CFD Markets News and Forecasts — 14-06-2018

Major US stock indices finished the trading session mainly in positive territory amid favorable data on the US, as well as the results of the ECB meeting.

As it became known today, the number of Americans who filed new applications for unemployment benefits fell last week, which is the last sign that employers are reluctant to fire workers in the hard labor market. Initial applications for unemployment benefits, a gauge of layoffs across the United States, fell by 4,000 to 218,000, seasonally adjusted for the week ending June 9, the Ministry of Labor said. Economists had expected 224,000 new applications. The four-week moving average of calls, a more stable measure, fell by 1250 to 224,250 last week.

Meanwhile, the Commerce Department reported that in May, Americans spent most of their salaries on retail goods, which is one of several factors that help raise the economy to a stronger growth phase this year. Sales in US retail stores grew by 0.8% compared to the previous month to $ 502 billion. This marked the largest monthly jump since November. Americans increased spending on cars, building materials, sports goods, health products, clothing and other goods. Excluding sales of cars, which tend to fluctuate monthly, retail costs increased by 0.9%. The report significantly exceeded the expectations of economists expecting growth in retail sales by 0.4% and growth in sales excluding cars by 0.5%.

Most of the components of DOW finished trading in the red (19 of 30). The leader of growth was the shares of The Walt Disney Company (DIS, + 2.38%). Outsider were shares of General Electric Company (GE, -1.87%).

Most sectors of the S & P recorded a rise. The services sector grew the most (+ 0.9%), while the financial sector showed the largest decline (-0.6%).

At closing:

Dow 25,175.31 -25.89 -0.10%

S&P 500 2.782.49 +6.86 +0.25%

Nasdaq 100 7,761.04 +65.34 +0.85%

Manufacturers' and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,930.0 billion, up 0.3 percent (±0.1 percent) from March 2018 and were up 4.4 percent (±1.3 percent) from April 2017.

The total business inventories/sales ratio based on seasonally adjusted data at the end of April was 1.35. The April 2017 ratio was 1.38.

U.S. stock-index futures rose moderately on Thursday, as investors continued to digest the latest policy decision of the U.S. Federal Reserve, including signal of faster rate increases ahead.

Global Stocks:

Prices for U.S. imports increased 0.6 percent for the second consecutive month in May, the U.S. Bureau of Labor Statistics reported today. Rising fuel and nonfuel prices contributed to the advances in both months. U.S. export prices rose 0.6 percent for the second consecutive month in May.
Import prices increased 0.6 percent in May, continuing the upward trend that began in August 2017. The May advance followed a 0.6-percent rise the previous month. The price index for overall imports increased 4.3 percent for the year ended in May, the largest 12-month advance since the index rose 4.7 percent in February 2017. The May over-the-year advance was largely driven by higher fuel prices although nonfuel prices also increased over the past year.

Prices for U.S. exports rose 0.6 percent for the second consecutive month in May, led by higher prices for both agricultural and nonagricultural exports. Export prices have not recorded a monthly decline since the index edged down 0.1 percent in June 2017. The price index for overall exports advanced 4.9 percent between May 2017 and May 2018, the largest 12-month increase since the index rose 6.3 percent in October 2011.

In the week ending June 9, the advance figure for seasonally adjusted initial claims was 218,000, a decrease of 4,000 from the previous week's unrevised level of 222,000. The 4-week moving average was 224,250, a decrease of 1,250 from the previous week's unrevised average of 225,500.

Advance estimates of U.S. retail and food services sales for May 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $502.0 billion, an increase of 0.8 percent from the previous month, and 5.9 percent above May 2017. Total sales for the March 2018 through May 2018 period were up 5.2 percent from the same period a year ago. The March 2018 to April 2018 percent change was revised from up 0.2 percent to up 0.4 percent.

Retail trade sales were up 0.8 percent (±0.5 percent) from April 2018, and 6.0 percent (±0.5 percent) above last year. Gasoline Stations were up 17.7 percent (±1.6 percent) from May 2017, while Nonstore Retailers were up 9.1 percent (±1.4 percent) from last year.

• News Are Still Good, But Not as Good as Before

• We See Uncertainty

• We Do Not Want to Underplay the Existing Risks

• Soft Patch May Extend into 2Q

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

Hewlett Packard Enterprise (HPE) target lowered to $18 from $20 at Pivotal Research Group

• Rising Wage Growth Will Help Drive Up Underlying Inflation

• ECB Staff Sees 2019 HICP +1.7% YY vs March Estimate of +1.4%

• Underlying Inflation Expected to Rise Gradually Over Medium Term

• Headline Inflation Likely to Hover Around Current Level in Rest of 2018

• ECB Staff Sees 2019 GDP +1.9% YY vs March Estimate of +1.9%

• ECB Staff Sees 2020 GDP +1.7% YY vs March Estimate of +1.7%

• Risks Related to Global Factors Have Become "More Prominent"

• Global Expansion Providing Impetus to Eurozone Exports

• ECB Stands Ready to Adjust All Instruments

• Temporary Factors Contributed to 1Q Slowdown

"The Governing Council decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path".

The outlook remains stable.

The factors supporting the rating affirmation include:

1. Robust and stable GDP growth and strong growth potential relative to peers, denoting very high resilience to economic shocks;

2. A moderate, albeit modestly rising, general government debt burden;

3. Strong institutions that preserve macroeconomic and financial stability, although fragmentation in political representation is a hurdle to more effective fiscal consolidation.

The stable outlook on Australia's rating reflects Moody's expectation that, even in the event of shocks, possibly in the housing market and/or to the economy's access to external financing, the resilience of the economy supported by countercyclical macroeconomic policy would allow Australia's credit metrics to remain consistent with a Aaa rating.

Australia's long-term local and foreign-currency bond and deposit ceilings remain at Aaa. The short-term foreign-currency bond and deposit ceilings remain at Prime-1 (P-1).

In May 2018, the quantity bought in the retail industry increased by 1.3% when compared with April 2018 with growth across all main sectors.

Feedback from retailers suggested that a sustained period of good weather and Royal Wedding celebrations encouraged spending in food and household goods stores in May.

The quantity bought saw a sharp increase to year-on-year growth in May at 3.9% when compared with April at 1.4%; possibly due to a combination of warm weather and slow year-on-year growth in May 2017 at 0.8%.

Non-store retailing showed strong growth in the quantity bought when compared with the previous year at 16.2%, the previous month at 4.5% and in the three months to May at 4.9%.

Online spending for food, department and clothing stores continued to increase, achieving new record proportions of online retailing in May at 5.8%, 17.4% and 17.6% respectively.

In May 2018, the Consumer Prices Index (CPI) accelerated to +0.4% over one month, after a slowdown in April (+0.2%). This higher rise came from those in energy prices (+2.0% after +0.9%), food prices (+0.9% after +0.1%) and "manufactured product" prices (+0.3% after +0.1%). Services prices increased at the same pace as in the previous month (+0.1%) and those of tobacco dropped by 0.6% after a stability in April.

Seasonally adjusted, consumer prices accelerated: +0.3% after +0.1% in April.

Year on year, consumer prices rose by 2.0%, 0.4 points of percentage more than in the previous month. This stronger increase resulted from a sharp year-on-year acceleration in energy prices and, to a lesser extent, in these of food and services. "Manufactured product" prices fell a little less than in the previous month and tobacco prices slowed down.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1904 (948)

$1.1882 (309)

$1.1858 (81)

Price at time of writing this review: $1.1803

Support levels (open interest**, contracts):

$1.1738 (2471)

$1.1705 (3503)

$1.1667 (2367)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 9 is 89933 contracts (according to data from June, 13) with the maximum number of contracts with strike price $1,1500 (6074);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3510 (830)

$1.3471 (330)

$1.3433 (125)

Price at time of writing this review: $1.3391

Support levels (open interest**, contracts):

$1.3351 (236)

$1.3306 (2004)

$1.3277 (2150)

Comments:

- Overall open interest on the CALL options with the expiration date July, 9 is 22066 contracts, with the maximum number of contracts with strike price $1,3800 (2316);

- Overall open interest on the PUT options with the expiration date July, 9 is 23868 contracts, with the maximum number of contracts with strike price $1,3250 (2306);

- The ratio of PUT/CALL was 1.08 versus 1.08 from the previous trading day according to data from June, 13.

* - 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.

Industrial production in China was up 6.8 percent on year in May, according to rttnews.

That was shy of expectations for 7.0 percent, which would have been unchanged from the April reading.

The bureau also said that retail sales were up an annual 8.5 percent in May - also missing expectations for 9.6 percent and down from 9.4 percent in the previous month.

Fixed asset investment gained 6.1 percent on year in May, missing forecasts for 7.0 percent, which would have been unchanged from the April reading.

The monthly trend unemployment rate remained steady at 5.5 per cent in May 2018, according to latest figures released by the Australian Bureau of Statistics (ABS) today.

Over the year to May, the unemployment rate declined 0.2 per cent, while the underemployment rate also fell by 0.2 per cent over the year to 8.5 per cent. The underemployment rate, which is the proportion of people who are working but would like to work more hours, remains below the peak of 8.7 per cent seen in 2017.

"The latest data tells us that over the past year both the trend unemployment rate and underemployment rate declined by 0.2 per cent, resulting in the underutilisation rate declining 0.4 per cent to 13.9 per cent," the Chief Economist for the ABS, Bruce Hockman, said.

The the inflation rate, as measured by the consumer price index, was markedly up on the preceding months An inflation rate of +2.2% was last recorded in February 2017. Compared with April 2018, the consumer price index rose by 0.5% in May 2018. The Federal Statistical Office (Destatis) thus confirms its provisional overall results of 30 May 2018.

The rise in the inflation rate in May 2018 was mainly due to energy prices. The year-on-year increase in energy prices (+5.1%) was markedly higher than in the previous month (April 2018: +1.3%). In particular, prices of heating oil (+24.3%) and motor fuels (+8.2%) were up in May 2018 on May 2017. Year-on-year price rises were also recorded for electricity (+1.5%) and charges for central and district heating (+0.5%), while prices of solid fuels (-1.5%) and gas (-1.1%) were down. Excluding energy prices, the inflation rate in May 2018 would have been +1.8%; excluding the prices of mineral oil products, it would have been +1.7%.

• Fomc Will Still Produce Economic Projections Each Quarter

• Economic Growth Appears To Have Picked Up In Current Quarter On Household Spending

• History Has Shown Moving Rates Too Quickly Or Slowly Can Lead To Bad Economic Outcomes

• Changes To Fomc Statement Don't Reflect Any Change In Policy Views

• Do Not Want To Declare Victory On Below-target Inflation

• Wouldn't Say Anything Has Happened Since March To Change Thinking On Inflation

• Gradually Returning Interest Rates To Normal Level Best Way To Sustain Environment in Which Households, Businesses Thrive

• Unemployment and Inflation Are Low

• Main Takeaway Is That Economy Doing Very Well

• Lower Unemployment in 2019, 2020 Than In March; Leaves Longer-Run Rate Unchanged

• Raises Core Inflation Projection in 2018 to 2%

• Core Inflation at 2.1% in 2019, 2020, Unchanged From March

• Fed Funds Rate at a Median of 3.1% at End of 2019

• Fed Funds Rate at a Median of 3.4% at End of 2020

• Fed Sees Four Rate Increases in 2018

• Three Rate Increases in 2019, One in 2020

• FOMC: Voted 8-0 For Fed Funds Rate Action

• Fed Cuts Language From Statement On Rates Remaining Below Long-Run Levels 'For Some Time'

• Signals Further Gradual Rate Increases

• Raises Interest on Excess Reserves to 1.95%

• Monetary Policy Remains Accommodative