft and other transportation equipment and parts fell 35.2% to $1.6 billion in July. Aircraft imports led this decrease, with a slowdown in imports of airliners in July after two months of strong growth.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce,announced today that the goods and services deficit was $43.7 billion in July, up $0.1 billion from $43.5 billion in June, revised. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports.

The July increase in the goods and services deficit reflected a decrease in the goods deficit of less than $0.1 billion to $65.3 billion and a decrease in the services surplus of $0.2 billion to $21.6 billion.

Year-to-date, the goods and services deficit increased $27.9 billion, or 9.6 percent, from the same period in 2016. Exports increased $76.8 billion or 6.0 percent. Imports increased $104.8 billion or 6.7 percent.

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

Caterpillar (CAT) initiated with a Neutral at Seaport Global Securities; target $120

Apple (AAPL) target raised to $185 from $175 at Instinet

Hewlett Packard Enterprise (HPE) target lowered to $14 from $17 at Mizuho

United Tech (UTX) downgraded to Market Perform from Outperform at Cowen

Hewlett Packard Enterprise (HPE) downgraded to Underperform from Neutral at BofA/Merrill

Exxon Mobil (XOM) upgraded to Neutral from Sell at UBS

Hewlett Packard Enterprise (HPE) reported Q3 FY 2017 earnings of $0.30 per share (versus $0.48 in Q3 FY 2016), beating analysts' consensus estimate of $0.26.

The company's quarterly revenues amounted to $8.209 bln (+2.5% y/y), beating analysts' consensus estimate of $7.494 bln.

The company also issued downside guidance for Q4, projecting EPS of $0.26-0.30 versus analysts' consensus estimate of $0.39.

HPE rose to $14.26 (+1.57%) in pre-market trading.

Growth was driven to a large extent by a marked expansion in Germany. The increase in France, meanwhile, was only fractional and sales in Italy continued to fall.

The headline IHS Markit Eurozone Retail PMI - which tracks the month-on-month changes in like-forlike retail sales in the bloc‟s biggest three economies combined - fell to 50.8 in August, from 51.0 in July. The latest reading highlighted the weakest rate of growth in the current five-month period of expansion.

Sales remained down on an annual basis. By country, yearly sales were up in Germany, but lower in France and Italy. The degree of the shortfall was particularly marked in the former.

• Says China holds the key to resolving North Korean crisis

Based on provisional data, the Federal Statistical Office (Destatis) reports that price-adjusted new orders in manufacturing had decreased in July 2017 a seasonally and working-day adjusted 0.7% on the previous month. For June 2017, revision of the preliminary outcome resulted in an increase of 0.9% compared with May 2017 (primary +1.0%). Price-adjusted new orders without major orders in manufacturing had increased in July 2017 a seasonally and working-day adjusted 0.6% on the previous month.

In July 2017, domestic orders decreased by 1.6% and foreign orders compared in July 2017 with the previous month. New orders from the euro area were down 1.0%, new orders from other countries increased 0.6% compared to June 2017.

In July 2017 the manufacturers of intermediate goods saw new orders fall by 0.4% compared with June 2017. The manufacturers of capital goods showed decreases of 0.7% on the previous month. For consumer goods, a decrease in new orders of 3.0% was recorded.

• The Australian economy grew by 0.8% in seasonally adjusted chain volume terms in the June quarter.

• Household final consumption expenditure increased 0.7% and government final consumption expenditure increased 1.2%.

• Exports of goods and services rose 2.7% for the quarter.

• Compensation of employees increased 0.7%.

• The terms of trade fell 6.0% in the quarter.

U.K. stocks turned lower Tuesday, clipped as the pound hit a three-week high and as investors wrestled with a downbeat report on British services activity and lingering tensions surrounding North Korea's nuclear program. The FTSE 100 UKX, -0.52% fell 0.5% to close at 7,372.92, with only the oil and gas and utilities sectors showing gains. The index had been higher early in the session as shares of miners and retailers rose.

U.S. stocks closed firmly lower on Tuesday, with the S&P 500 snapping a six-day winning streak, as investors focused on heightened tensions between the West and North Korea and worries about a lack of progress on President Donald Trump's pro-growth agenda. Low trading volume, particularly as investors returned from a holiday-lengthened Labor Day weekend, added to the downbeat tone on Wall Street.

Asian stocks fell as nations grapple with how to deal with escalating provocations from North Korea. The yen was near its strongest level for the year and U.S. Treasury yields were at their lowest since the aftermath of Donald Trump's November election win.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2029 (6248)

$1.1997 (3748)

$1.1971 (4405)

Price at time of writing this review: $1.1906

Support levels (open interest**, contracts):

$1.1855 (2525)

$1.1823 (3019)

$1.1785 (4692)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 8 is 150147 contracts (according to data from September, 5) with the maximum number of contracts with strike price $1,1600 (7135);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3115 (2584)

$1.3084 (2315)

$1.3065 (2686)

Price at time of writing this review: $1.3030

Support levels (open interest**, contracts):

$1.2982 (1425)

$1.2943 (2215)

$1.2897 (2284)

Comments:

- Overall open interest on the CALL options with the expiration date September, 8 is 36394 contracts, with the maximum number of contracts with strike price $1,3150 (3025);

- Overall open interest on the PUT options with the expiration date September, 8 is 31049 contracts, with the maximum number of contracts with strike price $1,2850 (2577);

- The ratio of PUT/CALL was 0.85 versus 0.87 from the previous trading day according to data from September, 5

* - 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.